Latin America: the New Growing IT Outsourcing Market
The urge for digitalization in every industry forces businesses to look for innovative IT solutions that can keep them ahead of the competition. LATAM's growing IT sector is now rising to the challenge and meeting the demand with a variety of services, from software development to cloud computing and cybersecurity. The region's proximity to North America, combined with its cultural and time zone compatibility, makes it an attractive nearshoring destination for U.S. and Canadian companies.
Besides LATAM's IT outsourcing market as a whole, the software development sector is growing at an impressive pace. Statista research reveals a compound annual growth rate (CAGR) to be 9.03% from 2024 to 2029. As Latin America continues to strengthen its IT infrastructure and develop its talent pool, it’s becoming a go-to outsourcing hub for companies looking for quality IT services at cost-effective solutions.
Why Tech Companies Choose LATAM for IT Outsourcing
There are many reasons why businesses choose LATAM as a software development outsourcing destination, including digital capabilities expansion while keeping costs low. To be more particular, I would point out five main causes.
Competitive cost structures
LATAM provides a cost-competitive alternative to traditional offshore outsourcing hubs such as Eastern Europe, for instance. While the region boasts a highly skilled technical workforce, generally, labor costs in LATAM are far lower when compared to North America and Europe. This competitive price factor allows companies to access top-tier talent without the hefty price tag, making it an attractive option for startups and large enterprises alike.
High-quality talent pool
Brazil, Mexico, Argentina, and Colombia are investing massively in the education and training of new IT workforce, especially in the STEM fields. This makes tech professionals in LATAM not only technologically savvy but also innovative and adaptive. If you’re considering software development in Colombia, Brazil, Mexico, or Argentina, Huntly can assist you with generating a quality candidate pipeline within 72 hours after posting your job on our platform.
And these aren’t abstract words. Thanks to Huntly’s global community of tech recruiters, our clients often get quality candidates even faster. One of the examples is the case when we managed to forward 26 relevant CVs to our client in just 48 hours!
Strong cultural compatibility
Cultural compatibility plays a significant role in outsourcing software development. Some of the cultural similarities include work ethic, communication styles, and business practices between LATAM and North America. Accordingly, less friction is expected in cross-border collaborations, which would produce more efficient and smooth work relations.
Government support and favorable policies
Many LATAM governments see the potential of the IT sector to drive economic growth, thus, ensuring its development through extensive support and policies. Tax incentives, investment in tech education, and the creation of tech-friendly regulations are just a few examples of how governments are fostering an environment conducive to IT outsourcing. These initiatives not only attract foreign investment but also encourage the growth of the community of software developers in Latin America.
Strategic proximity and time zone alignment
Another leading reason US tech companies nearshore software development to LATAM is its proximity to North America. This way, there are no big differences in time zones, which makes it possible for teams to communicate and cooperate in real time. This also allows for much better project management, which is extremely important to companies in the fast-paced tech space.
Top IT Outsourcing LATAM Hubs Comparison
Latin America is home to several thriving tech hubs that have become key players in the global IT outsourcing market. Each of these hubs offers unique advantages, making them attractive options for companies looking to outsource IT services. Below is a comparison of the top IT outsourcing hubs in LATAM, with their strengths and distinguishing features.
Brazil
Overview: Brazil is one of the major and most developed tech hubs in Latin America. A mature IT ecosystem within the country hosts numerous tech giants, startups, and innovation centers with over 500,000 software developers. Pay specific attention to the São Paulo city which has developed rapidly over the years.
Cost: Being one of the most expensive hubs in LATAM, costs in Brazil are high, but on the other hand, it provides access to some of the best talent and resources in the region. If you decide to outsource software development to Brazil, be ready to pay around $51K a year to a single tech specialist.
Strengths: Strong tech community, developed infrastructure, and solid governmental support power the bloom of software engineering, fintech, and AI fields.
Mexico
Overview: Mexico and its capital is a major IT outsourcing hub with a rapidly growing tech sector counting 220,000+ software developers. The country is a popular destination for nearshoring due to its close proximity to the United States.
Cost: Mexico combines good cost and quality, resulting in an average annual salary of $44K for software engineer services.
Strengths: The country's closeness to the United States coupled with deep expertise in cybersecurity and data analytics make it the first choice for North American companies looking to hire software engineers in Mexico.
Argentina
Overview: Argentina and Buenos Aires, in particular, has a reputation for its vibrant technology scene and emerging startups. The place has been a great contributor in terms of creativity and innovation for the region's IT outsourcing market.
Cost: Software development in Argentina is reasonably priced, offering high-quality services that on average cost $38K a year.
Strengths: The country is home to 115,000+ software developers from Latin America seasoned in mobile app development and IT consulting.
Colombia
Overview: Colombia has one of the fastest-growing tech sectors with over 62,000 software developers. Over the years, Colombia and its capital Bogota have become important destinations for IT outsourcing in Latin America.
Cost: Colombia offers one of the most cost-effective IT services among LATAM hubs, at the average rate of $43K a year for a single software engineer’s services.
Strengths: Hiring developers in Colombia gains popularity thanks to the region’s rising tech community and government initiatives as well as local specialists’ expertise in cloud computing and BPO (Business Process Outsourcing).
Chile
Overview: Chile is considered one of the most stable and developed tech hubs in Latin America. The strength of the economy and its political stability, as well as its developed infrastructure, have popularized it as a destination for IT outsourcing.
