According to most research, the global shortage of software developers will reach a mark of 4.0 million specialists by 2025. That compels tech companies to explore international expansion as a strategy to access a broader pool of skilled talents. Argentina has emerged as a prominent destination for outsourcing tech operations.
I’m Sergiy Ovcharenko, CBDO at Alcor, a leading R&D center provider and IT recruitment agency in Latin America and Eastern Europe. In this article, I’ll provide a comprehensive overview of the software development industry in Argentina, delving into its benefits, challenges, and median rates for developers. Additionally, I’ll introduce several alternatives to software outsourcing to Argentina, empowering you to choose the optimal solution for your IT business. Let’s dive in!
Software Development Industry in Argentina
Argentina has a rapidly growing software development industry and can be proclaimed a Latin American miracle without exaggeration. Argentinian developers have achieved a real boom in the IT and software sector since the early 2000s with an ongoing growth tendency. With a current market value of $11 billion, Argentina boasts the third-largest IT market in Latin America. Forecasts by Technavio suggest an 8.3% CAGR between 2022 and 2027.
The country is a flourishing hub for IT companies and hosts 19 commercial structures, 3,800 tech businesses, 1,107 startups, and 11 unicorns. Among the notable successes are companies like Mercado Libre, OLX, Globant, Prominente, Calipso, Baufest, and Neuralsoft. According to OPSSI, software development is the primary source of foreign investment, accounting for 58%. In 2022, Argentina’s software exports reached a record $2.61 billion.
As of November 2023, there are approximately 300 software development businesses in Argentina that specialize in custom software development, IT strategy consulting, mobile app development, and Big Data consulting. This robust IT ecosystem significantly facilitates hiring software developers in Argentina.
Software Development Outsourcing Trends in Argentina
Argentina is actively adopting artificial intelligence (AI) to spur economic growth. Ranking third in Latin America for AI policy implementation, the country applies AI across various sectors, including finance, healthcare, agriculture, transportation, and logistics. Currently, 19% of Argentine companies utilize AI, with 60% exploring its potential, as IBM study indicates. The nation is making significant strides in AI technology, positioning itself for continued advancement.
Cloud computing services
Argentina is a pivotal market in South America for cloud computing technologies. The growing digitization in end-user segments prompts software vendors and service providers to integrate cloud-based solutions. This eliminates the need for enterprises to procure and install IT infrastructure, thereby fostering the software development outsourcing sector in Argentina. This shift offers numerous benefits: process alignment, scalability, cost savings, and business consistency for foreign and local companies.
Don’t hesitate to check the specifics of the software development in Mexico!
Argentina ranks as the fourth-largest e-commerce market in Latin America and the 20th globally, with a projected CAGR of 20.69% from 2022 to 2027. The surge is attributed to a growing user base in internet, mobile, cardholders, and digital wallets. Buenos Aires-based online marketplace MercadoLibre is pivotal in propelling e-commerce development in Argentina. Another source of continued development of this tech sector is the country’s rising popularity of software development services.
Why Companies Choose to Outsource to Argentina
Outsourcing software development to South America, particularly Argentina, has become a workable solution for many US and Western European IT businesses. Here are some reasons why outsourcing software development to Argentina can beef up things in your IT company.
1. Growing Talent Pool
Argentina has a remarkable IT talent pool, boasting over 115,000 software developers in 2022. This number has reached 130,000+, given that local universities produce around 20,000 STEM graduates yearly. The Argentinian government is also actively enacting initiatives, such as Argentina Innovadora 2020 and Argentina Conectada, to foster a programming vocation among the younger generation. A recent tech education initiative, Argentina Programa 4.0, offers free training in coding languages, testing, and digital skills to produce about 70,000 new programmers by the end of the year.
2. Strong Tech Skills
Software engineers in Argentina are globally recognized since the country ranks 30th worldwide and holds the #3 position for technology skills in LATAM. These developers excel in mobile development, computer programming, and databases, with a particular strength in data analytics. You’ll consistently find Python, TensorFlow, Cloud APIs, SQL, R, and NLP in their toolkit of coding languages and technologies.
