A striking 87% of IT businesses considered nearshore outsourcing to slash costs, Deloitte reports. During tough economic times, companies naturally gravitate toward cost-effective yet efficient strategies to stay competitive in the game. But as an IT executive, you might ask the question: What is the best country for IT nearshoring?
I’m Dmytro Ovcharenko, founder and CEO of Alcor, with 15 years of experience in the industry. Alcor is a full-cycle R&D service provider, connecting tech companies with Silicon Valley-caliber developers in Latin America and Eastern Europe. Our solution offers a fresh alternative to traditional IT outsourcing, featuring a core duo of IT recruitment and EoR support, complemented by comprehensive back-office services.
In this article, Iโll describe the growing trend of nearshoring IT services and explore the top destinations in Latin America and Eastern Europe, helping you find the best country for nearshore IT outsourcing. Plus, Iโll reveal a game-changing solution that allows you to enter a new market with your own software development team effortlessly โ no need to set up a legal entity. Ready to dive in? Letโs get started!ย
Nearshoring IT Services 2025 Trend
The big wave of layoffs that began two years ago in the U.S. seemed never-ending. In 2023 alone, tech companies let go over 260,000 employees, according to the Layoffs.fyi tracker. One of the main reasons? The age-old practice of tightening budgets.
Yet, despite these cuts, great products are driven by talented people. Thatโs why tech businesses have increasingly looked beyond borders, leading to a significant boom in software development nearshoring. With 80% of North American companies considering nearshoring and turning to LATAM, Western technological companies reap the benefits of the Eastern European market. Letโs take a closer look at these developments:
US Tech Nearshores to Latin America
In 2023, tech companies from North America increased their hiring in LATAM by 50% โ a testament to the skyrocketing demand for software development in Argentina, Mexico, Brazil, Colombia, Chile, Ecuador, Puerto Rico, and other Latin American countries.
As of 2024, the U.S. remains the main importer of software development services from the region, leading to a market volume of $74 billion by 2029. Among the global tech companies that choose Latin America as their top destination for software development nearshoring are Apple, Tesla, Amazon, Dell, Microsoft, and many others. A fresh case in point: in addition to its strong presence in the region, Google has recently announced the launch of its second data center in LATAM, aiming to invest over $850 million in it. With all the facts combined, the nearshoring rush in Latin America is evident and doesnโt show any signs of slowing down!
Western Europe Nearshores to Eastern Europe
In the meantime, IT talent scarcity is sweeping across Western Europe, with only 12 million skilled workers available โ far below the EUโs goal to employ 20 million ICT specialists by 2030. Adding to the challenge is shrinking enrollment in the STEM fields in the EU, while 40% of local employers admit to facing challenges as they look for tech talent for hire.
Thatโs why tech entrepreneurs in the EU turn to Eastern Europe as their ideal nearshoring destination, opening the door to a large pool of software engineers at a lower cost. As a result, the IT services sector in Eastern Europe, much like in LATAM, is thriving and is projected to reach $18 billion by 2029. Companies like Siemens, Nokia, Booking.com, Orange, and SAP are already among the European tech giants tapping into Eastern Europeโs potential.
Another standout example is Ledger, a software product company from France that develops hardware wallets, which was aimed at entering the Eastern European market. To do it quickly and effectively, the company chose Alcor as its reliable partner in the region. Our team helped Ledger with full-cycle IT recruitment and comprehensive EoR support, including tax management, accounting, and labor law consulting. As a result, Ledger secured a remote team of 10 QA professionals, while our recruiters impressed the client with both speed and quality, filling the QA Lead and 3 QA manual positions within just 2 weeks!
Checklist to Choose Your Ideal Nearshoring Destination
Before we move to the overview of the most popular nearshoring destinations in LATAM and Eastern Europe, consider the following checklist to help you select the best country for nearshore technology outsourcing:
Ideal Nearshoring Destination in Latin America
Latin America boasts a thriving talent pool of 1.75 million software developers, while its IT services market is about to reach $56 billion by the end of 2024. The average software developer salary in LATAM is $38,350 a year, a striking contrast to the US $97,140, enabling tech companies to save up to 60% on local wages only. Apart from a vibrant talent pool and beneficial salary rates, Latin America also appeals to Western tech businesses due to its geographical proximity, as the time difference between the US and Latin American countries is around 1-4 hours. Plus, the shared work ethics and cultural similarities ensure effective communication between the software development teams.
The most booming tech hotspots in the region include Mexico, Colombia, Argentina, and Chile. Letโs see what each of these countries has up its sleeve:
| Mexico | Colombia | Argentina | Chile | |
| Talent pool | 700,000+ | 150,000+ | 115,000+ | 61,000+ |
| Annual ICT graduates | 124,000 | 13,000 | 27,000 | 5,000 |
| Average developer salary | $42,360 | $39,480 | $35,400 | $39,720 |
| Tech stack | JavaScript, Python, SQL, C#, React.js, and Angular | JavaScript, Python, C++, PHP, Java, and Ruby | Python, Cloud APIs, TensorFlow, and SQL | Java, Python, Node.js, Perl, PHP, and ASP.NET |
| Coursera Global Skills Report 2023 | 25th out of 100 | 19th out of 100 | 30th out of 100 | 43rd out of 100 |
| Main tech hubs | Mexico City, Monterrey, Guadalajara | Bogotรก, Medellรฌn | Buenos Aires | Santiago |
| Big tech companies | Google, Amazon, Microsoft, IMB | Accenture, Microsoft, Teravision, Amazon | Intel, IBM, HP, Cisco | Amazon, Microsoft, Google, Oracle |
| Number of startups | 790 | 1,280 | 250 | 430 |
| Business climate | A4 | A4 | B | A3 |
Discover more about nearshore software outsourcing in Argentina and nearshore software development to Mexico!
