Software Development in Latin America: Trends and Insights

The allure of software development in Latin America has made over 75% of companies hiring coders in the US also look to hire LATAM developers. No wonder why the LatAm IT market is projected to rise meteorically to nearly $50 million by 2027! One reason for foreign businesses’ piqued interest in Latin America is tech trends that are already shaping the local IT landscape. What are they?  

I’m David Gomez, Lead LATAM IT Recruiter at Alcor, a full-cycle R&D center services provider that builds top-tier software engineering teams from 0 to 100 employees within a year for tech product companies. With 7+ years of experience in IT recruitment, I’ve gained a deep understanding of the software development market in Latin America and its trends.

In this article, I’ll explore the dynamic landscape of the software development industry in Latin America and uncover its latest developments and trends. I‘ll also highlight its flourishing IT hotspots, discuss the advantages of expanding your business to this region, and offer a streamlined solution for doing so effectively and securely. Let’s dive in! 

Latin American IT Industry Overview 

The region’s IT industry is moving up at a CAGR of 6.5%. Currently, South America is leading the charge, with countries like Brazil, Mexico, Colombia, Argentina, and Chile being its tech powerhouses. Just look at Mexico – their $28 billion IT sector makes them the second-largest in the region, while Brazil has the most significant tech market valued at $45 billion. At the same time, Brazil maintains the highest percentage of investment in technology – 36% of the region’s total. 

Also, did you know Latin America is becoming a breeding ground for innovation? Yep, the region now boasts over 60 unicorns, including tech giants like Kavak, Rappi, and NotCo. It is also home to over 9k+ funded startups, which raised $3.4B billion in 2023, with Brazil leading the pack. And guess what? Fintech remains the hottest informational technology sector, attracting 40% of all VC investments in 2023. 

Latest News on Software Development in Latin America 

Speaking of Latin America’s startup investments, they are surging:

• Neowrk, a Brazilian software development company that combines hardware, software, and artificial intelligence to optimize workspace management, secured a $2M seed round led by Indicator Capital in February 2024.

• Cromai, a Brazilian startup specializing in artificial intelligence for agribusiness, closed funding of nearly $3.5 M in an extended Series A round led by Totvs’ iDEXO at the end of February 2024.

• One more software development company in Latin America, an Argentinian payments fintech startup, secured $40 million at the beginning of 2024 in a Series B funding round led by Kaszek Ventures. This brings its total funding to over $103 million since its inception in 2021. 

Moreover, Brazilian fintech players like Cerc, Omie, Stark Bank, and QI Tech are poised to join the coveted “unicorn” club in 2024. Brazil is beating its record by having 12 startup candidates in the “unicorn race”. This impressive showing is part of a larger pool of 100 promising startups identified by Distrito. Of these, 49 are Brazilian, 15 Colombian, 14 Mexican, 11 Argentine, and 11 Chilean. These 100 startups have collectively raised over $8.3 billion across 386 funding rounds.  

Meanwhile, a recent tech ecosystem benchmarking report by Dealroom identified four rising stars from the region among the top 20 global tech ecosystems worldwide. Curitiba, Bogotá, Belo Horizonte, and Mexico City all ranked within the top 10% of global hubs in this ranking. This recognition showcases the immense potential and rapid growth of Latin America’s tech scene. 

Software Developer Salaries in Latin America  

Curious about the financial benefits of leveraging Latam software development? Let’s take a quick dive into average software development market rates of Middle experts across different Latam regions to understand the cost landscape: 

As you see, Colombia boasts the most budget-friendly developer salaries in South America, averaging between $23K and $36K annually. Mexico follows closely, with a range of $28,000 to $38,000. Meanwhile, Chile and Argentina have the highest rates, from $30,000 to $40,000. 

Interested in the Argentinian IT market and wondering about the local wages?
Our article about software engineer salaries in Argentina is for you! 

Now let’s put into perspective and glance at Middle developers’ salaries across the US, Canada, the UK, and Germany: 

Across the entire LATAM region, you can typically find developers with salaries three times lower than those in the USA and Canada (where the standard range is $91K-$128K). Even compared to Western Europe, the savings are significant — coders in the UK and Germany command salaries roughly twice that of their South American counterparts, ranging from $58K to $80K annually.  

Share your software development positions in LATAM and get a free salary & talent availability report! CONTACT US

Software Development Trends in Latin America 

• AI  

Latin America’s tech scene is experiencing a pivotal surge in Artificial Intelligence investments. A recent IDC report highlights this trend, projecting that by 2027, the largest 5,000 companies in the region will dedicate over 25% of their IT budgets to AI initiatives. In 2024 alone, LatAm companies are forecasted to spend almost $460 million on AI.  