3. Top STEM Education
The exceptional expertise of developers in Argentina is nurtured by national universities known for their excellent computer science programs. Argentina’s commitment to developing the education system is evident in the World Population Review, where it ranks 34th. Seven Argentinian universities, including the University of Buenos Aires, the National University of La Plata, and the National University of Cordoba, are among the Best Global Universities, based on their research performance and ratings by academic community members worldwide and within Latin America.
4. Cultural & Language Compatibility
Software developers in Argentina are distinguished by their high proficiency in English, ranking #1 in the region and 28th globally. Beyond language skills, Argentina’s business culture resembles the Western one, making onboarding and collaboration with such developers a breeze. Their exceptional qualities are diligence, punctuality, attention to detail, and a notable passion for their craft. When you work with a development team in Argentina, you can be confident that they will consistently go the extra mile in developing your product.
5. Time Zone & Geographical Proximity
Other generous bonuses for choosing Argentina as the nearshoring location for a US company are geographical proximity and convenient time zones. Being only one hour ahead of most American cities allows you to schedule suitable meetups for both sides and establish common deadlines.
Check out our article on nearshore software development to Colombia as an alternative for your business expansion.
6. Government Support
Beyond the influential local tech community, the Argentinian government actively fosters favorable conditions in the local market for foreign companies seeking to outsource developers in Argentina. Several pertinent programs like Startup Buenos Aires and IncuBAte were designed to bolster IT entrepreneurship in the country.
In response to the challenges posed by the pandemic, Argentinian authorities enacted the Legal Regime of the Teleworking Law. This legislation safeguards the rights of remote workers, specifying regulations for remote work relationships.
Additionally, Argentina has taken steps to digitize its bureaucratic system, enabling businesses to be fully established online within just 24 hours. This commitment to streamlining processes demonstrates the government’s dedication to creating an attractive environment for foreign companies.
7. Flexible Taxes
A remote team in Argentina offers a great taxation solution for foreign IT companies. Like many other countries, an employer must handle the employees’ income taxes. If an employee’s gross monthly salary exceeds ARD150,000 ($750), then income tax is imposed from 5% to 35% at progressive rates. For the independent contractor, this form should be registered for Documento Nacional de Identidad with the Registro Nacional de las Personas, which has jurisdiction over your area. The income surplus will be deducted from the overall tax amount in the first five years after establishing a new IT company.
Software Development Outsourcing Hubs in Argentina
Stands as the most prominent IT powerhouse and the most prolific tech incubator in Argentina, Buenos Aires experiences remarkable growth. This vibrant city is home to approximately 85% of the Argentinian developers, recognized as the most well-educated in the country.
Known for its innovation, Buenos Aires hosts 90% of all startup activity in Argentina. The city’s dynamic startup ecosystem comprises a notable concentration of Bitcoin and cryptocurrency startups. Other rapidly developing sectors are e-commerce, the Internet of Things (IoT) and FinTech. This thriving IT ecosystem finds its home in various parks and centers such as AreaTres, Startup Buenos Aires, Palermo Valley, and Catalinas Norte Technology Park.
Argentina’s second-largest IT center is often called La Docta due to its high concentration of bright minds. The city attracts and nurtures thousands of new experts, including software developers. A key player in the IT sector is the Córdoba National University (UNS), which has national student population of around 132,000.
Córdoba is gaining recognition for its growing number of startups and accelerators. One of the most active accelerators is Incutex, the first-ever in Córdoba and ranked as the 5th best accelerator in Latin America. The city is home to approximately 400 tech companies and 126 startups, featuring stars like Xcapit, Wibond, and Mobbex. Notably, between 30% and 40% of all software development exports from Argentina originate from Córdoba.
An emerging tech hub in Argentina, Mendoza, is actively 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 employment, over 4,000 new establishments, and 200 investments. Mendoza also boasts a growing startup ecosystem known for its two successful startups: Energe and Eventioz.
