Software Development in Latin America: Forecast for 2026

Software development in Latin America is skyrocketing, as the attractiveness of LATAM specialists has grown 2x over the past year! With such momentum, it’s no surprise that the LATAM tech market is projected to reach $67.4 billion by 2030. This raises an important question: is the strategy to hire LATAM developers a reasonable investment, and how will it boost your tech business?

I’m David Gomez, Lead LATAM IT Recruiter at Alcor, your brand-new software R&D center partner. We help Western tech product companies build their own Silicon Valley–caliber engineering teams with comprehensive Employer of Record (EOR) services and full operational support. We make it possible for businesses to scale into Latin America or Eastern Europe with 5 developers in the first month, 30+ within three months, and up to 100 in a year. And the best part – there’s no legal entity required.

In this article, you’ll gain valuable insights into the software development industry in Latin America, including its key trends, tech hubs, advantages, and disadvantages of the region, and finally, learn about the best business approach to set foot in the region.

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Key Takeaways

• Latin America’s software development industry is growing at a CAGR of 7.8% with strong momentum in AI, fintech, mobile, IoT, and cloud. With over 60 unicorns and billions in VC funding, LATAM has positioned itself as a global innovation hub, projected to reach $67.4 billion by 2030.
• Outsourcing software development to LATAM gives companies access to 2+ million tech specialists, 220,000 annual STEM graduates, and salaries up to 49% lower than in the US. Cultural alignment, overlapping time zones, and thriving startup ecosystems make the region cost-effective without compromising quality.
• Mexico, Colombia, Argentina, Chile, and Brazil stand out as leading tech hubs. Each offers strong talent pipelines, government incentives, and unique specializations – from fintech in Mexico and Colombia to mobile and AI in Argentina, and innovation ecosystems in Chile and Brazil.
• Outsourcing to LATAM requires navigating tax differences, complex labor laws, and varying English proficiency levels. Ensuring technical readiness is also crucial. These challenges can slow expansion if not managed with expert support.
• Unlike traditional outsourcing, Alcor offers a one-stop solution combining EOR, tech recruitment, and 360° operational support. With a growing 253,000-candidate database, 98.6% probation pass rate, and full compliance coverage, we help companies scale from 10 to 100+ LATAM developers seamlessly – without setting up a local entity.

Latin American IT Industry Overview

Latin America for software outsourcing is gaining global attention, with the industry growing at a CAGR of 7.8%. Brazil, Mexico, Colombia, Argentina, and Chile drive this growth, backed by a strong culture of innovation. The region counts over 60 unicorns and more than 11,400 startups, which raised $3.6 billion in 2024 alone. Fintech dominates, attracting over 60% of VC funding, while AI, Healthtech, Cleantech, and E-commerce are quickly expanding.

The region’s IT industry is moving up at a CAGR of 7.8%. Currently, South America is leading the charge, with countries like Brazil, Mexico, Colombia, Argentina, and Chile as its tech powerhouses.

Also, the software development market in Latin America stands out in innovation thanks to:

• 69 unicorns, including the ones with the highest valuation in 2025, like Colombian Rappi, Brazilian QuintoAndar, and Mexican Kavak.
• 11.4k+ funded startups that raised $3.6 billion in 2024.
• Fintech as the top informational technology sector, attracting 61% of all VC investments in 2024.
• Noteworthy sectors like E-commerce, Healthtech, AI & ML, Cleantech, and Agtech.

Software Development Trends in Latin America

Latin America’s software development industry is rapidly expanding, driven by AI, mobile, IoT, and cloud innovation. The AI & ML sector alone could boost the region’s GDP by 5% in the next five years, with top companies dedicating over 25% of tech budgets to AI by 2027. Mexico and Brazil dominate AI patents, while Chile emerges as a leader in AI innovation. The mobile development market hit $18.9 billion in 2024 and is forecast to reach $55.5 billion by 2033, fueled by fintech and e-commerce growth. Meanwhile, IoT and cloud computing are surging, projected to generate $45.6 billion and $29.2 billion. With such momentum, software outsourcing in Latin America is becoming the go-to strategy for global tech companies.