Fueling this trend is the projected impact of AI on regional growth. Studies forecast that AI could boost Latin America’s GDP by over 5% by 2030, with the potential for even more significant gains if governments invest in talent development and infrastructure expansion. Mexico and Brazil hold nearly 95% of all AI patents filed in South America, demonstrating their leadership in this critical area. 

• Fintech  

Fintech is arguably LatAm’s most mature startup sector: it took about 40% of all venture capital in the region as of 2023. Giants like Brazil’s Creditas (with a staggering $799 million raised) and Mexico’s Konfio ($706 million) exemplify this growth. Mexico has emerged as a fintech powerhouse, boasting the first dedicated Fintech laws in the region and attracting a hefty 20% of all venture capital investments in 2020. 

This fertile ground has nurtured nearly 1,000 Fintech companies in the region, an impressive 18.4% growth in just five years. In 2023, 62% of these Fintechs generated over $500,000 in revenue, projected to hit 80% in 2024! 

• E-commerce 

Almost one–third of the e-commerce market in Latin America and the Caribbean was concentrated in Brazil in 2023. It was followed by Mexico and Colombia with roughly 30% and 6.3%, respectively. During the second quarter of 2023, Colombia’s sales surged to $3,8 billion, marking an impressive 11.1% increase compared to the same period in 2022 and a remarkable 70.3% surge from 2021. Looking ahead, the future of e-commerce in Colombia appears promising. Forecasts indicate a continuous increase in the penetration rate of the market between 2024 and 2028, with an estimated total increase of 10.4% points. 

• Blockchain 

The software development industry in Latin America is experiencing a surge in blockchain technology and cryptocurrency adoption. The blockchain market size surpassed $800 million in 2023 and is projected to reach a staggering $39.78 billion by 2032, with a growth rate of over 54.3% annually. This enthusiasm spills over into cryptocurrency ownership. In Colombia, over 6% of the population owns crypto, and 80% are open to using it. Argentina is another major player, ranking 15th globally for crypto adoption. Their market is expected to reach $327 million by 2027, fueled by a yearly growth rate exceeding 30%.  

• Cloud Computing and IoT 

Cloud investments are expected to surge by 22.4% annually through 2027, making it one of the region’s fastest-growing tech sectors. Cloud computing reigns supreme for technology investments, with 42% of businesses planning to allocate their resources in this area in the coming year. Meanwhile, according to a report by Business Insider, the IoT market is projected to hit $44 billion by 2024. Consequently, the number of IoT connections in Latin America will nearly double by 2025, reaching 1.3 billion. 

These tech trends are impressive, aren’t they? But if you’re still not convinced that the region’s IT market is worth considering, LATAM has other benefits up its sleeve. 

Reasons to Go For Software Development in Latin America  

Large Pool of Skilled Tech Talents 

Latin America boasts an impressive talent pool of over 1,75 million IT professionals, with a heavy concentration in Brazil (750,000), Mexico (700,000), Colombia (150,000), Argentina (115,000), and Chile (61,000). If you happen to struggle with a talent shortage in your country, LATAM will help you solve this problem. 

These software developers are well-versed in various modern technologies, such as .Net, Java, Ruby, Python, C++, C#, React, and Node.js. But their expertise goes beyond just programming languages. LATAM developers also excel in mobile development, data analytics, cloud computing, database development, and operating systems.  

Get well-versed LATAM devs with Alcor! Clients approve 80% of our candidates. CONTACT US

Prevailing Cost Effectiveness 

If you haven’t missed the salary tables above, you’ve seen that developers in Latin America charge up to 70% less than their US, Canadian, and Western European counterparts while maintaining high-quality standards.

Well-Educated IT Workforce 

Software engineers in LATAM receive high-quality STEM education in local universities, 20 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 talent. No wonder major IT companies like IBM, Google, Microsoft, Amazon, Meta, and Oracle decided to open their offices here. Moreover, major US tech giants like Microsoft and Hewlett-Packard recognize the region’s potential and actively invest in educational programs to support the development of their IT skills.

Geographical Proximity to the US 

For US and Canadian tech companies, geographical proximity is a major advantage when opting for software development in Latin America. Think about this: there‘s just a one-hour time difference between the US West Coast and Mexico and a two–hour difference between the former and Colombia. The time difference between the US West Coast and Chile is three hours and four with 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. Furthermore, the geographical closeness to remote Latin American developers streamlines onboarding procedures and team-building activities.   

Similar Work Culture 

Software developers in Latin America seamlessly integrate into foreign teams due to their shared business ethics, customs, and workflow, which align with those in the USA. LATAM software developers care haracterized by dedication, punctuality, and a willingness to go the extra mile to meet deadlines. They excel in both collaborative and independent work and adapt to different project needs, while their clear and straightforward communication style ensures everyone is on the same page.  

But where’s the trick, you might ask? Well, there are a just few. 

