Outsourcing is nothing new, and it has happened for centuries — the United Kingdom saw its industrial revolution partly outsourced to India in the 1700s. But it really came to prominence in the 1970s and 1980s, when thousands of jobs became outsourced to India, notably service jobs. For many businesses, this resulted in significant cost savings — although some quickly realized it had its limitations. In many cases, the issues with attrition, lack of cultural awareness and general issues with accuracy and innovation proved insurmountable.
However, these companies started to realize that nearshore outsourcing was a much more palatable option. This means outsourcing to a neighboring or nearby country, and in the United States, that usually means Mexico. However, there are other options.
As with any outsourcing, nearshore outsourcing in Latin America is cost-effective. The cost of living and overall wages are generally much lower, which means lower overall costs for services. However, it’s not just about costs.
- Various language skills: Unlike India, the Philippines and Indonesia, Latin America has a huge range of language skills, including Portuguese and Spanish. This makes it easier to talk to a range of customers and clientele.
- Time zone: Latin America generally has the same or similar time zones as in the United States. This is suitable for businesses that use an agile methodology, as developers are likely to be working at the same time.
- Access to larger markets: Latin America has a growing middle class. This means that the talent pool is widening as more people have high levels of education, and it also provides potential opportunities within that country.
Typically, outsourcers look for three main points when considering a country for outsourcing:
- Safety and stability
- Existing infrastructure
- Existing or widening talent pool
Central America has several outsourcing hotspots:
- Costa Rica
Of these, Mexico is arguably the most well-known, primarily because it has good infrastructure, is reasonably safe outside certain regions, and has good links with the United States. However, Costa Rica is a very stable country with strong growth and thriving economy, albeit a small one, and Belize and Nicaragua are starting to gain popularity as major hotspots, although they are still in the process of developing their talent pools and have significant social issues and poverty to address.
South America has a huge range of options, including:
All four countries are large and have sizeable populations with a range of skills. Brazil in particular is developing into an economic powerhouse, although its economic stability has been called into question over the past few years — especially with its 2014 to 2016 recession — and the recent pandemic will only exacerbate issues. Chile, Colombia, and Argentina also have similar issues with Argentina having to restructure large amounts of debt, Colombia having low labor productivity, and Chile experiencing social unrest due to perceived inequality of opportunities.
With a solid understanding of US culture, similar time zones and a huge range of talent, outsourcers in Latin America can provide a huge range of opportunities for US companies that need to reduce costs while still maintaining quality. These countries are easy to get to, with Mexico being the most convenient for many.
This is especially true for those who need software development services, as Mexico enjoys a particularly beneficial position because it is a member of NAFTA. As a result, software tariffs are zero, resulting in significant savings. In addition, the country is stable, is politically more liberal than many of its neighbors, and has low enough overall costs to be competitive with India.
When you need to outsource your software development services, consider nearshore outsourcing to Latin America via Sonatafy. Our teams provide a huge range of solutions that can be tailor-made to your needs, whether you wish to augment your staff or want a complete turnkey product.