Despite facing challenges such as limited access to venture capital and overall investment, Mendoza is steadily establishing itself as a player in the IT sector. With a large population of university graduates and access to great talent, this hub attracts an increasing number of foreign tech companies looking to build development teams in Argentina.
Outsourced Software Developer Salaries in Argentina
Price is often a critical factor in the decision-making process for IT businesses considering hiring programmers in a foreign location and outsourcing to Latin America. Argentina’s software outsourcing comes at the lowest price in Latin America. Take a look at the comparison of the current salary ranges of a middle specialist in software development in Argentina:
Annual Salary Ranges for Middle Software Developers
|Argentinian salaries were converted to US dollars at a relevant exchange rate for November 2023.|
Employee outsourcing to Argentina is budget-friendly for IT companies since it requires lower expenses than in North American, Western European, and other LATAM countries. If you would like to compare Argentinian developer salaries with Colombian ones, have a look at our article on outsourcing to Colombia.
Still, when choosing an offshore destination for hiring developers, you should also pay attention to these significant salary-formation factors:
- Experience. If you think about hiring a software developer in Argentina, outsourcing costs will be greatly impacted by the amount of experience the specialist has. For instance, the Junior React Native Developer will earn 16% less on average than their Middle counterpart. Meanwhile, the Senior React Native Developer’s salary increases by 44% compared to the compensation of their Middle colleagues.
- Level of Education. The level of education has a significant impact on a software engineer’s salary in Argentina. Individuals with a Certificate or Diploma earn 58% less than those with a Bachelor’s Degree, while Master’s Degree holders earn 39% more than individuals with a Bachelor’s Degree.
- Type of company. Company type also plays a huge role in the cost of software hiring & application outsourcing to Argentina. For example, product tech companies usually pay more to Argentinian software engineers than outsourcing and outstaffing tech companies. Why? Because the former develop their own products which requires more advanced hard & soft skills and experience from programmers, resulting in higher compensation. At the same time, the latter provide software development services to other businesses, and in order to receive more profit, they tend to cut the pay for their coders.
Challenges of Outsourcing to Argentina
One significant challenge IT companies encounter when opting for software outsourcing in Argentina is team loyalty. When hiring your own programmers, you can rely on their commitment to your product as they become official employees invested in your company’s growth and success. In contrast, outsourced developers are a temporarily leased workforce that tends to treat each project as one of the many, nothing special. Going the extra mile and putting in effort may not be anticipated by such experts, which can further lead to possible development complications and even low-quality products.
Did you know that data storage leaks are increasing year-over-year, while over 82% of breaches involve data stored in the cloud? Offshoring software development to Argentina significantly increases the risk of exposing your sensitive data. When entrusting a third party with your information, you rely on their safety standards. If your IT outsourcing provider lacks robust security measures or experiences a compromise, your data may be at risk. Another concern is the reliability of outsourced developers, as they might use your confidential information or developments for personal gain.
There is a common belief that IT outsourcing is a cost-effective solution. There is truth, as getting services in lower-cost countries like Argentina can potentially save you a decent sum. The pitfalls arise because most outsourcing providers tend to add some extra charges on top of their monthly fee. These additional costs may involve procuring extra equipment, delivering unnecessary IT services, or requiring developer training. Moreover, potential product adjustments could impose a financial burden over time and transform software development outsourcing into a potentially costly venture.
Lack of control
Software outsourcing to Argentina presents a challenge for IT product companies due to limited supervision of the development process. When outsourcing, most management functions are delegated to the service provider, who handles the project from beginning till end. Consequently, the client has minimal involvement in the software development and largely awaits the result.
Moreover, a project manager typically conducts all communication with the developers. This setup may significantly extend task completion time and potentially result in misunderstandings and errors that impact the quality of the end product.
Tips to Successfully Outsource Software Development to Argentina
As you can see, Argentinian IT outsourcing has quite a few drawbacks and pitfalls. So, if you own a tech product company, it’s better to refrain from this cooperation model, keep all software development in-house or in your R&D center in Argentina, and outsource only operational functions to a reliable provider.