Disadvantages of Outsourcing Software Development to Latin America 

Complex Labor Laws 

Each country has unique 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 work. 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. 

Plus, there are differences in employment and taxation, which might be tricky when choosing Latin American software development. My advice? Partner with a professional IT recruitment services provider. They’ll help you navigate the legal landscape and ensure your expansion journey is smooth sailing.

Alcor’s legal and payroll experts will make you fully compliant with LATAM laws! CONTACT US

Language barrier 

LATAM developers may be slightly inferior in English proficiency 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, according to the EF English Proficiency Index. At the same time, Chile has a moderate level, a drastic improvement from a low English proficiency level from just ten years ago. And it’s likely to increase even more.

Top Outsourcing Destinations in Latin America and Their Hubs 

Latin America is buzzing with highly skilled software developers, making it a prime location for your product. But with so many options, where do you even start? Worry not; we’ll guide you through the top picks in South America for your development needs! 

Mexico 

Mexico is undoubtedly the most frequent choice among North American IT 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.  

Mexico is a hotbed for software developers, having the second-largest IT talent pool in Latin America – over 700,000 tech experts. They are considered the most educated programmers in the region, getting STEM degrees at top universities like Tecnologico de Monterrey, National Autonomous University of Mexico, and Universidad Autonoma de Nuevo León. Mexican developers are experienced with various programming languages, including JavaScript, Python, SQL, C#, React.js, and Angular.  

The ecosystem thrives with 38 IT clusters, 400+ service companies, and 450+ startups. These skilled developers are concentrated in major tech hubs like Mexico City, Guadalajara, and Monterrey. Let’s take a closer look! 

1. Mexico City is the capital and one of Mexico’s most significant IT hubs. It’s renowned for its startup-friendly environment and boasts 230 startup companies. In addition, Mexico City houses branches of leading tech giants, such as Microsoft, Google, Cisco, Amazon, IBM, and Oracle. 
2. Guadalajara is often referred to as the “Mexican Silicon Valley.” It has a thriving tech ecosystem and a strong culture of innovation. Guadalajara boasts the highest concentration of educated IT professionals in the country who get their majors in 28 higher institutions.  
3. Monterrey is a prominent center of technology in Mexico, known for its modern infrastructure and favorable business climate. Its proximity to the USA makes it a popular choice for nearshoring among American IT companies. Monterrey is also home to over 60 startups, including the well-known unicorn Nowports. 

Curious about Mexico’s Taxes & Regulations for IT companies?
Check out our article for a detailed breakdown! 

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 tech market currently valued at $8.2 billion and projected to reach an impressive $12.98 billion by 2026. 

Colombia is abundant in highly skilled IT professionals who acquire STEM degrees from prestigious universities, with nine featured in the Best Global Universities in Latin America. Colombian programmers possess profound expertise and are proficient in various coding languages and technologies, including Java, Python, C#, SQL, and Ruby. The majority of these professionals are concentrated in the following cities: 

1. Bogotá is the capital of Colombia and the most prominent IT powerhouse. It distinguishes itself with a well-developed startup ecosystem, ranking second in South America. Unsurprisingly, Bogotá hosts over 190 startup companies, including notable names like Habi, LifeMiles, Rappi, UBITS, Addi, and Bold. 
2. Medellín is Colombia’s second-largest city and tech hub. It’s also considered the country’s education center, boasting a high concentration of skilled talents. This is a primary reason why foreign IT businesses opt for working with local developers. Microsoft, Google, Meta, Amazon, IBM, and HP are big-name IT companies that reap the benefits of Medellín’s vibrant IT market. 
3. Cali is an emerging IT center in Colombia that has been steadily gaining recognition on the global IT stage. The city has invested substantially in innovation centers and research parks, bolstering the local startup ecosystem. Recently, Cali has witnessed a remarkable surge in tech startups, with a notable focus on mobile app development and e-commerce. 

Our 40 IT recruiters will build a dream team of top-tier devs for you in Latin America! CONTACT US

Argentina

For IT companies seeking cost-effective software engineering in South America, nearshoring to Argentina often emerges as a top choice. This tech gem is home to over 115,000 IT professionals with the region’s most robust English command. Argentinian programmers are masters in Python, Cloud APIs, TensorFlow, and SQL. Whether you need to develop a mobile app or harness data, Argentinian developers are your go-to crew. According to the Coursera Skills Report, they rank among South America’s best mobile developers and data analysts.  

