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19 June 2024
9 min
Latin American countries shine with skilled workforces yet with much more modest wages compared to the US. No wonder 87% of IT businesses considered nearshore outsourcing to LATAM to slash costs. But is this everything the Latin American market has up its sleeve, and which country in this vibrant region could propel your business to new heights?
I’m David Gomez, Lead IT Recruiter in LATAM at Alcor, with 8 years of experience in the field. Alcor is an all-in-one place R&D service provider that helps product tech companies from the US grow from 0 to 100 developers within a year. We combine full-cycle Eastern European and Latin American IT staffing services with comprehensive EoR and other operational support.
In this article, I’ll provide an overview of nearshore outsourcing to Latin America, its IT market dynamics, why tech companies choose nearshore software outsourcing in LATAM, top destinations for running your IT business, and an effective solution to scale in this booming region. Without further ado, let’s dive in!
Latin American IT Market Development 2022-2025
In the turbulent year of 2022, the Latin American software development industry reached a whopping $105 billion value. The regional leaders? Brazil boasts the most significant IT market value at $45 billion, followed by Mexico with $28 billion, making it the second-largest IT market in the region.
Yet these are not the only gems in LATAM’s treasure trove. Among nearshore software development destinations in Latin America, countries such as Colombia, Argentina, Chile, and Uruguay also shine brightly. Take a look at Chile, whose IT industry generated a staggering $15.8 billion. The Argentinian tech market also doesn’t lag behind, valued at $11 billion, while Colombia features an information technology market worth $8.2 billion. Finally, Uruguay, with its speedily growing IT sector, is projected to reach $1 billion in 2029.
The local IT outsourcing market is on a rapid ascent, projected to hit $17.89 billion by 2024, and it’s not stopping there! With an impressive annual growth rate (CAGR) of 9.03% from 2024 to 2029, the future also looks bright. What’s more, Kearney’s 2023 Global Services Location Index brings exciting news for digital exports from Colombia, Argentina, Brazil, Chile, Mexico, and Uruguay. These nations are on track for remarkable expansion, with yearly revenues anticipated to rise from $34 billion in 2022 to over $140 billion by 2030. When you look at the bigger picture, it’s clear that the rise of nearshore software outsourcing in LATAM is persistent and unstoppable!
But why do software companies decide to nearshore IT outsourcing to Latin America? Well, see for yourself…
Reasons Tech Companies Nearshore Outsourcing to LATAM in 2024
Abundant talent pool
One key advantage of nearshoring software development to Latin America is the access to a rich pool of candidates. This region is home to 1.75M+ software developers, with Mexico, Brazil, and Colombia leading the pack. Additionally, local engineers in Latin America embrace a familiar work culture and demonstrate proficiency in collaborative efforts and independent tasks, making them ideal team players. With such a wealth of talent and cultural alignment, finding your dream talent is guaranteed.
Excellent tech expertise
Yet the benefits of nearshore outsourcing in LATAM do not end with the generous pool of IT talents. Regional tech wizards stand out for their profound tech expertise and shine in such programming languages and technologies as .Net, Java, Ruby, Python, C++, C#, React, and Node.js. Additionally, they are masters of mobile development, data analytics, cloud computing, database development, and operating systems.
Cost-effective rates
But what about software developers‘ salary rates when nearshoring software development to LATAM? Well, the wages of developers from South America are, on average, three times lower than those in the US. Just compare:
|
Technology |
Senior Developer’s Gross Annual Income, USD | |||||
|
USA |
Mexico | Argentina | Colombia | Chile |
Uruguay |
|
|
Java |
$150,500 | $66,000 | $57,600 | $60,000 | $60,000 | $57,600 |
|
Node |
$143,000 | $66,000 | $57,600 | $60,000 | $60,000 | $57,600 |
|
Angular |
$123,500 | $50,400 | $45,600 | $48,000 | $48,000 |
$45,600 |
| React | $138,500 | $60,000 | $56,400 | $62,400 | $60,000 |
$56,400 |
| .NET | $142,500 | $60,000 | $54,000 | $54,000 | $60,000 |
$54,000 |
| Python | $145,000 | $62,400 | $57,600 | $60,000 | $60,000 |
$57,600 |
| DevOps | $145,000 | $72,000 | $53,600 | $69,600 | $69,600 |
$62,400 |
Flourishing IT infrastructure
The LATAM software development ecosystem is in full swing – the region hosts over 9,000 funded startups, which last year raised a combined $3.9 billion in VC investment, according to Dealroom. It also harbors over 60 unicorns, with stars such as Kavak, Rappi, Butterfly, QuintoAndar, and others on the list. Additionally, Latin America hosts around 2,400 software development companies that offer web and mobile app development, UX/UI design, IT strategy consulting, and more.
But let’s zoom in on what each country has in stock. Mexico, the top nearshore software outsourcing hub in Latin America, is a powerhouse with 38 IT clusters, 450+ startups, and more than 20 tech parks. Colombia, on the other hand, is making waves with its second-best startup ecosystem in South America. Meanwhile, Argentina is where unicorns roam freely, with 11 calling it home. And don’t overlook Chile – recognized as the top spot in Latin America for innovation.
Geographic proximity to the US
Lastly, when tech companies nearshore software outsourcing to LATAM, they benefit from the region’s convenient location and time zones. The time difference between the US West Coast and Mexico is a mere one hour, making coordination with your remote software development team a breeze. With Colombia, there is just a two-hour gap, while heading further south, there is a three-hour gap with Chile. Argentina and Uruguay share a four-hour difference. The geographical proximity to major Latin American tech hotspots also cultivates seamless communication and team-building activities.
