When it comes to producing high-quality products at a competitive price, software outsourcing is a highly advantageous strategy. This outsourcing model has become increasingly popular on a global scale, yet it can be difficult for some companies to find a dependable IT service provider. Many businesses are entering the market for the first time without a proper plan of how to move forward.
The good news is that there are numerous ways you can access the international outsourcing market. It can be beneficial to gain an understanding of the most popular outsourcing destinations, in order to select locations with a sophisticated technological infrastructure. For example, many US companies have discovered that outsourcing to countries in South America can be a great decision due to the numerous advantages it presents.
Offshoring to Latin America
It is an undeniable truth that Latin America is set to experience the highest growth rate in the Information Technology (IT) industry over the coming decade, with a projected revenue growth rate of 5.3%, two points above the global average of 3.3%. Currently, countries such as Argentina, Colombia, Chile, and Brazil are spearheading the software development industry in South America.
It is unsurprising that North America is the region with the greatest demand for outsourcing to Latin America. Many countries, including the United States, are facing a shortage of qualified IT professionals; by 2023, there will be one million more computer science vacancies than applicants worldwide. Therefore, outsourcing to Latin America is the most effective way to bridge the gap between supply and demand.
When recruiting a software engineer within the United States, you can expect to pay anywhere from $80 to $150 per hour for the services. However, if you are looking to recruit a software engineer in Latin America, you will be pleasantly surprised to find that the hourly rate is significantly lower, sitting between $40 and $70 per hour.
2. There Is a Time Gap
The disparity in time between North America and major outsourcing destinations such as India can often make it difficult to work collaboratively on projects in real-time. However, the time difference between Latin America and Eastern Time is only 1-3 hours, meaning that project management and briefings can be conducted much more efficiently.
3. A Superior Command of the English Language
Argentina has been ranked first in the EF English Proficiency Index 2023 for the entire Latin American region. This is an impressive feat, especially when considering the fact that many other Latin American countries have surpassed both India and China in terms of English language proficiency. Consequently, bilingual programmers and project managers are increasingly seen as an invaluable asset to any business, due to their ability to communicate and collaborate across different cultures.
4. The Importance of Technology-Based Instruction
The three Latin American countries renowned for having the most comprehensive and advanced educational systems in terms of technology are Argentina, Chile, and Brazil. In Argentina, the government has implemented Plan 111 Mil, an initiative which is dedicated to providing training to an additional 100,000 computer programmers over the course of the next four years.
5. IT Expertise
Stack Overflow’s data indicates that countries such as Peru, Colombia, Chile, Argentina and Brazil boast a significantly higher number of skilled programmers than those of India and China, with figures of 24,000, 21,000, 18,000, 16,000 and 14,000 respectively, compared to 13,000 and 10,000.
6. Development in the Information Technology Sector
Frost & Sullivan conducted research which revealed that the Information Technology (IT) sector in Latin America experienced an impressive 20.3% revenue growth between 2019 and 2020, largely attributed to the success of a number of organisations providing outsourced services.
7. Worldwide Nearness
Within the United States, it is possible to receive a shipment from Latin American countries in less than a day, making outsourcing from this region a more practical option when compared to IT centres from the Middle East or Asia. This is due to the geographic proximity of South America, which allows for faster and more efficient deliveries.
8. Commonalities Among Cultures
Due to the potential for misunderstandings arising from outsourcing software development to distant locations such as Singapore or India, which can lead to increased workloads, additional costs and delays, it is advisable to consider outsourcing to Latin America instead. This is due to the presence of native English speakers in the region as well as cultural similarities, both of which can help to minimise the potential for problems.
9. An Agile Development Process
Mayar Brown Brad Peterson’s Partner succinctly summarises the situation: “We are seeing a growing number of customers who are assembling large teams of negotiators and adopting an agile approach in order to achieve timely, cost-effective deals.” It is anticipated that a large proportion of Agile software development projects will be outsourced to Latin American countries.
10. Large Businesses Have Been Reliable Customers
Many large technology corporations, such as Hewlett Packard (HP) and International Business Machines (IBM), have demonstrated a clear inclination towards the Latin American market. According to estimates, the software outsourcing industry in Latin America was worth approximately $513 billion in 2023, making it the most prominent component of the nearshore outsourcing industry.