10 Reasons Why Latin America Is Great for Software Outsourcing

You probably noticed that the impact of Latin America on the global software development industry has been constantly rising in recent years. Statista forecasts that the revenue from IT outsourcing in South America will grow 9.34% (CAGR 2024-2029), resulting in a market volume of $15.36 billion by 2029. The average cost spent per employee in the Latin America IT outsourcing market is projected to reach $47.58 in 2024.

This influence happens because of the availability of a top tech talent pool, LatAm software engineers’ cost-effectiveness, geographical proximity to North America, and many other factors. In our article, you will discover why Latin America is an excellent option for outsourcing software development.

Read further to learn what impacts the growth of software development services in South America and what are ten core reasons why the LatAm region is beneficial for software development outsourcing. 

1. Abundance of Skilled Talent

Latin America has a vast talent pool of IT professionals. University graduates begin their tech careers with well-established IT companies every year. One of the most decisive criteria of skillful talent presence in the LatAm region is the number of headquarters of most tech giants. For instance, Mexico can boast Microsoft, Google, Intel, Stripe, and Lyft offices. Argentina has offices established by IBM, Oracle, Salesforce, Google, and other top software companies.

Naturally, the most significant number of experienced tech professionals is found in those countries where the total number of all IT specialists is high. Many such tech talents mean more opportunities to grow and create effective IT communities. The latest statistics show us that the most extensive number of developers in Latin America can be found in the following countries:

• Brazil: 500,000;
• Mexico: 220,000; 
• Argentina: 115,000;
• Colombia: 62,000.

Of course, you can find top-notch developers in other Latin American countries. However, as a rule of thumb, a more significant number of IT specialists usually means a higher probability of finding high-quality professionals.

2. Cost-Effective Solutions

The primary goal of IT outsourcing is to reduce expenses on salary for tech specialists leveraging talent pool from other countries. Companies tend to find markets filled with professionals who deliver high-quality results and require fewer resources for software development projects. 

Compared to their colleagues in the USA, Canada, Europe, New Zealand, and Australia, Latin American developers cost less to hire. For example, outsourcing to US software development engineers can cost you approximately $75-150 per hour, while LatAm software engineers deliver the same quality software development value at $50-80 per hour.

Outsourcing rates depend on various factors:

• Experience level: Senior and architect-level developers cost considerably higher than others;
• Cost of living: Engineers from countries with a higher standard of living expect higher salaries than those from other LatAm countries;
• Regions economy: Consider taxes and laws from different locations or the services of an outsourcing company in Latin America that knows the market better than you;
• Technology stack: Developers competent in rare technologies require paying them higher hourly rates. 

3. Proximity to North America

Another advantage of outsourcing in Latin America is its geographical closeness to the USA and Canada. Time zone differences are minor (1-5 hours), and business hours overlap compared with Asian countries, New Zealand and Australia (6-9 hours). Therefore, teams can collaborate and communicate on projects efficiently without significant gaps in working hours.

Geographical proximity makes traveling more accessible. So, flying costs are much lower than business trips to Europe, Asia, or Australia. Such advantages open possibilities that make this region more attractive for collaboration, live meetings, and efficient team building.

4. Strong Educational Systems

Argentina, Brazil, Mexico, and Chile have high-quality tech education systems. These countries in Latin America are constantly working on increasing the number of graduates in software engineering specialties. For example, Argentina plans to educate 100,000 new developers in four years. Mexico, in turn, produces 130,000 engineering professionals annually. Mexican programmers demonstrate a high level of proficiency. 93% of Mexican developers are skilled in computer programming, and 79% display considerable results in mobile app development. 

Local governments empower IT education. Universities, businesses, governments, and other stakeholders collaborate in a way that transforms the tech industry in Latin America. Such partnerships enable more talent nurturing and boost the demand for IT jobs. 

5. Cultural Affinity and Language Proficiency

Software development is teamwork. That is why communication is an inevitable part of this process. When dealing with an outsourcing team, it is essential to communicate your goals and objectives without any misunderstandings.

Latin American countries have similar cultural visions and practices, including workplace ones, to North America and Europe. So you can share many Western values and interests and seamlessly collaborate to achieve desired results. Such teamwork components as communication styles, remote work policies, deadline expectations, and quality standards work similarly for these cultures, helping teams adapt quickly. On the contrary, Eastern culture is much different, and it takes time to comprehend teammates from Asian regions. Then, you need to spend more time and money to deliver a high-quality outcome. 

English language fluency is another factor needed for efficient communication among employees. The level of English in LatAm countries is constantly growing. The governments invest in developing English language skills starting from school education. Some South American countries have surpassed China and India in English proficiency. According to the 2023 EF English proficiency index, Argentina ranks highest, followed by Uruguay, Peru, Chile, Brazil, and Colombia. 

