Everything You Need To Know About Outsourcing In South America
Startup Posted 1 week ago

Everything You Need To Know About Outsourcing In South America

In recent years, IT outsourcing in South America has become more prominent. When you think about software outsourcing destinations, countries like Poland, Romania, and Ukraine, and India come to mind.

Historically, these regions had a competitive advantage in the outsourcing market due to competitive prices. Times are changing, and a lot of US-based businesses turn to South America for outsourcing software development for higher quality and time-zone congruence.  

Outsourcing has always been a code word for cost reduction, but it’s becoming a legitimate way to access a larger pool of software development talent. 

Why do companies outsource?

Companies out source for a few different reasons and their motivations can vary depending on the size of the organization as well as the overall capacity of their engineering team if they have any. Let’s take a look at a few of the main reasons why companies outsource.

Cost reduction

Cost reduction is usually the main reason companies outsource. Some companies try to keep their in-house teams as lean as possible while outsourcing the rest to firms that can work on non-mission critical tasks. Others outsource entirely out of preference, but no matter which approach you take, outsourcing lowers overhead employment costs significantly and allows companies to spend money elsewhere. 

Professional focus

Not all companies have the bandwidth or experience to manage an engineering team in-house. Outsourcing development can provide a layer of comfort knowing that their application is being developed, allowing managers to focus on things that matter. 

Access to resources

Not every company can afford to have all the necessary resources within the organization. Outsourcing helps new companies as well as established ones to access these resources and technologies through intermediaries and make use of it for as long as they need it. Resourcefulness plays a significant role in business performance and the ability to compete in the market. 

Scaling flexibility

Being able to expand and downsize quickly is a great competitive advantage for companies that are sensitive to the change. While employment laws and regulations may complicate the process and put an extra cost to it, outsourcing gives companies more flexibility here and a chance to operate faster in this sense. 

Quick integration

Outsourcing is a faster alternative to full-time in-house employment as it doesn’t require as much time to find, select, and hire software development professionals. If the company and the provider agree on the terms without delay, then the work on development project can start in the matter of a couple of weeks, if not days, when the actual hiring process may take as little as a month to perform the selection process and formalize the commitment. There is no limit to the more extended options. Being able to move quickly in the current business environment becomes an undeniable advantage. 

Nearshore vs. Offshore outsourcing

Not all outsourcing is equal. Depending on location, outsourcing comes in 3 flavors: onshore, nearshore, and offshore. We won’t be covering the onshore outsourcing as it represents the service providers that are based in the same country or a neighboring country and doesn’t significantly differ from partnering with a company in your own country. 

To illustrate these two concepts, let’s say that your company is in the United States. That would make outsourcing to South America a nearshore choice because of geographic proximity and similar time zones. In contrast, Asia would be an offshore choice because of the distance and time-zone difference. 

Another thing to consider when you are choosing between these two concepts is the price that you are ready to pay for the services. Offshore regions are widely known for their extremely competitive low prices, while nearshore regions are a bit more expensive. 

You can still expect the prices for nearshore software developers to be two-three times lower than in the United States. Lower rates do not necessarily mean that your software developers are less experienced or will work not as well as you expect them to.

Low quality is usually the biggest concern for business owners when choosing between nearshore and offshore options. Keep in mind that the country where you will outsource your development projects needs to share your culture and language, which will be the foundation of trust in your business relationship.

When deciding whether to leverage offshore or nearshore outsourcing, consider the following points below in order to guide you to whichever fits your organization best.

  • Price. For many companies, this is a decisive factor when choosing an outsourcing provider. If reducing costs is your number one priority then offshoring would be a more sensible choice because of the lower hourly rates of other countries. If you are ready to pay a bit more than the minimum, you might want to consider nearshore outsourcing to keep the remote team in the same time zone. At the end of the day, you will be hiring people and finding the right fit is important. 
  • Location. When you are choosing between nearshore versus offshore, you need to know that the biggest difference between them is the location of your outsourcing company. The time zone difference between the US and South America is on average less than two hours, which means there is more time for teams to coordinate and stay in touch. The location also brings out the cultural differences, which can be an asset to your company if you are looking to enter a new market or looking to receive a fresh point of view on the problem. 
  • Communication. Even though outsourcing means delegating responsibilities of a project to another company, it doesn’t mean that their software developer will be working in isolation. Collaboration is key in establishing productive professional relationships with an outsourcing provider. For that, you need to make sure that communications are not complicated by the language barrier. English is widely spoken in South America, which makes nearshore locations a bit of a favorite here. Most of the South American countries show high proficiency in the English language, beating out China and India who have remained at low proficiency.
  • Cost reduction. As we’ve mentioned above, depending on your goals concerning your costs, offshoring might be more useful for your company. Of course, lowering your costs is always important, but it shouldn’t outshine other benefits such as communication when you are making a decision. 
  • Culture. Cultural fit is usually not the main concern when choosing between nearshore and offshore options. However, it can play an important role is a successful development process. Share the same culture is important for a fruitful collaboration and with near-shoring, you shouldn’t worry about that, as your outsourcing partner will most likely be located in the nearest country which will share most of the views and ideas or at least be familiar with yours.

