Pros and Cons of Software Developers Outsourcing to Latin America
by Sumona Business Development 28 October 2022
Just a few years ago Latin America wasn’t among the main destinations for offshore IT outsourcing, but the situation changed quickly.
Due to the growing number of talented software developers and budget-friendly costs, more and more companies every day choose LATAM specialists for their projects nowadays.
Of course, this option is not without its disadvantages. Let’s talk more about the pros and cons of outsourcing to this region.
1. A growing pool of talent
LATAM countries spend a considerable amount of money on IT education every year, there are several dozens of top-rated universities with programs in software engineering and countless courses and coders camps in the region. Because of this, the pool of talent is ever-growing and you will have no problem finding a developer just for your project’s needs.
2. Governmental support
Several countries in Latin America made the development of IT infrastructure their top priority. As we mentioned earlier, there are government-funded universities that provide expert software developers every year.
Also, a lot of LATAM countries are overall extremely business-friendly, four of them made the special list of 25 best countries in the world last year. It is Brazil, Mexico, Chile, and Colombia. The IT industry in the region grows ten percent every year on average.
Many major companies with a worldwide reputation, for example, Google and Coca-Cola, opened their new offices in Latin America recently. All of this can guarantee you long and stable working relationships with LATAM developers.
3. Geographical proximity
If your business is located in North America, working with LATAM specialists will be much easier than with their colleagues from Eastern Europe or Asia.
Time zones are not that different. So you won’t have to stay up all night to arrange a video call or wait for ten hours till the developer replies to your email. If you will need to meet with coders in person, the trip will be much shorter too. You can fly to Latin America and back in one day, and traveling to Europe can easily take up to 12 hours.
4. English proficiency
Because of the strong system of school education, young people in most LATAM countries are fluent in English. According to the latest studies, some countries in the region now have higher percentages of people with great English skills than China or India.
5. Lower costs
Of course, the main reason for offshore tech outsourcing usually is the cost of labor. The average salary for software engineers in LATAM varies from 1200 to 6000 dollars per month, which is considerably lower than in the US, Canada, or Western European countries.
1. Complex tax laws
There are some risks linked to various tax laws in different countries. Some of them will be business-friendly and make your life much easier, but some will cause some serious problems along the way.
For example, in some countries, if you are hiring a dedicated development team or just simply outsource a big lengthy project, you will be taxed as if your company had a branch in this said country. Sometimes there is double and indirect taxation too.
To navigate all legalities you will probably need some independent counsel or some help from an outsourcing agency. Finding an outsourcing destination that will work best for your business needs is key to a pleasant experience working with LATAM developers.
2. Far from Europe
As we mentioned earlier, geographical proximity to North America is a great advantage for companies located there. But if your company is in Europe, working with Larin American tech talent is a pretty inconvenient option.
Time zones are extremely different and traveling for face-to-face meetings will be almost impossible even in case of an emergency. In this case, you will probably want to hire specialists from Eastern Europe or South Asia.
3. Cultural differences
Even though there are basically no language barriers with LATAM developers, cultural differences sometimes make communication on the project pretty hard. A lot of business owners complain that tech specialists from this region tend to run late on deadlines and have overall difficulties with basic punctuality.
Of course, you can’t dismiss all Latin American coders because of several bad examples but be wary of this and try to communicate all deadlines early in development, especially if punctuality is really important for you.
4. Data security
There are international protocols and policies in place for efficient data protection, for example, General Data Protection Regulation or GDP, and Latin American countries don’t follow it. Instead, they have their own regional protection policy but still, some specialists don’t really trust it and warn business owners about considerable security risks.
5. Rising costs
Average salaries for LATAM software developers are budget-friendly compared to their US counterparts, but hiring from Eastern Europe or South Asia is still considerably cheaper.
Due to overall economic growth in the region and the rise of some national currencies in comparison to the American dollar, costs of work are rising. Of course, the quality of the tech talent pool in some cases is worth it, only you can decide what is more important to you.
6. Political instability
Latin America has a long history of political instability and even though the situation changed for the better in recent years, there are still some countries in South America with extremely anti-American views. Local armed conflicts, revolutions, and other unexpected events can impact your project and this is a factor to consider when hiring LATAM developers.
Latin America is amongst the top offshore outsourcing destinations for a reason. It has a great number of advantages and you can easily find the right talent for your project needs, especially if your company is located in the United States. Of course, there are some serious risks to consider, but still, you will want to have a good look at your options in this region.