Working with bilingual developers from Latin America is another advantage for US companies that simplifies communication and project management. 

6. Growing Tech Ecosystems

The global outsourcing market is expected to grow by 33% from 2020, from $318 billion to $425 billion by 2026. Outsourcing in Latin America started with governments perceiving new opportunities in software development. South American countries have begun to invest in their infrastructure and IT specialists. The growth of the middle class in Latin American countries and pandemic factors that surged the demand for digital innovations led to a significant rise in the tech industry in Brazil, Chile, and Colombia, tripling their efforts in the last five years. 

The LatAm region was the fastest-growing market for venture funding globally in 2021, showing a steady increase since 2015. Venture and technology growth investors vested about $19.5 billion in the South American market.

Latin America’s most notable tech hubs are in São Paulo, Brazil; Mexico City, Mexico; Buenos Aires, Argentina; Medellín, Colombia; and Santiago, Chile. IT specialists working within existing tech ecosystems demonstrate proficiency in digital innovation, software development, data science, cybersecurity, UI/UX design, and AI.

The best start-up accelerators working in LatAm are:

• 500 LatAm Program;
• Founder Institute;
• MassChallenge;
• AgilMentor;
• Start-Up Chile;
• Socialab;
• Start-up Farm;
• GridX;
• Wayra;
• Parallel 18. 

The Latin American start-ups that are worth mentioning are Kavak (eCommerce, Mexico), D-local (Fintech, Uruguay), iFood (Logistics/Foodtech, Brazil), and Rappi (Logistics, Colombia).

7. Government Support and Incentives

Governments in South America continuously provide support for the software development sector through initiatives and policies to stimulate and incentivize investments in the tech industry and develop digital undertakings. These policies involve regulatory frameworks, tax incentives for IT companies, and supportive initiatives for start-ups and small firms via accelerators, incubators, and innovation hubs.

The Latin American laws on foreign direct investment (FDI) were the main impetus for the arrival of foreign investors. They began to invest in the IT sector and other domains, stimulating regions’ economic growth. Governments provide many perks to investors, such as tax benefits, financial rewards, and protection from direct expropriation, safeguarding investments from political instability issues. Here are the most common FDI strategies that also has given a boost to the IT industry:

• Investment assurance: This practice protects investors from political and currency exchange issues or conflicts and ensures that foreign companies can take profits, dividends, and capital out of the country. For instance, Mexico enacted a Foreign Investment Law in 1993 that regulates such policies; 
• Financial bonuses: Financial benefits for investors include grants, low-interest loans, and subsidies to make investing more attractive;
• Tax benefits: These include extended tax breaks, exemptions from import fees, sales tax, and corporate tax. Some LatAm countries like Brazil and Uruguay have implemented such practices.

Specific software initiatives were launched across the region to attract international tech companies and to support business growth in the tech sector. One instance is the Argentinian software law that provides a promotional regime for information-based economy businesses, including software development companies. Uruguay’s tax reduction programs stimulate foreign businesses to commence their operations in the country. 

8. High-Quality Deliverables

Efficient processing is vital for getting the most out of software development projects. You would be delighted with the work of the top Latin American development companies because they produce remarkable results. This success is achieved because tech businesses have implemented the most effective software development methodologies and models.

Most companies in the LatAm region have adopted SCRUM, Agile, and Lean models for the whole development cycle. As a result, the product quality has increased, and deadlines are regularly met despite any issues and changes to the product along the way.

Moreover, the best Latin software development companies provide a distributed work model. IT firms find top talents in different parts of the region. This strategy ensures the excellent software development experience.

9. Strong IT and Tech Culture

Opportunities for tech innovations grow on fertile soil. The population in Latin America was around 664 million people in 2022. A growing population results in an enlarged consumer market, which fosters the emergence of undertakings that satisfy customers’ demands. GSMA Report states that between 2014 and 2021, the number of people in the region with mobile internet access nearly doubled, from 220 million to almost 400 million. This means that spending and the desire for innovation are also growing. Venture capitalists have invested billions of US dollars in this region during the last ten years.

All these factors contributed to the creation of Latin America’s vibrant IT and tech culture. Every year, numerous conferences and meetups are organized since tech communities are constantly increasing. The rising number of tech start-ups provokes a growing demand for high-quality software engineers and other tech specialties. Big software companies are continuously seeking top talents, which stimulates permanent learning and innovation to meet market needs. 