State of software development in South America

Countries in South America are experiencing an increase in interest for development talent from companies all over the world. Many of these companies come from the United States because of their geographical proximity and time zone similarities.  

South America is changing the perception that outsourcing is a risky business and is becoming a significant IT provider in the global arena with thriving economies and industries led by Brazil, Chile, and Argentina, among other countries. 

Research performed by the Brookings Institute and the London School of Economics stated that Santiago ranked #5 among the world’s ten best economic performing cities, behind Lima and in front of Shanghai. South American outsourcing companies are winning the hearts of their American partners with cultural similarities, time-zone compatibility, and a tech-savvy demographic.

Benefits of working with South American developers

In a perfect world, outsourcing should be painless. But many end up getting burned by firms that operate overseas. South America is a relatively new region to outsource from and has kept a good track record of passionate developers that are eager to do good work. 

Putting together a good team of developers from South America has several good things going for it. We listed some of the big ones below. You can read more about the benefits of South American software developers here. 

Price vs. quality

When working with South American developers, you don’t have to worry about sacrificing the quality of work for lower prices. South American governments invest in technical education, which allowed for the initial foundation for talent to flourish. 

While conversion rates from the U.S Dollar to any South American currency are favorable, the real value comes from the passion that South American developers have for their work and their eagerness to participate in the U.S tech market. 

Competence

So why outsource to South American software engineers? To put it bluntly, they do good work. The cream of the crop know their tools and understand how to take a project from start to finish while making thoughtful considerations on software architecture to prepare applications for scaling and performance. 

International experience

South American countries attract many global corporations that want to take advantage of the benefits remote engineers have to offer. Many talented developers have worked with global organizations on projects, learning new ideas and skills in the process. 

The cost of hiring a remote developer in South America

Outsourcing is usually associated with cost-reduction. Those looking to minimize costs tend to roll the dice on countries like India, which has a subpar record of delivering value. 

Countries in South America tend to bring substantial experience and work ethic to the table beyond the lower price tag. You can expect to see the average hourly rates to work with an experienced software developer in South America between $30 and $50 depending on the complexity of the tasks, seniority, and the grade of engagement. 

Of course, you can find top specialists charging two or three times more, but on average, the hourly rate for a good software developer doesn’t exceed $50. 

Being cost-efficient while maintaining a high quality of work is what makes South American countries strong players in the global software development arena. Of course, you can find lower prices like $7-$15 in the same region, but keep in mind that this by no means does guarantee the quality of the final project delivered.

When choosing a South American software engineer or a development team, pay attention to the references, previous experience with similar projects, and see the work in action to make sure you know what you are paying for. Learn more about the criteria you can use to pick a good team.

Top destinations for outsourcing in South America

The top countries to hire a software developer in South America are Argentina, Puerto Rico, Colombia, Brazil, and Peru. These countries have shown the most stable growth and the most attractive economic climate to get the attention of global companies from all over the world.

Every one of them has their unique traits and specializations. Still, in general, you can expect the software developers in all of these countries to have a good command of programming languages, solid knowledge of business operations, and proficiency in English. 

Argentina

  • Capital: Buenos Aires
  • Population: 44.27 million (2017)
  • Language: Spanish
  • Hourly rate: $30-50
  • Famous for: tango, steak, wine, and football superstar players

Argentinian software developers generally are proficient in English, which is a tremendous strategic advantage for them. Companies worldwide appreciate good communication. According to EF Education First global test, Argentinians score the highest in the South American region. 

The country’s economic development also helps it to rank high on the global scene. Argentina ranked 53rd in the International Monetary Fund’s 2017 GDP outlook, which shows the stable growth and pleasant economic climate of the country. 

The government understands the importance of IT outsourcing businesses and passes the laws to support these initiatives and attract more international business to the country. The outsourcing industry comes mostly out of Buenos Aires, but there is a lot of opportunities to scale up and create more outsourcing centers in the country. 