The availability of skilled talent contributes significantly to the growth of Argentina’s tech industry, with the IT market projected to reach $2.5 billion by 2026, growing at a CAGR of 8.3%. Here are the leading IT hubs that drive the rapid development of IT in Argentina: 

1. Buenos Aires is a bustling capital city and Argentina’s most prominent IT powerhouse. Home to about 85% of the Argentinian tech community, Buenos Aires develops by leaps and bounds. It’s known as an innovative city with the most significant number of Bitcoin entrepreneurs in the country and the LATAM region.  Buenos Aires also has a vibrant startup ecosystem of over 290 companies, mainly focusing on fintech, e-commerce, and software development. 
2. Córdoba is Argentina’s second-largest IT center known for its exceptional educational system. The city’s high concentration of young, bright minds and supportive public sector incentives boost the development of its startup and entrepreneurial scenes. Córdoba is home to 126 startups with stars like Xcapit, Wibond, and Mobbex. 
3. Mendoza is an emerging tech hub in Argentina, primarily focusing on cultivating the entrepreneurial spirit. To make it a reality, the government launched the “Consejo Consultivo Emprendedor” (CCE) initiative that resulted in an impressive 20,000 employments, over 4,000 new establishments, and 200 investments. Mendoza is also known for its two successful startups: Energe and Eventioz. 

And last but not least: 

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 IT market has been experiencing remarkable growth, projected to reach $2.5 billion by 2028, with an annual growth rate of 8.2%. The Chilean government has proactively implemented critical initiatives and programs to foster innovation and cultivate an attractive business climate. Consequently, Chile stands as the second most attractive South American country for startups and holds a top spot in LATAM for innovation. Impressive as it is, the country is home to over 122 startup companies, including three notable unicorns: Betterfly, Cornershop, and NotCo. 

The driving force behind such a rapid development of the IT market is its software developers. These skilled professionals possess a diverse arsenal of languages, including Java, Python, and PHP, and excel in data analytics, mobile development, and statistical programming. 

And once again, let’s look at the main tech hubs there: 

1. Santiago is the epicenter of IT in Chile, boasting the third-largest pool of available IT workers in Latin America. This Chilen offshoring location is a real magnet for foreign IT companies, as it has good infrastructure, pleasant business conditions, and high talent availability. Google, Starlink, Amazon, and Microsoft are just a few of the foreign tech giants present in Santiago. 
2. Valparaíso is an emerging IT hub in Chile, steadily developing its infrastructure and startup scene. Such renowned IT enterprises as Google, IBM, and Uber invest in their potential. 
3. Concepción is another impressively growing IT center in Chile. Its IT companies predominantly focus on sectors like e-commerce, cybersecurity, and digital marketing, contributing to a diverse and thriving tech landscape. 

Simpler Than Outsourcing Software Development to Latin America  

Expanding your tech business to Latin America is easy with the right partner. And Alcor’s got your back! We are a full-cycle provider that builds software R&D offices for Western tech companies in Latin America and Eastern Europe from 0 to 100 developers within a year. We are different from typical IT recruitment and Employer of Record providers since our software R&D center solution is more comprehensive:
 

• Alcor takes care of IT recruitment in Latin America to assemble your own team of 20 software developers in 3 months. Our 40 experienced headhunters need 8 CVs and 2-6 weeks to close one position. How well are our candidates doing after getting hired? 98,6% of them successfully pass probation.
   
• After we’ve found, interviewed, and hired developers for you, we offer an EoR service to employ them, handle their onboarding/offboarding, manage payroll, pay local taxes (if needed), administer employee benefits, and ensure compliance with all local laws.
   
• If you need extra back-office assistance, we provide 360° operational support. It includes your employer’s brand promotion, hardware procurement, office lease, stock options plans (SOPs), migration services, and so much more. Just tell us what you need, and we’ll make sure to make it a reality. 

Our R&D solution has proven reliable and effective for many well-known tech companies like BigCommerce, ThredUP, People.ai, and others.  

Just look at the results of our partnership with the US-based IT company Gotransverse, which develops cloud-based software to automate billing, invoicing, revenue management, and analytics! They needed to set up a remote full-stack development team but struggled to find a provider offering both qualified Employer-of-Record services and professional IT recruitment assistance. Until they found out about Alcor. With a 95% CV pass rate, it took Alcor just 6 weeks to handpick and place 6 top-tier developers for our client.  Our comprehensive employer of record, along with finance, procurement, and IT infrastructure setup services, allowed Gotransverse to bypass legal complexities and paperwork mountains, ensuring smooth and compliant hiring.  

Want similar or better results in LATAM? Let’s see what we can do for you. CONTACT US

References on Software Development in Latin America  

1. Business Insider 
2. Technavio 
3. MordorIntelligence 
4. Statista 
5. ABES 
6. IDC 
7. Dealroom 
8. Nasdaq 
9. ValorInternational 
10. Datacenterdynamics 
11. Expert market research 
12. EF.EPI 
13. Bnamericas 
14. Economist Impact 
15. USnews 
16. International Trade Administration 
17. Globaldata 
18. Nearshore Americas 
19. Startupblink 
20. Coursera 
21. Reportlinker 
22. StartupUniversal 
23. WIPO 
24. InvestChile