Pros and Cons of Outsourcing from LatAm
Outsourcing gains popularity among business owners for a reason, and Latin America is one of the most exciting destinations to go for some skilled workforce. A lot of clear advantages made it the number three region for IT outsourcing in the last few years. In this post, we will talk about the positives and disadvantages that still keep LATAM from becoming number one.
Pros
Budget-friendly
Naturally, the main reason for hiring an outsourcing agency is to save some money on the salary budget. LATAM may not be a leader in this category, but still, IT professionals from this region will cost you at least thirty percent less than their colleagues from North America or Western Europe with the same set of skills. It is possible due to the lower cost of living in LATAM countries and the difference in currency exchange rates. For a relatively modest price, you will be presented with skilled IT professionals, and this makes a lot of people choose this region as their go-to outsourcing destination.
IT education and English proficiency
A lot of Latin American governments made improving the level of education their priority and this policy already brought some great results. First of all, due to school education reform, children learn English from a really young age and this helped to bring the level of English proficiency even further than many expected. Now in some of the region’s countries, 95 percent of the population has a level of English above average, so communication with the Latin America software development team is unlikely to be a problem. And don’t forget about LATAM higher education. Several local universities constantly make global top-100 lists, and almost every one of them has a program for software engineering. With various offline and online courses, the number of young tech talent that enters the workforce every year is really impressive.
Geographical proximity
If you are located in the USA or Canada, working with developers from Europe or Asia can be extremely difficult due to drastically different time zones and long traveling distances. With LATAM specialists, due to geographical proximity, you won’t have to stay up all night for a video call or spend 10+ hours on an airplane for some face-to-face meeting with the development team. The nearshore location also guarantees more cultural similarities and fewer chances of misunderstanding between foreign developers and your local team.
Business-friendly environment
A lot of LATAM governments made local tech startups and working with foreign IT giants their priority and a great stream of revenue. A lot of companies with a worldwide reputation, such as Google, Coca-Cola, or Amazon, opened their new offices in the region in recent years. Mexico, Brazil, Argentina, Chile, and Colombia are constantly listed among the most business-friendly countries in the world and the IT sector of their economy grows approximately ten percent every year. It is possible because of governmental support and business-friendly laws.
Impressive infrastructure
Because of the big number of foreign tech companies’ offices and local startups. LATAM IT infrastructure is on the rise. The number of coding camps, tech hubs, and an overall number of tech talent grow every year, and internet connection in the region is top-notch too. All of this makes experts sure that the number of skilled developers will only grow in the coming years when more popular outsourcing destinations mainly meet their peak in terms of a qualified workforce.
Cons
Relatively high costs
As we mentioned earlier, the average developer’s salary in LATAM is considerably lower than for the same positions in North America or Western Europe. But still, in Western European or South Asian countries you can hire experienced tech talent for even less money, especially with average salaries in Latin America steadily growing. Of course, the level of IT education and English proficiency in a lot of those countries is lower, not to mention different time zones, so everyone should decide if they are willing to pay extra.
Complex laws
It is true that LATAM governments try to make their laws more business-friendly, but it is still in progress. At this moment, some countries have really complex business and tax laws that can confuse foreigners really easily. In some countries there is double or indirect taxation, in some, you will need to register at a local office to work with a development team, etc. Without legal counsel, your outsourcing experience can turn into a nightmare.
Data security concerns
A lot of LATAM countries have problems with basic data security because of different protocols than most of the world’s countries, notably GDPR. If you are working with an outsourcing vendor, you will need to learn about their measures to ensure your data privacy. A lot of Latin American countries formed their own data protection policy, but still, this issue concerns a lot of product owners for a reason.
Instability in region
Latin America has a long history of dictatorships, civil wars, and overall political instability. Yes, it mostly stayed in the past, but still, some countries in the region are still under totalitarian regimes which hold anti-American views and make the whole LATAM destination somewhat unstable. Chances of some real trouble are really slim, but still can affect your development process, so you will need to remember about this possibility.
Final thoughts
Latin America is already among the top-three outsourcing destinations in the world and has the potential to come on top sometime soon. The list of the region’s advantages is really impressive and the downsides seem not so crucial in comparison. Of course, only you will decide which option is better for your app’s requirements and budget, but if you are located in the United States and have some room for maneuver in your salary budget, going with the LATAM development team seems like a safe bet due to great level of local IT education, wide pool of talent and impressive IT infrastructure. With the region’s IT market on the rise, it is time to start a successful working relationship with local tech talent.
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