Argentina has been developing its IT talent for about 20 years. Their understanding of the benefits that the software development industry brings to the country has led them to make tech a priority. 

Recently the Argentinean Government has launched several initiatives to support the industry’s growth and attract more international companies. The main goal for it is to comply with international standards in terms of applicable laws such as intellectual property and personal data protection.

Bolivia

  • Capital: Sucre
  • Population: 11.05 million (2017)
  • Language: 37 official languages are recognized, but the Spanish language is used by the majority of the population
  • Hourly rate: $20-45
  • Famous for: Salt flats

Unlike other outsourcing providers in India, China, or Eastern Europe, Bolivians share a similar culture to the United States. Lower cultural barriers mean you experience better communication from the start—and a faster, better connection between the outsourced team of software developers and your company in-house team if you have one. 

Bolivia offers dedicated software development teams working in your time-zone and your schedule. Because they have a more cost-efficient economy, you have access to good talent at an affordable price. 

In the last few years, Bolivia has experienced outstanding growth in research and technology, becoming an increasingly important tech hub in the region. Their economic growth made it possible for the country to create more work opportunities for its citizens in the industry. 

While Bolivia might not be the leader in the digital trends, the Bolivian government considers technological growth to be an essential element for the country towards social and economic growth.

The bulk of IT resources is in Cochabamba, which is the most prominent software developer and services exporter city in the country (80% of software is developed there), followed by La Paz and Santa Cruz. 

Bolivia enjoys having more than 200 software development companies that work closely with clients in countries like the United States, Netherlands, Belgium, Czech Republic, and Panama, among others. According to the 2019 Stack Overflow Developer Survey, Bolivia has about 11,000 software developers, the majority of which are working for local businesses. The number of independent software developers that do their business from Bolivia and outsource their professional skills to other countries has also grown in the last few years.

The country has good options for higher education, and because IT graduates are demand among local and global companies, Bolivia offers a wide range of scholarships. Universities provide software engineering and computer science students with partial and full scholarships. The students are also encouraged to apply to international scholarships provided by institutions such as the Organization of American States (OAS), the Women’s Rights Program (for women interested in pursuing IT careers), EuroInkaNet, UNESCO, and the World Bank among others.

Brazil

  • Capital: Brasilia
  • Population: 209.3 million (2017)
  • Language: Portuguese
  • Hourly rate: $25-40
  • Famous for: Carnival, football superstars, Amazon rainforest

Brazil is South America’s largest economy with Fortune 500 companies, ranging from IBM and HP, many of which enjoy the talents of skilled Brazilian software developers. Brazil has been experiencing steady economic growth since 2010. As the biggest country in South America, Brazil has become itself a major global IT outsourcing center thanks to its nearshore location and numerous IT service providers. 

With more than 250,000 IT professionals, and approximately 23,000 new IT graduates entering the industry each year, Brazil is a great place to find software developers. Such a large talent pool backed by higher education guarantees a good selection of professionals for the companies interested in outsourcing in Brazil. 

The technical knowledge is supported by proficiency in English, which makes Brazil a strong competitor to Argentina. Due to a well-developed local market, many developers don’t feel a need to improve their English-speaking skills. However, the ones that aim to work on international projects, and at global companies tend to show excellent language skills. 

The IT services market in Brazil is supported by the growth and maturity of local service providers, continuous investment in Brazil-based operations from the government and private sector, and the constant growth of all major global providers participating in the Brazil market. 

The appearance of such industry leaders in the country only confirms the potential of the IT outsourcing industry in Brazil.

Chile

  • Capital: Santiago
  • Population: 18.05 million (2017)
  • Language: Spanish
  • Hourly rate: $30-50
  • Famous for: poets, Easter Island, wine

It is not a surprise that Chile aims to be a key supplier of IT and software development services to the western market. Chile’s growing economy and business-friendly environment helped it gain some notoriety among the leaders in the South American IT outsourcing industry. However, it still needs a broader availability of highly-skilled professionals to compete with leading markets in Asia and Ukraine. It’s reputation for business, and the economic environment is helping it to gain more interest from global companies. 

Some of the industries where Chilean software developers have shown outstanding results are security systems, mobile banking, data processing, web design, and green technology. Staying on top of digital innovations allows Chilean outsourcing companies to compete in the market with their experience and knowledge on top of the affordable prices. 

While aiming at attracting global technology leaders to do business with outsourcing companies in Chile is a long-term goal for the economy, numerous small businesses have already benefited from choosing Chile as their partner for software development. A more modest, and focused approach to an industry that provides high-value service with a personal touch is what small businesses need to succeed. 

