July 25, 2024
A problem that trips up many outsourcing ventures is having partners who fall out of step. Communication breakdowns and misaligned goals contribute to an estimate two-thirds of technology projects completely or partially failing.
Outsourcing, if done poorly, can add to the risk. However, when you’re working with Latin American software developers, it’s much easier to get in sync.
Nearshoring to Latin America means US-based teams can work in rhythm with their project partner seamlessly across compatible time zones.
Recognized for their creative, collaborative approach to problem-solving, top companies in the region are also familiar with Western business practices and culture, minimizing integration issues.
That’s even more important today as strategic outsourcing moves from an over-the-wall approach to a fully integrated, holistic model rather than – creating a borderless extension of business leadership and in-house resources.
International recruitment data shows a 55% increase in the harnessing of Latin American talent last year, with the United States generating the bulk of that demand. Argentina, Colombia and Brazil — all key outsourcing markets in our global partner network — made the top five worldwide, a sign of both the availability of talent and their success in locking in international contracts.
Oneshore™: How to Achieve a Greater Level of Success in Your Software Development Outsourcing Projects
At Accelerance, our Oneshore approach uses a framework designed for effective globally distributed teams to avoid the kind of problems so graphically illustrated in the chart below.
Effective risk management is crucial to navigating the potential pitfalls associated with IT outsourcing. This includes defining clear project objectives, establishing robust communication channels, and setting realistic timelines, budgets, and contingency plans. In the Onshore model, clients and their partners act as one self-governing distributed Agile organization to deliver working software aligned with business, operations, and technology objectives.
Companies must also build strong relationships with their outsourcing partners, fostering transparency, and ensuring continuous engagement throughout the project lifecycle.
An Innovative Mindset and Cultural Compatibility – the Key Advantages to Outsourcing to Latin America
Our new 2024 Latin America Region Guide to Nearshore Software Outsourcing draws on international data and expert insights to analyze 16 key markets and their potential for offshore partnerships.
While clients outsourcing software development to Latin America can still expect to pay a higher rate compared to South Asia, costs are around half what you’d expect to pay for the same quality engineers in the US, where the supply chain remains under severe strain.
Here’s why Latin America should be on your radar:
Expertise
Outsourcing firms in Latin America have strategically positioned themselves as adept innovators. Across the region, there is a notable surge in expertise encompassing artificial intelligence, machine learning, blockchain, and other cutting-edge domains.
Time zone
Latin America shares closer time zones with North America than other outsourcing destinations, making real-time communication more accessible. This allows for better collaboration and minimizes potential delays.
Language
English proficiency is relatively high, particularly in the tech industry. Effective communication in English reduces language barriers, making it easier to convey project requirements, discuss issues, and collaborate with remote teams.
Talent
From Argentina to Costa Rica, a growing pool of skilled and well-educated IT professionals call Latin America home. Developers we work with in the region are trained in the latest technologies and programming languages, providing businesses with access to a talented workforce.
Culture
Latin American countries share cultural similarities with North America, making it easier for teams to understand each other’s work culture, communication styles, and business practices.
Government support and infrastructure
In Latin America, governments have proactively implemented a range of supportive policies aimed at nurturing a thriving IT ecosystem. This includes strategic investments in cutting-edge infrastructure to provide a solid foundation for technological advancements.
Forecast 2024: What to Expect from the Year Ahead
After a slowdown in 2023 and early 2024, the volume of work is ticking up across South America, driven by a push for projects focused on artificial intelligence, machine learning and data. Our insights team predicts three central trends:
- A buyer’s market, following cooling demand across the region: After nearly 40% growth over a three-year period, developer rates will plateau, with any modest increases largely attributable to lingering inflation and exchange rate fluctuations.
- Cautious optimism in the outsourcing sector: In the latest survey of our global network 76% of our software development partners in Latin America forecast an increase in revenue.
- The continuing rise of artificial intelligence: Building AI capability will be a big focus, with many development companies investing in training for AI, machine learning, and data analytics.
When it Comes to the Big Hitters in Latin America, it’s as Simple as ABC
Home to the Big Three – Argentina, Brazil and Colombia – South America’s depth of resources is impressive. Brazil alone accounts for more than a third of Latin America’s overall market share.
We’re constantly monitoring opportunities across the region, and the best-match partnership will depend on both the scale of your project and the expertise required. While South America continues to dominate, Costa Rica is a standout in the smaller Central America and Caribbean markets.
One of the largest economies in Latin America and a prime location for nearshore partnerships due to ongoing support for research and development, a widespread ability to generate and retain talent, and an openness to new ideas. Argentina tops the rankings for English proficiency in the region and has an impressively diverse workforce, with women comprising more than 45% of applicants for tech jobs.
Brazil’s reputation continues to grow as an impressive force of creativity and innovation, thanks to its vast talent pool and rapidly expanding technology sector. Foreign investment in domestic startups has more than doubled in the past few years and several of the world’s biggest tech companies are major players in the country’s IT industry.
Known as the the most business-friendly country in Latin America, Colombia has a rapidly expanding startup environment. Bogotá and Medellín are already recognized as innovation centers, while the sectors in Cali and Barranquilla have seen significant growth. In the 2023 World Digital Competitiveness Ranking, Colombia was placed sixth of Latin American nations, ahead of other major outsourcing destinations such as Mexico and Brazil in training and education.
San Jose, the country’s capital, ranks in the top three cities in Latin America in terms of talent availability and level of skills. An attractive outsourcing market due to its stability and compatible business culture, Costa Rica has a reputation for producing top-level software developers and that’s reflected in a slight premium on rates. A big advantage is its location and in-sync time zone, just two hours ahead of California and one hour behind New York.
In the current environment, the tactical value of nearshoring can’t be underestimated, combining cost savings with proximity, cultural alignment, and reduced operational risks. Argentina may be more than 5,300 miles away from New York but it’s only one hour ahead, making the workday overlap a smooth hand-in-glove fit.
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