Top LATAM Nearshore Outsourcing Destinations
Can’t choose the perfect country for nearshore outsourcing in Latin America? Let’s dive into the top picks tech companies are buzzing about:
Mexico: One of the region’s top talent pools
Indeed, the Mexican talent pool is the second largest in Latin America, but as the saying goes, numbers speak louder than words…
Tech talent pool: 700,000;
Technology skills: JavaScript, Python, SQL, C#, React.js, and Angular;
The average salary in tech: $40,050 yearly;
% savings compared to the US: 58%*;
Tech universities: Tecnologico de Monterrey, National Autonomous University of Mexico, and Universidad Autonoma de Nuevo León;
Tech hubs: Mexico City, Guadalajara, Monterrey;
Top IT companies: Apple, Amazon, Cisco, Dell, Google, and Microsoft.
Argentina: #1 in terms of English skills
Did you know Argentinian developers are leaders in English proficiency, ranking number one in Latin America? Apart from this, Argentina boasts…
Tech talent pool: 115,000;
Technology skills: Python, Cloud APIs, TensorFlow, and SQL;
The average salary in tech: $35,500 per year;
% savings compared to the US: 63%*;
Tech universities: University of Buenos Aires, the National University of La Plata, and the National University of Cordoba;
Tech hubs: Buenos Aires, Córdoba, Mendoza;
Top IT companies: Google, IBM, Uber, Dell, and Meta.
Learn more about IT staff augmentation in LATAM to make informed decisions!
Colombia: JavaScript wizards of the region
Colombia is a true JavaScript powerhouse – the country boasts a vibrant tech hub with over 3,000 members and hosts regular JavaScript meetups in 8 different cities. But this prime destination for nearshore outsourcing in LATAM also offers…
Tech talent pool: 150,000;
Technology skills: JavaScript, Python, C++, PHP, Java, and Ruby;
The average salary in tech: $37,500 yearly;
% savings compared to the US: 61%*;
Tech universities: National University of Colombia, University of America in Colombia, University of the Andes Colombia, Pontifical Javeriana University;
Tech hubs: Bogotá, Medellín, Cali;
Top IT companies: Google, Microsoft, Amazon, IBM, and Oracle.
Chile: #1 in Latin America for digital skills
Chilean developers stand tall as digital frontrunners in LATAM, yet this country also showcases…
Tech talent pool: 61,000;
Technology skills: Java, Python, Node.js, Perl, PHP, and ASP.NET;
The average salary in tech: $37,870 annually;
% savings compared to the US: 61%*;
Tech universities: Pontificia Universidad Católica de Chile, Universidad de Chile, Universidad Técnica Federico Santa Maria, Universidad de Concepción;
Tech hubs: Santiago, Valparaíso, Concepción;
Top IT companies: Google, Microsoft, IBM, Amazon, Uber, Oracle, and Meta.
Uruguay: Region’s most literate tech talent
When tech companies seek Latin American software engineers for hire, they also turn their gaze to Uruguayan talent, known as the most literate in LATAM! Additionally, this nation features…
Tech talent pool: 22,000;
Technology skills: Java, JavaScript, Go, Rust, and Python;
The average salary in tech: $34,840 a year;
% savings compared to the US: 64%*;
Tech universities: Universidad de la República, Universidad ORT Uruguay, Universidad Católica del Uruguay;
Tech hubs: Montevideo;
Top IT companies: IMB, Oracle, Microsoft, and Netflix.
* Estimated difference in cost where the average salary in tech in the US is $97,140 a year.
Better than Nearshore IT Outsourcing to LATAM: Your Own Team from 0 to 100
Fascinated by the idea of nearshore software outsourcing to Latin America? There’s a more effective solution for your tech business – your own software R&D center at 20%-40% lower costs than outsourcing and outstaffing. Here’s what it includes:
1. IT recruitment
Our internal IT recruitment department comprises 40 experienced headhunters who manage the full-cycle recruitment process, from sourcing candidates to smooth onboarding. Operation across Mexico, Chile, Argentina and other countries in Latin America, it takes us just 3-6 weeks to find the perfect software engineers for your development team. At Alcor, speed meets quality, with 98.6% of our candidates successfully passing the probation period.
2. EoR support
When you nearshore to LATAM with Alcor, you don’t need to worry about setting up a legal entity. We take care of everything: hiring software developers, complying with local laws, managing taxes and monthly payroll, and handling the onboarding and offboarding of your engineers. Plus, our clients enjoy a 100% compensation guarantee.
3. Operational support
To complete your R&D center, we offer all-encompassing back-office assistance. It includes leasing office space, promoting your employer brand, procuring hardware, setting up stock option plans, and more. Just tell us what you need, and Alcor will make it happen.
One of our stellar cases is a US-based product tech company, People.ai, which planned an expansion abroad. To break into the offshore IT market quickly and smoothly, they chose Alcor as their reliable partner to set up an R&D center. Our IT headhunters secured over 25 top-tier tech professionals, with around half focusing on AI engineering. Our legal and finance teams handled all the intricate details for setting up People.ai in their chosen location. Once that was sorted, we quickly got their office operational. In just 4 short weeks, the company proudly opened its doors, fully equipped and ready to make its mark on the market.
Our solution also played out well for Gotransverse, Sift, Ledger, and others. Ready to write your success story in Latin America together with Alcor?
Contact Us
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It includes the salary ranges and availability of the requested developers in Poland, Romania, and other countries in EE (as well as time-to-hire metrics and other KPIs for your case).