From the political point of view, Chile is one of the most stable countries in the region, and it maintains strong financial institutions and sustainable economic development as its focus. International businesses are attracted to Chile thanks to the high literacy rate (96%), and geographic proximity, which is in the same time zone as New York and the eastern US. The country also has a thoroughly developed telecom infrastructure, counting the highest broadband and mobile telephony penetration rates in the south American region. 

Colombia

  • Capital: Bogota
  • Population: 49.07 million (2017)
  • Language: Spanish, English
  • Hourly rate: $25-45 
  • Famous for: emeralds, El Dorado myth, coffee, food

Colombia has earned the status of the software development outsourcing hotspot in South America thanks to hiring and investment benefits that the government is actively offering to attract global IT leading companies. Still, there are more than tax incentives that make Colombia rank high among other countries in the region. 

Colombian IT companies aim at making Medellín the headquarter for the center for the fourth industrial revolution alongside San Francisco (USA), Tokyo (Japan), Beijing (China), and Mumbai (India) through bringing technological innovation and developing actionable strategies for digital transformation. The labor costs, which are pretty low even in the capital, make the country a lucrative outsourcing partner for the companies that don’t want to break a bank. 

Another great advantage of Colombia as an outsourcing destination is its world-class infrastructure. The telecommunications infrastructure in Bogota ranks 4th among 46 South American cities in terms of broadband penetration. 

The rapid growth of the IT industry in Colombia is due to government investment for IT training programs. That makes the number of companies that hire software developers in Colombia increased by leaps and bounds, showing that outsourcing tech jobs to specialized talent is not only cheaper for the companies but also helps the country to reach an international technology benchmark. The two main cities that have attracted the most investment IT and innovation are Bogotá, the capital, and Medellín.

Peru

  • Capital: Lima
  • Population: 32.17 million (2017)
  • Language: Spanish, Quechua, Aymara
  • Hourly rate: $20-50
  • Famous for: ceviche, alpacas, Machu Picchu

Peru is the third-largest country in South America after Brazil and Argentina. What makes Peru so interesting for the companies that are looking to outsource in South America is that Tholon’s Top 100 outsourcing rankings have steadily moved Peru up the list, giving it the 57th rank worldwide. 

Recently Peru started a higher education organization named UTEC (University of Engineering and Technology), which is considered the most modern in South America and has become the cornerstone of Peru’s rapid growth in tech and engineering graduates. 

Peruvian programmers have wide range of programming skills. The most significant market share of programming languages in Peru includes PHP, HTML, Java, Lua, Perl, Python, CSS, ASP.NET. A high number of Peruvian developers have experience working with global companies and a solid understanding of their business processes.

Peru has been placed among the top outsourcing destinations thanks to its cultural compatibility with western work culture, which makes communication and collaboration much easier for both parties. Also Peru’s thriving start-up culture presents its ability to compete with global companies for business opportunities. 

South American software development companies expanding into the country have set high standards for employment, making sure that their software developers have the right tools that are necessary to succeed in the global economy.

Uruguay

  • Capital: Montevideo
  • Population: 3.457 million (2017)
  • Language: Spanish
  • Hourly rate: $25-45
  • Famous for: wine, mate, tango, Punta Ballena

The two main features that make Uruguay stand out from its neighbors are its innovative, high-quality education system and its adaptation to new technologies. 

Uruguay’s education system has been providing all the tools necessary for graduates to be ready to compete in the global market. Learning English at a high level is a priority as well as recognizing the necessity of global partnerships in the future. 

Education in Uruguay starts early. The government offers free access to all levels of the education system from pre-school to university. Attending school and high-school is not only free but mandatory, which in turn ensures the highest literacy rate in South America, at 98.5%.

What gives Uruguayans an additional advantage in the labor market is their tendency to enter the workforce while they are studying at university. The early work experience gives them a head start and enough experience to count on finding good employment options. Continuous professional growth helps them to advance in their careers over time. 

Fun fact: Uruguay was the first country in the world to provide a free laptop to all public school students and teachers. Tech education starts at an early age.  

Historically Uruguay has had close working relationships with the United States and close connections with neighboring countries in the region, which helped it to advance infrastructure and support its abundance of IT talent. Uruguay is worth taking a closer look at for software development, outsourcing, or shared services. 

Some global companies like IBM, Kraft, BBVA, HBO, and others have already shown their interest in working with Uruguay by setting up offices and partnerships there. Uruguay may not be the most known country in terms of IT outsourcing, but it shows promising growth and an attractive talent pool that international companies can’t ignore. 