Interested in how the software development industry in Latin America is developing? See our breakdown of the industry segments by application type to spot the newest trends in AI & ML, mobile development, IoT, and Cloud.

AI & ML solutions

The AI & ML IT sector can boost Latin America’s GDP by over 5% in the next five years. Such potential impact spurs AI adoption, investment, infrastructure expansion, and AI talent development.

The stats speak for themselves:

• By 2027, the largest 5,000 companies in the region will dedicate over 25% of their tech budgets to AI initiatives.
• Mexico and Brazil hold nearly 95% of all AI patents filed in South America.
• The University Tecnológico in Monterrey opened a GenAI laboratory to drive innovative AI technology in Mexico, while Chile emerged as the AI leader in the Latin American Artificial Intelligence Index.

Mobile development

According to IMARC, the LATAM mobile development market reached $18.9 billion in 2024 and is expected to hit $55.5 billion by 2033 with a stable CAGR of 11.4%. Such continuous growth results from enhanced internet connectivity, rising digitalization in fintech and e-commerce, and increasing 5G penetration. Regional leaders in digital payments? Brazil, Mexico, and Argentina.

At Alcor, we know about Mexican mobile development from experience. When Franki, a US software development company, sought to build a mobile capability team, they turned to our R&D solution.

As a result, they gained:

• A strong pipeline of 20 pre-vetted iOS engineers tailored to their request;
• Freedom from opening and maintaining a legal entity in Latin America;
• The ability to focus on integrating 7 top senior hires into their team and accelerating product growth.
• Legal shield, 100% compliance with local labor laws, and PTO management;
• Up to 40% cost-savings compared to traditional outsourcing.

IoT & Cloud

The public cloud sector in Latin America is forecast to grow at a high CAGR of 14.3% to achieve $29.2 billion by 2030. Cloud computing, in turn, propels the LATAM IoT sector – in 2025, it should generate over $45.6 billion, while the number of IoT connections in the region will reach 1.3 million. At the moment, Brazil, Argentina, and Colombia stand out in the LATAM IoT market, while Chile is gaining momentum thanks to its well-developed digital infrastructure.

Reasons to Go for Software Development in Latin America

Latin America has become a top choice for software development outsourcing, offering a mix of talent, cost savings, and innovation. With over 2.8 million tech specialists and 220,000 new graduates annually skilled in .NET, Java, Python, and more, the region provides a steady talent pipeline. Developers cost up to 49% less than in the US, yet deliver the same high standards, while world-class universities nurture elite engineers. Countries like Mexico, Colombia, Argentina, and Chile stand out for fintech, AI, data science, and startup ecosystems. Add to this convenient time zones, cultural alignment with US companies, and government-backed tech hubs, and LATAM emerges as a thriving launchpad for global software development.

Tech talent trove

One of the reasons to outsource to Latin America is that it boasts an impressive talent pool of over 2+ million tech specialists. On top of that, this pool grows every year with more than 220,000 young engineering graduates from top universities, well-versed in .NET, Java, Ruby, Python, C++, C#, React, and Node.js.

Smart labor cost savings

Developers in Latin America charge up to 49% less than their US counterparts while maintaining high-quality standards. Building a team of five AI software engineers will cost you $858,000 in the US, compared with $373,500 in Latin America – and that’s only salary-wise.

Elite engineer education

Software engineers in LATAM receive high-quality STEM education in local universities, 24 of which are recognized among the Best Global Universities in Latin America. Institutions like the University of Chile, the Monterrey Institute of Technology, and the University of Buenos Aires nurture exceptional Latin American software development talent, placing it in top tech skills rankings on Coursera.