10. Success Stories and Notable Companies

Latin America is also well-known for outsourcing software development companies. They provide a comprehensive number of services, including:

• Nearshore software outsourcing offering Project managers, SCRUM Masters, Technical leads, Business analysts, Software engineers and architects, DevOps, QA engineers, Automation, and UX/UI designers;
• Software Architecture; 
• Web and Mobile app development;
• DevOps & Cloud engineering;
• IoT development services & Robotics software solutions;
• Enterprise software;
• UI/UX Design;
• Software Testing;
• AI and Machine Laerning;
• Cybersecurity.

Latam software development companies from Brazil, Argentina, Bolivia, Columbia, Mexico, and other countries of this region are skilled in such programming languages and technologies as:

• Java; 
• JavaScript; 
• .NET; 
• PHP;
• Ruby;
• Python;
• C/C++;
• C#;
• Node.js;
• React;
• iOS;
• Android;
• Salesforce;
• AWS;
• Appian;
• Microsoft Azure;
• DALL.E;
• Docker;
• Swift;
• Kotlin;
• Dart;
• VueJS;
• Angular.js.

Many industries use their services, including: 

• Learning and education;
• Healthcare;
• Pharmacy;
• Finance;
• Insurance;
• Real Estate;
• Transportation;
• Retail;
• Blockchain. 

Conclusion

Latin America has become one of the prominent centers of software outsourcing globally for several reasons: 

1. Latin America has a substantial pool of IT professionals. Brazil, Mexico, Argentina, and Colombia are regions with the most significant number of developers in Latin America;
2. Compared to their colleagues in the USA, Canada, Europe, New Zealand, and Australia, Latin American software engineers cost less to hire;
3. The geographical proximity of Latin America to the USA and Canada allows for minor time zone differences (1-5 hours) and overlapping business hours, making collaboration and communication more efficient. Proximity also makes traveling more accessible, reducing flying costs for business trips compared to other regions;
4. High-quality tech education systems and collaboration among universities, businesses, government, and other stakeholders are transforming the tech industry in Latin America;
5. Latin American countries share similar cultural values with North America and Europe, making collaboration easier. English language fluency is growing in Latin America, and working with bilingual developers can simplify communication for US companies;
6. The LatAm region shows a rise in tech industry development, with notable tech hubs in São Paulo, Mexico City, Buenos Aires, Medellín, and Santiago. IT specialists in Latin America demonstrate proficiency in digital innovation, software development, data science, cybersecurity, UI/UX design, and AI;
7. South American governments permanently support the software development sector through initiatives and policies to stimulate investments and tech industry growth. They offer tax incentives, financial bonuses, and protection for foreign investors. Specific software initiatives have been launched to attract international tech companies and support regional business growth;
8. Latin American development companies excel in software development by implementing effective methodologies such as SCRUM, Agile, and Lean models. This results in improved product quality and meeting deadlines despite changes. They also adopt a distributed work model to ensure access to top talent in different parts of the region;
9. The development of a vibrant tech culture and a growing demand for specialized talents in Latin America meet the needs of innovation-driven companies from the USA, Canada, Australia, and other countries;
10. LatAm has numerous successful software development outsourcing companies. Many prominent tech giants like Microsoft and Google use their services. 

The abovementioned reasons are compelling to hire developers in Latin America to create your following projects. Consider LatAm developers as a meaningful option to choose for your software endeavors.

FAQ

What makes Latin America an attractive destination for software development outsourcing?

Latin America provides a distinct blend of well-trained professionals, affordable solutions, and proximity to North America, making it a perfect choice for outsourcing software development. Furthermore, the area has robust educational institutions, support from the governments, and a dynamic technology community.

How does the cost of hiring developers in Latin America compare to other regions?

Hiring programmers in Latin America is much more budget-friendly than in North America and Europe. Companies have the potential to reduce labor expenses by 50-60% while still being able to hire highly skilled employees. For instance, the typical income for a software developer in Argentina is significantly less than that in the United States.

Are Latin American software developers proficient in English?

Many software developers from Latin America have a strong command of the English language. Such countries as Argentina, Brazil, and Colombia have adequate English language education programs, leading to many tech professionals proficient in English. This proficiency enables smooth communication with clients from North America and Europe.

What kind of government support and incentives are available for tech companies in Latin America?

Several Latin American administrations provide different incentives to bolster the technology sector, such as tax benefits, subsidies, and funding for technology-focused education. For instance, Mexico has implemented free-of-charge technical universities and provides funding to technology entrepreneurs via programs such as the Fondo Nacional Emprendedor.

Which Latin American countries are known for their thriving tech ecosystems?

Latin American countries such as Argentina, Brazil, Mexico, and Colombia are key countries with flourishing tech ecosystems. Cities such as Buenos Aires, São Paulo, Mexico City, and Bogotá are renowned for their thriving tech communities, which host a multitude of booming start-ups and well-established tech firms.