Cost: Chile offers high-quality tech talent at a competitive rate, with the average annual salary for a software developer around $43K — still providing cost savings for businesses compared to the North American market while ensuring access to skilled professionals. Although its capital Santiago is considered one of the most expensive cities in LATAM tech hubs, it is highly rated for the business environment it provides, making it attractive for companies looking for reliable and sustainable outsourcing.
Strengths: Chile excels in fintech and IT consulting among other services. The country's stability and the government's commitment to innovation make it a secure location for companies looking to hire developers in Chile.
Uruguay
Overview: Situated at the southern edge of the Latin American IT outsourcing market, Uruguay features political stability, high living standards, and progressive digital policies.
Cost: The government's provision of tax incentives to foreign companies often becomes a decisive factor for businesses to hire developers in Uruguay. The average annual price for softdev services is competitive, too, and makes an average of $47K per year.
Strengths: Uruguay's political and economic stability attract companies looking for long-term, secure investments. Being the heart of Uruguay's tech scene, Montevideo leads in technology adoption and digital transformation, with strong government support for the IT sector.
Costa Rica
Overview: With around 40,000 software developers, Costa Rica has gained a reputation as a rising star in the Latin American IT outsourcing landscape, thanks to its focus on education, sustainable development, and political stability. Companies like Intel and Amazon have contributed to the growth of its dynamic IT ecosystem.
Cost: Although it’s one of the most expensive countries in Central America, Costa Rica remains a cost-effective IT outsourcing destination compared to North America and Europe, with an average annual price of $45K per software talent.
Strengths: The country with a capital in San Jose is a leader in IT services, customer support, and digital transformation. Its proximity to the U.S. and its bilingual workforce make it a favored nearshore outsourcing destination for software development, BPO, and fintech businesses.
*Resources:
- https://www.statista.com
- https://www.glassdoor.com/Salaries/index.htm
- Huntly’s inner analytics
How to Choose Your Perfect IT Outsourcing Destination
Selecting the ideal IT outsourcing destination in Latin America can be a game-changer for your business, providing access to skilled talent, cost-effective services, and strategic advantages. However, with several promising hubs across the region, the decision might not be simple. Below are key factors to consider when choosing the perfect destination for IT outsourcing to LATAM.
- Define your project requirements
Before the selection process, it is important to clearly outline the specific needs of your project. Are you in need of software development, IT support, data analytics services, or a combination? Different LATAM destinations have different specialties, so understanding your needs can help you narrow down your choices. For instance, if you are going to work with fintech solutions, pay attention to Brazil or Chile. If cost is an issue, explore options such as Colombia or Argentina.
- Assess the talent pool
The availability and quality of software engineers in Latin America are other crucial factors you should consider. Check out the professional skills and educational background along with technical skills for each of the hotspots. Brazil and Mexico are two locations with large, diverse talent pools adept at the latest technologies, and Argentina showcases an ecosystem of creative and innovative software developers.
- Consider time zone and cultural compatibility
Time zone compatibility plays one of the most important roles in successful outsourcing, especially when real-time collaboration is necessary. Besides, cultural similarities are another key to good collaboration. Countries like Mexico and Colombia have a cultural overlap with most businesses across North America and can therefore be good choices when considering nearshoring.
- Check costs and define your budget
While the LATAM region is, in general, cheaper than most Western outsourcing destinations, prices vary between the hubs. In more developed hubs such as Brazil, it might be pricier, but the infrastructure is more advanced and talent pools are bigger. To compare, Uruguay or Costa Rica offer more competitive rates.
Pitfalls of IT Outsourcing to Latin America
While IT outsourcing to Latin America offers numerous advantages, there are also potential pitfalls that businesses should consider before embarking on this path.
Language barriers and communication issues
Although most software developers in Latin America are proficient in English, proficiency levels vary widely across the region. Differences in language nuances, accents, and technical terminology create areas for miscommunication. It may lead to misunderstandings, project delays, or errors in the final product. All teams need to have a good command of languages and communication that is clear and consistent throughout.
With Huntly, you avoid this pitfall, thanks to our deep understanding of the needs American businesses have, including candidates’ proficiency in English.
Legal and regulatory compliance
The legal and regulatory landscape in Latin America can be quite a maze. Each country has its labor laws, data protection regulations, and tax requirements. This might result in legal disputes, financial penalties, or brand damage through non-compliance.
When hiring with Huntly though, you hire in-house specialists who sign contracts with your legal entity, thus, playing by your rules.
Different billing system
Dealing with the complicated payment systems of foreign countries or unclear billing terms can be frustrating, making companies feel like they have less control when hiring abroad.
Huntly saves you the trouble of handling complicated payments. By choosing Huntly as your tech recruitment partner, you can count on payment flexibility and risk-free service as you pay only after a successful hire. Upon request, we can also connect you with our global EOR partners which will ensure smooth payroll and accounting for your business.
Huntly Can Help You in Hiring in LATAM
Whether you need to outsource your IT projects to the top LATAM hubs discussed above or hire software developers in Peru, among others, Huntly is here to help you meet your tech recruitment needs! Designed to simplify the process of hiring, our platform connects you with a curated pool of software developers and IT professionals across the region, allowing you to find the right talent fast and effectively.
Thanks to Huntly’s vast community of professional recruiters in the region, there are more than one million tech professionals in LATAM at our disposal. In addition to quantity, Huntly ensures a high-quality pipeline thanks to the two-step verification of every candidate by external recruiters and then by the Huntly internal team. As a result, 4 out of 5 candidates forwarded to our clients get an interview invitation.
If you want to learn more about hiring IT specialists in LATAM with Huntly, fill in the form below and we’ll contact you as soon as possible!