Top tech industry expertise

With strong investment in tech education and a booming digital economy, outsourcing software development to Latin America has a lot to offer:

• Mexico: Ranked 3rd in Central America for tech and 2nd for data science skills, plus home to LATAM’s 2nd largest fintech ecosystem;
• Colombia: #2 startup ecosystem in LATAM, with one of the largest JavaScript communities in the region. Also ranks #9 in South America for overall tech skills, excelling in operating systems and networking;
• Argentina: Is known for mobile dev, data analytics, and AI. Ranked 3rd in AI policy implementation, with CESSI internships ensuring developers graduate job-ready;
• Chile: A stronghold for PHP, Angular, and more. Ranks #4 in tech and #3 in data science in LATAM, making outsourcing to Chile a reliable option.

Time zone synergy

Geographical proximity is a major advantage for US tech product companies opting for software development in Latin America. The US West Coast is just 1 hour behind Mexico, 2 hours behind Colombia, 3 hours behind Chile, and 4 hours behind Argentina. This not only facilitates face-to-face interactions between in-house and offshore tech teams but also enhances the supervision of the development process and streamlines onboarding for remote Latin American developers.

Corporate culture compatibility

Software developers in Latin America seamlessly integrate into foreign teams thanks to shared business ethics, customs, and workflow. LATAM developers:

• are known for dedication, punctuality, and a willingness to go the extra mile to meet deadlines;
• excel in collaborative and independent work;
• adapt to changing project needs;
• have a straightforward communication style that ensures everyone is on the same page.

Just like their American colleagues, according to The Culture Factor Group, they demonstrate a strong motivation toward achievement and success, which drives high-quality and results-focused software development.

Booming tech ecosystem

One more powerful driver and benefit of software outsourcing in LATAM is its thriving tech ecosystem, which gives foreign companies access to government-backed initiatives, world-class hubs, and strong investor support:

• Mexico: 20+ innovation parks and government-led initiatives, such as 500 Startups LATAM and Fondo Nacional Emprendedor, support startup growth.
• Colombia: Medellín, often dubbed the “Silicon Valley of Latin America,” has become a magnet for tech innovation.
• Argentina: The Knowledge Economy Law allows startups to convert up to 70% of payroll charges into 24-month tax credits and reduce income tax on promoted activities.

Software Developer Salaries in Latin America in 2025

Software development salaries in Latin America in 2025 highlight the region’s major cost advantage. Senior developers in Argentina are the most budget-friendly, earning $40,000–$68,500 annually, followed by Colombia with $51,400–$76,200. Chile and Mexico offer higher but still competitive rates, ranging from $52,200 to $81,400. On average, LATAM salaries are about 50% lower than in the US, making outsourcing software development to Latin America a cost-effective choice without compromising expertise.

What could be the financial benefits of leveraging LATAM software development? My tech recruitment analytical team has prepared a salary package comparison, where, at a glance, you can see the average annual software development market rates in LATAM:

Positions	Mexico	Colombia	Argentina	Chile
Python Developer	60,000	79,800	51,600	75,000
AI Engineer	84,600	69,000	70,200	75,000
ML Engineer	79,800	75,000	62,400	75,000
Java Developer	61,200	66,600	57,000	58,800
Angular Developer	61,200	55,200	48,000	55,200
Node.JS Developer	78,000	90,000	57,600	78,000
React.JS Developer	54,000	60,000	48,000	55,200
Ruby Developer	58,800	55,200	51,600	60,000
Mobile Developer	76,200	79,200	60,000	76,200
Drupal Developer	72,000	51,600	44,400	51,600

Argentina boasts the most budget-friendly senior developer salaries in South America, averaging between $40,000 and $68,500 annually. Colombia follows closely, with a range of $51,400 to $76,200. Meanwhile, Chile and Mexico have the highest rates, from $52,200 to $81,400.

Check out our article on software engineer salaries in Argentina to learn more about the local wages!

Now, let’s put into perspective the average senior developers’ salaries of senior developers in LATAM in comparison with those of their US colleagues.