Here are some tips on how to perform this kind of strategic IT outsourcing in Argentina:
- Define the scope of the work. First of all, you should identify the specifics of your project. Suppose it involves the development of a software product in the long term. In that case, consider getting your own team of developers instead of sharing your ideas and sensitive data with third parties. If you’re a non-tech business that needs to complete a task or project for which you lack expertise, you may find outsourcing a good way to go.
- Pick a cooperation model. The next step is to select the best option for cooperation with your future vendor. There are 4 engagement models: IT outstaffing, IT recruitment, employer of record, and R&D center, which I will describe in more detail in the next section.
- Choose a service provider. When scrolling the websites of potential vendors, pay attention to their expertise, guarantees, case studies, and client reviews on independent platforms.
4 Alternatives to IT Outsourcing in Argentina
A similar option to software development outsourcing is IT outstaffing in Argentina. External developers are temporarily leased to fulfill a specific project in this cooperation model. This approach offers flexibility, allowing for swift team scaling up or down as needed.
The critical advantage of outstaffing over outsourcing is the ability to maintain control over the development process and direct communication with the development team. However, this model doesn’t fully protect against potential intellectual property breaches, hidden costs, or team indifference. Another consideration is the presence of buy-out fees; if you wish to retain the services of the developers, you’ll need to pay for each separately, potentially making outstaffing cost you an arm and a leg.
Explore the staff augmentation model in Latin America!
An effective strategy for outsourcing to Argentina involves leveraging the talent acquisition services of an IT recruitment agency. This trusted partner handles the entire hiring process, from creating an ideal candidate profile and sourcing to interviewing and onboarding. The outcome is a top-notch team that comprises perfect fits. Collaborating with a tech recruitment agency implies a long-term partnership and allows you to participate actively in the hiring decision-making. However, not all IT recruitment providers in Argentina offer operational functions as Alcor does.
A noteworthy example of successful IT recruitment is demonstrated by the French cryptocurrency company Ledger. The fruitful cooperation with Alcor resulted in over 10 hires, including closing a QA Lead and 3 QA Manual specialists within just 2 weeks. Moreover, Alcor’s legal team provided comprehensive legal and compliance support, ensuring a smooth working relationship between Ledger and their newly assembled engineering team.
Another alternative strategy to outsourcing to Argentina is cooperation with an Employer of Record (EOR) company. Instead of establishing a legal entity in the offshore location for hiring, you hire an EOR company that hires your software developers in Argentina and covers HR payroll, tax management, accounting, and employee benefits. However, this model typically doesn’t cover recruitment services, so you must attract, interview, assess, and make offers to local software developers yourself.
An extended and comprehensive approach to IT recruitment and EOR services is building your own R&D center in Argentina. This solution is a one-stop shop for foreign tech companies looking to expand abroad. It encompasses full-cycle IT recruitment, payroll & accounting, legal & compliance, office leasing services, as well as employer branding and IT infrastructure setup.
The outcome is a fully supported team of loyal developers, plus an opportunity to reduce expenses and maintain complete control over the development process. Have a look at how it worked out for US-based IT company People.ai:
Hire Software Developers in Argentina as Simple as Is
In times of accelerating change in the tech world, hiring a team of qualified software engineers is not a walk in the park. Yet, this process can be facilitated with a reliable partner.
Alcor is an experienced R&D service provider who specializes in IT staffing in Colombia, Argentina, Mexico, and Chile, as well as in Eastern Europe. With a team of 40 IT recruiters and deep expertise in local markets, we guarantee to build you an R&D office in 2 months and hire 20 developers with diverse tech stacks within 3 months.
You can be sure of the quality of our services, as 98.6% of their candidates successfully pass the probation period and stay with the clients for 2.5 years on average. In addition, we provide open detailed pricing for our services, and clients can calculate how much they save on hiring software developers in the region by using our free software cost calculator.