Learn why Latin America is quickly becoming known as one of the top regions to outsource software development.
Choosing where to outsource your software development projects calls for a big decision that demands a lot of thought. One of the first questions that one will ask is, “Where will I outsource my software development project to?”.
After compiling a list of reasons why outsourcing is a great idea, firms frequently start thinking about China, India, or Central and Eastern European nations. On the other hand, Latin American countries are positioned to become the next developing trend in software development and mobile applications as the need for cost-effective development projects continues rising.
Due to this, the number of tech jobs being outsourced is rapidly and continuously growing every year. Four of the top 25 nations for outsourcing are in Latin America, according to the A.T. Kearney GSLI, which measures offshore outsourcing internationally. But why are countries like Argentina, Brazil, Chile, Uruguay (dubbed a “hidden gem” in software development), and Colombia being the new outsourcing hotspots?
Nothing Beats Experience
Mastering the skill of developing good software has not been an easy path for Latin American firms. As with anything else, it didn’t come so easy. For several years in a row, some of the largest businesses had to design their own CRMs, banking cores, ERPs, and all other products they required to operate their businesses. This happened because the region was blocked from software imports, leading to a greater understanding of client demands and experiences, as well as customer-focused software products.
Cost savings is one of the most common reasons for outsourcing in the first place. The lower cost of living in Latin American countries leads to considerable cost reductions for certain businesses when it comes to software development and other IT initiatives. Helping out such a cause is the recent rise of some currencies against Latin American ones, taking the US Dollar as a prime example.
Such a factor pushes firms, even more, to seek development from this part of the globe, especially when considering the high quality linked with a low price tag.
Beneficial Tax Policies
The savings don’t end there. Several countries in Latin America have amended their tax systems, and although this may sound a bit complex at times, significant benefits came out as a result.
Furthermore, some Latin American nations, like Uruguay, have been trying to position themselves as worldwide leaders in the tech industry for the past ten years. The government has increased access to computer science education, given students laptops, and offered broadband internet to almost 99% of the population.
The Uruguayan government also set 12 free trade zones that provide various advantages and incentives, such as tax elimination for income, transportation, and VAT. Imports by foreign corporations are exempt from tariffs, levies, and inventory taxes. As expected, these free trade zones promote outsourcing by enabling foreign money to be freely used and granting tax breaks to international businesses.
Lower Churn Rates
Nowadays, people move on. The issue with attrition is the process that goes behind hiring and training new staff. It’s time demanding and also adds to the expense of replacing a team member. According to a 2020 survey by the Bureau of Labor Statistics, the average employee remains at a job for slightly over four years. The same survey discovered that similar figures apply to both men and women and that older employees tend to stay at a firm longer than younger ones.
Tackling the above problem, Latin America has a lower labor turnover rate when compared to other countries. An outsourced project in the area might benefit from increased stability, productivity, and further cost savings.
Latin America has a Strong Infrastructure
A thriving software development sector is not possible without a solid infrastructure. Reliable internet access, lots of energy, and other resources are required for a software development project to be successful. Latin American countries have made significant progress in developing some of the world’s most advanced IT, electrical, and communications infrastructure. This means one thing to businesses looking to outsource their software development project: this part of the world offers easy collaboration with your outsourced workforce, as well as great connectivity and authentic communications.
English Proficiency & Bilingual Talent
Quite a number of Latin American nations like Argentina, Bolivia, Costa Rica, and the Dominican Republic, have exceeded China and India in English proficiency, according to the EF English Competence Index 2021, with the younger generations starting to learn English at a very early age.
More English-speaking Latin Americans are surely on the way, and with its governments spending more on English language training, it’s the reason why it has become one of the leading outsourcing destinations. It’s a fact that there is a big talent pool for programming and software development projects, with several Latin American specialists working remotely in the technical sectors for international corporations.
Furthermore, Latin American countries have implemented a set of new government initiatives to supplement or revamp English education. The EF English Proficiency Index explains, “Twelve of the 19 Latin American countries included in this year’s EF EPI improved their adult English proficiency since last year, and four improved significantly”. They add, “the overall trend is encouraging”.
This multilingual ability is not just valuable for overseas organizations which may need English speakers, but it’s just as fantastic for enterprises that target a Spanish-speaking audience. This results in a highly integrated experience, with websites and mobile applications that can be translated into English or Spanish quickly, cheaply, and efficiently.
Known for a Strong Work Ethic
The great work ethic of Latin Americans cannot be emphasized enough. Working hard and having a strong feeling of loyalty, purpose, and pride in the job is part of the culture. As a result, it’s common to hear of a deployed team working till the wee hours of the morning to meet a client’s deadline.
The Big Challenge
There are numerous convincing reasons to consider outsourcing software development to Latin America, as you can see from the list above. However, you will confront challenges in this area, including hand-picking the right firm out of the lot. Certain fundamental principles might assist in locating the best outsourcing firm while avoiding making the wrong decision. So, before actually outsourcing, think about the following suggestions.
The most crucial step is to perform thorough research on any potential candidates. It’s critical to understand everything possible about how they work, their background and experience by looking at services in their portfolio, and their team formation. Besides, it’s crucial to be aware of the process used if and when working remotely.
Another box to tick is the outsourcing provider’s communication approach, as poor communication can easily result in misaligned expectations, misunderstandings, delays, and other problems. Therefore, there must be a solid communication protocol in place before the actual outsourcing.
Then there’s the issue of costs. Although selecting an outsourcing partner solely based on cost is not recommended, price comparison is an inevitable element of any outsourcing process. Fortunately, one of the reasons Latin America has proliferated in the outsourcing world is that it provides competitive prices. However, after all, it’s not a case of picking the lowest or most expensive choice. Taking into account the other variables and balancing them against the pricing is what will help acquire a better idea of the prospects.
Software development outsourcing to Latin America is becoming more popular. The region is one of the fastest-growing outsourcing destinations in the industry, thanks to bilingual talent, cost-effective rates, tax benefits, and a highly tech-savvy populace.
It’s a fact that the majority of Latin American economies are growing at a steady rate, and they will continue doing so despite the political instability and the general imbalance with supply and demand. Despite these obstacles, the region has emerged as a promising offshore services location for complex software development projects that need effective communication, teamwork, and the highest level of technical expertise and innovative thinking.
Nearshoring a project in Latin America should therefore provide a company with the most outstanding technical and creative brains, as well as the unique combination of language, education, easy facility of doing business, and innovation emphasis that is required for outsourcing success.
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