Positions	US	LATAM
Python Developer	132,000	66,600
AI Engineer	171,600	74,700
ML Engineer	132,000	73,000
Java Developer	110,400	60,900
Angular Developer	120,000	54,900
Node.JS Developer	114,000	75,900
React.JS Developer	120,000	54,300
Ruby Developer	114,000	56,400
Mobile Developer	165,000	72,900
Drupal Developer	115,200	54,900

As we can see, LATAM software outsourcing is twice as cost-effective as hiring specialists in the US. The most affordable positions in LATAM comprise those of Angular Developer, Ruby Developer, and React.js Developer, averaging between $54,300 and $56,400 a year. In the US, at the same time, this expertise requires $114,000 to $120,000. If you need mean stack or fintech expertise, this difference will help you cut costs by hiring South American tech specialists.

Top Outsourcing Destinations in Latin America and Their Hubs

Latin America has become a powerhouse of tech hubs, each contributing to the region’s growing IT talent pool and favorable business climate. Mexico leads as the top choice for US companies, with 800,000+ engineers, world-class STEM universities, and major hubs like Mexico City and Guadalajara. Colombia, the region’s 4th-largest IT services provider, offers 165,000+ specialists and thriving hubs in Bogotá and Medellín. Argentina combines cost-effectiveness with strong English skills and expertise in mobile development and data analysis. Chile, a rising startup hub, excels in data analytics and hosts over 588 startups, including unicorns. Finally, Brazil, with 763,000+ professionals, ranks #2 in regional innovation and drives one of LATAM’s largest IT service markets, projected to hit $26.1B by 2030.

In this section, you’ll explore the main tech hubs in LATAM that strengthen the sought-after IT talent pool in Latin America. Bonus: a business environment ranking breakdown to help you navigate the region!

Mexico

Mexico is undoubtedly the most frequent choice among North American tech companies when hiring software developers in LATAM. Its convenient location, overlapping time zones, and impressive cost-effectiveness are just a few factors that attract foreign tech businesses.

Talent pool: 800,000+

IT businesses: 400 tech businesses and 1,137+ top startups

Leading industries: mobile development and fintech

Best for companies: US/EU product companies; enterprise nearshore hubs; fintech/e-commerce scale-ups

Tech education: Top STEM universities – Tecnológico de Monterrey, the National Autonomous University of Mexico, and the Universidad Autónoma de Nuevo León

Well-versed in: JavaScript, Python, SQL, C#, React.js, and Angular

Tech hubs: Mexico City, Monterrey, Guadalajara

Colombia

Another excellent option for doing remote software development in Latin America is IT outsourcing to Colombia. This country ranks as the region’s fourth-largest provider of IT services, with a market currently valued $2.3 billion and projected to reach $2.9 billion by 2030.

Talent pool: 165,000+

IT businesses: 11,000 tech businesses and 1,582+ top startups

Leading industries: startup programming

Best for companies: Cloud/data platforms; security-first teams; customer apps

Tech education: 12 universities featured in the Best Global Universities in Latin America

Well-versed in: Java, Python, C#, SQL, and Ruby

Tech hubs: Bogotá, Medellín, Cali

Argentina

For tech companies seeking cost-effective software engineering in South America, nearshoring to Argentina is often a top choice. The Argentinian tech market is projected to reach $3.5 billion by 2030, growing at a CAGR of 1.1%.

Talent pool: 150,000+

IT businesses: 3,800 tech businesses and 741+ top startups

Leading industries: database and mobile development

Best for companies: Deep-tech R&D; AI/ML and backend specialists; product cores

Tech education: #2 in English proficiency, top in mobile development, and data analysis

Well-versed in: Python, Cloud APIs, TensorFlow, and SQL

Tech hubs: Buenos Aires, Córdoba, Mendoza

Chile

One more great spot for hiring a software development team in Latin America is Chile. Software development in Chile looks quite promising: the country’s tech market has been experiencing remarkable growth, projected to reach $2.5 billion by 20230, with an annual growth rate of 3.8%. Chile also stands as the third most attractive South American country for startups, hosting over 588 startup companies and three notable unicorns: Betterfly, Cornershop, and NotCo.

