Guide to Offshore Software Development in Latin America in 2022/

Overview

• Summary
• Risks When Outsourcing to Latin American Countries
• Businesses Choose to Outsource Software Development to Latin America: Learn Why
• Why is Outsourcing to Latin America, Not the Best Option?
• Is there another option?
• 2022 Data and Statistics on Outsourcing in Latin America

Most tech companies, from startups to multinationals, want to hire the best developers at reasonable rates. However, due to a talent shortage, hiring top talent on the home ground has become nearly impossible. As a result, American corporations have relocated to a better alternative – Latin America. Latin American countries have a shorter time difference, more flexible labor laws, are close to US states and have few to no communication barriers. Furthermore, the majority of LATAM countries have fostered an impressive IT environment, making them the most sought-after destination for software outsourcing.

Risks When Outsourcing to Latin American Countries

Outsourcing software development has remained a significant trend in the IT market in recent years. There are numerous reasons why companies, organizations, and businesses choose to maintain software development teams in other countries. Still, one of the most important is to reduce development costs.

On the other hand, Latin America has grown its reputation in the IT industry to become the preferred outsourcing destination for software development. Companies consider offshore software development in Mexico, Chile, Argentina, Colombia, Brazil, Uruguay, Costa Rica, and other Latin American countries for various reasons that have helped Latin America become a leader in software development outsourcing.

However, when it comes to outsourcing processes and operations overseas, there are always some risks to keep in mind. Business analysts and outsourcing consultants often consider these risks when delegating jobs to third parties.

This article will discuss the advantages and disadvantages of outsourcing to Latin America and an alternative.

Businesses Choose to Outsource Software Development to Latin America: Learn Why

Latin America comprises about half of the Americas, and its culture, language, and heritage are predominantly of Hispanic origin with Western influences. With Latin America’s vast and diverse countries, it’s no surprise that businesses are vying to expand into the region.

Outsourcing to Latin America is a popular concept that companies worldwide, particularly in the West, consider because of its benefits.

1. Language and Cultural Alignment

Working professionals in the region are often fluent in English, whether verbal, written, or conversational. This makes them viable candidates for multinational corporations looking to connect with locals in the job market.

Moreover, developers in Latin America who are well-educated and skilled speak English fluently. Their thorough understanding of Western business practices and culture facilitates a good fit.

2. Close Proximity for Ease of Coordination and Time zone Alignment

In terms of time zone alignment, Latin America is far more convenient for outsourcing. Latin American time zones enable you to have a team nearby, communicate effectively with them, and receive a faster response from your software developers during regular business hours. It will be much easier and quicker to resolve any issues that arise without delay. Furthermore, the short travel time and limited jet lag make face-to-face meetings a simple reality when outsourcing software development to Latin America.

3. Network Infrastructure

Latin America’s network infrastructure is improving, particularly in major cities, thanks to next-generation technology that enables businesses to provide better services.

With the advancement of technology, an increasing number of companies are investing in various sectors of the region. As a result, more opportunities for significant and large-scale upgrades become available.

4. Education

Latin America is brimming with IT programmers with substantial educational backgrounds. As a result, industry professionals can easily keep their outsourcing commitments. The workforce is highly experienced and offers clients a broad range of services. Major technology companies such as Microsoft and Hewlett-Packard have initiated educational programs to help Latin Americans enhance their IT skills and start a career.

Why is Outsourcing to Latin America, Not the Best Option?

Despite all the benefits mentioned above, outsourcing software development to Latin America may be risky, and here’s why:

1. Relatively Costly Services

Compared to Asian outsourcing regions, Latin American outsourcing rates are pretty high. Consider how different areas compare in terms of software development outsourcing rates:

• Latin America: $21 – $93
• South Asia: $19 – $75
• South-East Asia: $14 – $61

Source: 2021-2022 Global Software Outsourcing Trends and Rates Guide

It would be best to consider how cost-effective this solution will be in the long run and determine whether it is a good fit for your needs.

2. Uncertainty Concerning Work Quality

Outsourced work does not always turn out as planned. Certain quality issues may arise, necessitating a back-and-forth with the outsourcing company.

Latin American service providers may not be as strict about maintaining consistency in their processes, which can impact their quality.

Furthermore, some developers may require constant follow-ups and reminders about work progress and deadlines.

You can, however, communicate your goal and timeline with the developers from the start.

3. Large Tech Talent Pool

Many Latin American countries have invested significantly in their universities and colleges, mainly in information technology programs. The result? A large talent pool includes some of the world’s most qualified professionals. However, a large number of candidates makes it challenging to extensively and accurately determine their level of expertise. Consequently, you could make a mistake and hire an inappropriate candidate who will provide you with low-quality code that will impact the overall working process of an organization or business.

4. Tax Policies

In recent years, Latin America has implemented several reforms to strengthen and modernize its tax system. Different tax policies, double taxation treaties, and free trade zones can all impede the outsourcing process to Latin America. As a result, companies looking to outsource to one of the region’s countries face significant challenges.

5. A Region’s Political Instability

It is worth saying that the political situation in Latin America is relatively precarious. Venezuelan, Ecuadorian, Nicaraguan, and Bolivian governments have become anti-business and anti-American. This can be a significant barrier for American businesses. Furthermore, recent acts of violence in the region may substantially impact Latin American IT outsourcing.

6. Data Security

Even businesses with the highest level of security are vulnerable to cyber-attacks and data breaches. Transferring sensitive data outside of your organization always carries some level of risk. It is especially high when a third-party company is used.

Outsourcing companies may serve multiple clients at once, including your competitors. It increases the likelihood of data theft and leakage.

In addition, Latin American countries generally do not adhere to international data protection policies, such as the General Data Protection Regulation (GDPR).

However, many countries, including Argentina, Brazil, and Mexico, have now developed data protection policies in line with the GDPR.

Is there another option?

Fortunately, it is possible to avoid all the risks mentioned above and make the most of outsourcing to Latin America and other popular offshore destinations. The solution can be found in tech marketplaces for offshore development talent, which serves as a two-sided platform for hiring developers. Slashdev.io, for example, is a new-generation staffing company that can make building a distributed team much easier and less time-consuming. They work with thousands of freelance software developers from over 138 countries. Slashdev.io provides tailored support to each client all throughout the recruiting process, picking the best candidates based on project requirements.

Slashdev screens thousands of developers to find the best talent. They are constantly turning away good candidates to ensure only the best senior engineers join their team. Furthermore, before assigning a team to a project, you can meet with professionals to ensure you make the right decision.

A team carefully chooses all professionals, so you don’t have to worry about the quality of your project and can focus your efforts on something more meaningful. The price range is between $28 and $38 per hour, which is suitable for any business. Only the most qualified candidates can be found on their website.

So, if you want to choose the best quality, minimize all risks, and have all of the work done quickly and professionally by the best offshore software development companies, that’s the most cost-effective way to find experienced developers.

2022 Data and Statistics on Outsourcing in Latin America

Are you considering outsourcing to Latin America? Here is some additional information and statistics to help you decide.

• Argentina had a 100% outsourcing penetration rate in 2019.
• According to World Bank data, Mexico’s IT outsourcing industry is growing at a rate of up to 15% per year.
• Peru has Latin America’s fastest-growing economy.

We hope this article has provided you with everything you need to start, from setting expectations to finding the right outsourcing destination and partner in Latin America. Of course, Slashdev.io is here to stay and assist, we’re one click away for you!