Where to find South American software developers

If you’ve decided to outsource software development tasks to South American countries, you will find plenty of opportunities to find competent talents for the job. Depending on the project, professional requirements, and the nature of commitment, you might want to go the extra mile in the candidate search aside from posting the job on your website. We’ll show you how. 

Freelance marketplaces

Freelance marketplaces are a perfect option for companies that are looking for individual specialists for short or medium-term collaboration. Freelancing is often associated with the gig economy that serves software developers that are working for themselves and are not directly hired by any company. 

Even though freelance marketplaces usually cater to the users who are looking for short-term professional commitments, you shouldn’t overlook them. There are plenty of talented software developers who’d be happy to work with your company full-time remotely. 

Job boards

Unlike freelance marketplaces, job boards connect professionals with companies that are interested in hiring full-time employees. Job boards tend to cater to a specific niche, so that makes finding software developers in south America a much easier task. 

Staffing agencies

Staffing agencies take the responsibility of finding candidates before offering you a hand-picked selection for the interviews, after which you can decide whether you want to hire the candidates. Even though staffing agencies charge for their services, it can be good for companies that are not very experienced in working with software engineers but can afford someone to source them. 

Outsourcing agencies

These companies specialize in providing software development talent. They will take care of finding and hiring their own professionals and deliver the completed work to you according to the requirements and stipulated deadline. There is a truly enormous variety of software outsourcing agencies in the market, and you can find the optimal partner that fits your budget and meets your business needs.

Alternatives to outsourcing

Working with South American software developers is an optimal choice for companies that are looking to find affordable talents in the same time zone yet don’t want to compromise on quality. However, many businesses are concerned about finding and hiring remote software developers themselves because it can be time-consuming, and hired professionals don’t always meet the expectations. At Trio, we know the importance of hiring the right fit. 

If you are interested in working with South American software developers, there is an alternative to outsourcing that might be an excellent opportunity for your company to connect with highly-skilled professionals and avoid the turmoils of finding, selecting, and hiring remote software developers. 

At Trio, we have seasoned south American engineers making the major part of our remote software development team. We carefully searched for, interviewed, and hired amazing south American talents in mobile and web development to bring your ideas to life with our engineering power. 

Now you might be asking yourself how is working with Trio is different from software development outsourcing or hiring a third-party agency? Easy, Trio offers small and medium companies competent software developers on-demand, thereby eliminating the necessity for them to go through a time-consuming process of hiring full-time employees for their projects. Trio is your software development partner, not an outsourcing vendor, and this is what makes us different. 

Approved developers

We’ve hand-picked and vetted our South American software developers. It’s important to mention that we don’t outsource the projects to third-party agencies and freelance gigs; you get to work directly with our full-time employees. We take time to select job candidates carefully, test their skills and professional abilities before hiring them, and provide all necessary training to make sure that they keep growing in their careers and stay up to date with the latest technological developments.

Flexible contract

All projects are different, and the number of developers working on one may vary depending on its complexity and requirements. Regardless, the quality of the final product delivered is always consistent. Customer satisfaction is the priority for our engineers, and we do our best to keep our partnership as flexible as possible to accommodate the customers’ needs without sacrificing excellent work. 

Quick integration

If you are ready to start working with Trio, we can begin working the following workday. As you do not have to find and hire developers yourself, you can get our developers to start working on your project ASAP. Once the details of the agreement are discussed and approved, Trio software developers will seamlessly join your project and start working on your product. 

On-shore professionals

This is what sets Trio aside from other businesses; it is a fully remote company that has South American software developers based in U.S time zones. Having everyone in the team working remotely gives us a competitive advantage in pricing without sacrificing quality.  

Communication 

Outsourcing in countries that have different communication styles and language barriers can complicate things. When you are hiring third-party software developers, it is crucial to make sure that they understand what your company stands for and what you are looking to receive as the final product. 

Hiring employees that speak fluent English and are good at communicating is a great benefit to the development process because they minimize the possibility of miscommunication, misunderstanding, as well as bugs in the final product. 

If you are looking to outsource your software development needs, you should consider partnering with companies that support South American talent. The countries in that region provide well-versed and dynamic programmers that have a skill-set that would satisfy your company’s needs. 

Whether you want to delegate a one-time project and establish an ongoing collaboration, you can undoubtedly benefit from working with South American software developers. The attractive cost and geographic position make outsourcing in South America a sensible choice for the companies located in the USA and Canada. Still, businesses from other regions can benefit from professional relationships from them as well. 

Hiring Remote Developers