Talent pool: 100,000+

IT businesses: 200 tech businesses and 588+ top startups

Leading industries: data science, data analytics, and statistical programming

Best for companies: Regulated industries; fintech/retail; utilities & telecom

Tech education: top in data analytics, mobile development, and statistical programming

Well-versed in: Java, Python, and PHP

Tech hubs: Santiago Aires, Valparaíso, Concepción

Brazil

Another spot for software outsourcing to Latin America, with a well-established ICT market and access to strong talent. Brazil ranks #2 in the region in innovation and also boasts one of the largest tech markets in LATAM, projected to reach $26.1 billion by 2030.

Talent pool: 763,000+

IT businesses: 24,000 tech businesses and 3,115+ top startups

Leading industries: fintech, e-commerce, payments

Best for companies: US/EU product companies; fintech scale-ups; enterprise platforms

Tech education: top in fintech, AI, and digital infrastructure sectors

Well-versed in: JavaScript, SQL, Java, HTML, CSS, C#, and Python

Tech hubs: São Paulo, Rio de Janeiro, Belo Horizonte

Disadvantages of Outsourcing Software Development to Latin America

While Latin America offers strong opportunities for software outsourcing, companies should be aware of certain challenges. Tax peculiarities differ by hiring model: under FTE, in Colombia, developers face ~24% effective tax, with employers covering an additional ~24% in payroll contributions; under B2B, contractors pay ~17.3% while employers are not obligated to pay payroll taxes by law, making it more cost-efficient. Labor laws can also be complex, with varying rules on workweeks, overtime rates, holidays, and vacations across countries. Communication may pose issues due to slightly lower English proficiency in some regions, though Argentina and Chile show steady improvement. Ensuring proper technical readiness is also key. Partnering with providers like Alcor helps navigate compliance, legal intricacies, and smooth team operations.

Tax peculiarities

Latin America overall provides a favorable environment for running a tech business – for example, in Colombia, companies investing in R&D receive a 30% tax credit, while in Mexico, high-tech and R&D firms can claim immediate deductions of 56–89% on fixed asset investments. Still, it’s crucial to understand how taxes differ depending on your hiring model. Let’s take a look at Colombia:

• FTE model: Developers pay progressive personal income tax (19–41%) plus mandatory contributions to the pension fund (4%), health insurance (4%), and the solidarity fund (1% if applicable). For example, an IT specialist in Bogotá earning $5,000/month faces an effective tax rate of ~24%, while the employer additionally covers ~24% in payroll and social security taxes.
• B2B model: Contractors pay a lower PIT of 5.9–14.5% plus their own contributions (pension 16%, health insurance 12.5%, etc.), amounting to an effective tax rate of ~17.3% on $5,000/month income. Importantly, employers are not legally obliged to cover payroll taxes or benefits under B2B, which makes this model more flexible and cost-efficient for companies.

Alcor’s advice: Partner with providers that have legal entities across LATAM, giving you the flexibility to hire developers on either FTE or B2B terms. With Alcor, you can onboard full-time engineers in Colombia and Mexico through FTE or tap into the broader region through B2B contracts.

Complex Labor Laws

Each country has local labor laws that can feel like a maze for foreign companies looking to do software development in South America. Here’s a quick glimpse:

• Workweek. Colombia, Mexico, and Argentina follow a 48-hour workweek, while Chile sticks to 45 hours. All these countries generally allow for a six-day work week with the possibility of overtime work.
• Overtime. From double pay in Mexico to triple pay after the 9th hour, overtime rules differ across the region. In Argentina, employees who work overtime are entitled to 150% of their average pay or 200% if working on holidays. In Colombia, on the other hand, employees can work up to two hours of overtime per day and up to 12 hours per week. They’re paid an extra 25% on top of their regular salary.
• Paid public holidays. Colombia offers the most public holidays (18), followed by Argentina (12), while Mexico and Chile have 8 and 9-12, respectively.
• Paid vacations. After a year, Mexican labor law grants workers 12 paid vacation days, while Colombians get 15, and Argentines with less than 5 years of experience get 14.