The Latin American countries are the real treasure throve for tech companies. Yet they also differ significantly in terms of labor laws, including paid time off, national holidays, and even working hours. For instance, the workweek is 45 hours in Chile, but in Mexico, Colombia, and Argentina itโs 48. At the same time, Mexico has only 10 public holidays a year, while Colombia and Argentina offer 18 and 19, respectively. Plus, donโt forget about the differences in overtime pay and vacation days.
The good news is that you donโt have to navigate through these complexities alone. At Alcor, weโre here to guide you through every step, providing expert labor law consulting across Latin America. And to give you peace of mind, we offer a 100% compensation guarantee for any fines caused by our mistake.
Ideal Nearshoring Destination in Eastern Europe
The Eastern European tech landscape houses 1,5 million software developers, with the local software development services market set to reach $14 billion in 2024. On average, programmers from Eastern Europe earn $52,180 annually, which is around 46% less than their counterparts from the US. In addition, they boast solid English language proficiency, with Poland, Romania, and Bulgaria listed among the top 20 worldwide. These countries, along with Ukraine, have become go-to nearshoring and offshoring hubs for Western Europe and North America, offering a perfect blend of talent and expertise. Take a look yourself:
| Poland | Ukraine | Romania | Bulgaria | |
| Talent pool | 607,000+ | 307,000+ | 202,000+ | 110,000+ |
| Annual ICT graduates | 20,000 | 27,000 | 10,000 | 6,100 |
| Average developer salary | $59,040 | $45,300 | $55,000 | $49,380 |
| Tech stack | JavaScript, Java, SQL, Python, PHP, and Typescript | JavaScript, Java, Python, C#, TypeScript, PHP, and Kotlin | Java, JavaScript, C#, Python, React, Angular, HTML, and CSS | C#, JavaScript, Java, Python, SQL, and PHP |
| Coursera Global Skills Report 2023 | 24th out of 100 | 15th out of 100 | 54th out of 100 | 18th out of 100 |
| Main tech hubs | Warsaw, Krakow, Poznan, Gdansk, and Wroclaw | Kyiv, Lviv, Odesa, Dnipro | Bucharest, Cluj-Napoca, and Iaศi | Sofia, Varna, and Burgas |
| Big tech companies | Google, Samsung, CISCO, Motorola, IBM, and Netflix | Google, Mastercard, Huawei, and Deloitte | Google, Amazon, Microsoft, Samsung, and Oracle | Hewlett Packard, IBM, CISCO, Oracle, and SAP |
| Number of startups | 3,300 | 2,000 | 1,500 | 400 |
| Business climate | A2 | C | A3 | A3 |
In addition, the region offers some of the lowest personal income tax rates in CEE, ranging from 10% in Bulgaria to 12โ32% in Poland. However, itโs worth noting that, despite these favorable tax rates, Eastern Europe is well-known for its complex and frequently changing tax legislation. Take the recent changes in the Fiscal Code 2024 in Romania, for example. IT businesses now need to keep a close eye on changes in micro-enterprise taxation, the RO e-invoice system, and local VAT rates to stay compliant and avoid surprises. Another instance is Polish legislation, as the country has a relatively high Business Complexity Index, especially when it comes to reporting standards.
But donโt let the paperwork intimidate you. Instead, consider teaming up with an experienced local guide who can help you not only with hiring nearshore developers but also with legal compliance and tax management. This way, you can ensure your business operates smoothly abroad, sidestep the paperwork headaches, and concentrate on what truly mattersโyour product.
And thatโs exactly what Alcor offers…
Your Ideal Nearshoring Partner for Seamless Tech Business Expansion
Whether you plan to nearshore to Poland, consider Colombia for technology outsourcing, or explore any Eastern European or Latin American country, Alcor has a revolutionary solution for your IT business!
We help you launch your own software research and development center at your ideal nearshoring location, offering:
Full-cycle IT recruitment: Alcorโs 40 experienced headhunters are at your service to hire Silicon Valley-caliber talent for your software development team. Starting with candidate sourcing to onboarding, it takes us just 2-6 weeks to recruit your dream developer. We hire the top 10% of talent, 98,6% of which pass the probation period with flying colors!
Seamless EoR service: Benefit from our legal assistance which features HR payroll and tax management, along with onboarding/offboarding in accordance with local legislation. The best part? No need to establish your legal entity, as Alcor takes care of it all.
Back-office support: We go even further and offer office lease, hardware procurement, benefits management, employer branding, or any other type of back-office support.
Ultimately, Alcor is an outsourcing killer, allowing you to save up to 40% without any buy-out fees and markups. Instead, you get your own software development team from day one, fully integrated into your companyโs culture and practices.
Want to learn how Alcor already helped top tech companies go global? Read success stories of People.ai, Gotransverse, Sift, and others.
Got your ideal nearshoring destination in mind, or still exploring which one fits your business needs best? Reach out to usโAlcor is here to help you every step of the way!