South America Outsourcing: Everything about Software Outsourcing in Latin America
In recent years, IT outsourcing in South America has become more prominent.
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.
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.
But 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.
Why do companies outsource?
Companies outsource 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 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.
Related read: Complete Guide To Outsourcing Software Engineers
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.
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.
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:
- Nearshore, and
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.
What to look to decide between offshore or nearshore outsourcing
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.
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.
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.
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 to 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.
Cultural fit is usually not the main concern when choosing between nearshore and offshore options. However, it can play an important role in 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.
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.
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.
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.
Top destinations for outsourcing in South America
The top countries to hire a software developer in South America are:
- Puerto Rico
- Brazil, and
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.
- 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.
- 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 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.
- 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.
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.
- 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.
The country also has a thoroughly developed telecom infrastructure, counting the highest broadband and mobile telephony penetration rates in the south American region.
- 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.
This, thanks to hiring and investment benefits that the government is actively offering to attract global IT leading companies.
Colombian IT companies aim at making Medellín the headquarter for the center for the fourth industrial revolution through bringing technological innovation and developing actionable strategies for digital transformation.
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.
- 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 a wide range of programming skills.
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.
- 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.
What gives Uruguayans an additional advantage in the labor market is their tendency to enter the workforce while they are studying at university.
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 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.
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 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.
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.
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.
We have seasoned south American engineers making the major part of our remote software development team.
And 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.
If you are looking to expand your software engineering team with LatAm talents, contact us to discuss your project and find the best match among our engineers.
Frequently Asked Questions
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The best software developers are in Brazil, Argentina, Chile, Peru, Columbia, Bolivia, and Uruguay
Being cost-efficient without sacrificing quality is what really makes South American countries strong competitors in the global arena. To hire a junior developer you can expect a price range of $35-$40, for a lead developer between $50-$61.
Both the quantity and quality of technology talent in South America have significantly risen over previous years. Now, with the number of experienced software developers still on the rise, the abundance of technology is one of the most prominent reasons to hire a software developer in South America.
High level of English, cost efficiency and little time difference make Latin America an attractive place for outsourcing.
South American software developers are known for their unique, reliable, tested and trusted skills in software development which has dramatically set them at the forefront of their competitors in the industry. However, you can only get these if you hire a South American software development company for your software design.