Alcor’s advice: Consult local experts who understand the legal intricacies, or partner with a professional R&D services provider like Alcor to make your Latin American software development offshoring journey seamless. For instance, our in-house legal team specializes in employment, labor, IP law, tax compliance, and NDAs for tech. Want a dev team with zero legal headaches? You know who to call!

Communication challenges

• Language barrier: LATAM developers may be slightly inferior in English proficiency compared to their Eastern European colleagues. However, the situation is changing in favor of Latin America every year. Argentina stands out as a bright spot in the top 30 countries of the world with the highest English proficiency in the region. At the same time, Chile has a moderate level, which is a drastic improvement from a low English proficiency level just ten years ago. And it’s likely to increase even more.
• Technical readiness: When outsourcing software development in Latin America, ensure your remote team is equipped with all the necessary tools. This includes computers, hardware, a stable internet connection, and other essentials to ensure smooth workflows and uninterrupted productivity.

Alcor’s advice: Partner with providers who can connect you with the best specialists. At Alcor, we have access to the top 10% of the talent market and carefully assess candidates’ English proficiency and soft skills during interviews. In addition, we deliver comprehensive operational support, ensuring your engineers are fully equipped with the right hardware, software, and office infrastructure to perform at their best.

Simpler Than Outsourcing Software Development to Latin America

Expanding your tech team to Latin America can feel overwhelming – but Alcor makes it seamless. We offer a comprehensive package that combines EOR, tech recruitment, and full operational support, enabling you to scale from 10 to 100+ developers in just a year. Our recruitment team taps into a growing verified database of 253,000+ candidates, delivering a 98.6% probation pass rate and 90% retention to save you time and prevent costly mismatches. We also remove legal headaches by handling HR, payroll, accounting, and compliance, so you don’t need your own entity. Beyond hiring, Alcor supports your brand promotion, office lease negotiations, and even stock option plan design – ensuring your expansion is both smooth and scalable.

Alcor is your package deal for tech expansion to Latin America. We’ve merged EOR, LATAM tech recruitment, and operational support into a transformational business model that lets you build a high-performing tech team in Latin America from 10 to 100+ developers within a year.

Struggling with tech expansion to Latin America? Here’s how Alcor removes the roadblocks:

• Can’t find the right developers for 6+ months? Our IT recruitment in Latin America taps into a growing, verified database of 253,000+ candidates, achieving a 98.6% probation pass rate and 90% retention, so you don’t waste time on mismatches.

Want to hear more about LATAM as youк next go-to destination for expanding your operations? See what our experts have to say:

• Worried about legal and compliance risks? Forget about setting up your own entity – we cover HR, payroll, accounting, and all legal matters while you focus on building and managing your team.

• Need more than just recruitment and EOR? From employer brand promotion, as we did for Sift, to office lease negotiations, like in the case of Dotmatics, and stock option plan design, as with ThredUP, we provide 360° operational support to make your expansion smooth and scalable.

References on Software Development in Latin America

1. Bloomberg Linea
2. Statista
3. Mordor Intelligence
4. Dealroom
5. TechCrunch
6. StartupBlink
7. Institute of International Finance
8. Mexico Business News
9. UNESCO
10. IMARC
11. Grandview Research
12. USnews
13. Coursera Global Skills Report 2025
14. ECLAC
15. CESSI
16. The Culture Factor Group
17. Secretaria de Economia
18. Tech Times
19. Argentina.gob.ar
20. English Proficiency Index 2025
21. Global Innovation Index 2025