Should you outsource to Latin America? Pros and cons

16:45 26 November 2019

Latin America is rapidly becoming a world-class destination for software outsourcing. Businesses based in the United States in particular turn to the region to build their apps, manage their information technology (IT) operations, and offer guidance and expertise on their software needs in general.

But while there are many advantages to outsourcing to Latin America, it’s not without its complications. What are the upsides to choosing this model, and what are some factors that might give you pause? Here’s what you should know.

Pros

Tech culture is on the rise

Countries like Argentina, Panama, Colombia, Brazil, Costa Rica, and others are home to numerous well-funded startups - and the number is only growing. Many tech giants, including Google, Facebook, Amazon, and Instagram, have established offices in Latin American countries, too, recognizing the tech boom in the region. Given the sheer volume of tech professionals working at these and other businesses and the evidence that technology is pervading the region, it’s no wonder that many businesses are outsourcing to South America.

Education and expertise

Earlier this decade, The Washington Post reported that Mexico was graduating 130,000 engineers every year, outpacing even the U.S.by some estimates. Many other countries in Latin America are producing a well-educated workforce through various initiatives. Argentina, for instance, offers free public university education. This and other factors have led to a rise in talent in the region.

There’s also the fact that when you no longer limit your search for software developers to your own country, you’ll have greater access to a wide range of skilled workers, some of whom may have the expertise you require for your project. Outsourcing to Latin America allows you to expand your search and tap into talent that may not be readily available nearby.

Efficiency

Latin American countries are not only known for offering some of the world’s best skills when it comes to technology, but they also tend to be efficient. In general, outsourcing means you’ll be entrusting your project into the hands of dedicated professionals. Because they’re focusing on the product exclusively, rather than dealing with other aspects of your business, they can often complete your project quickly and enable you to release it sooner than you might if you rely on an in-house team.

Culture and language

Countries such as India and China are popular technology outsourcing destinations, but they often have drawbacks such as a lack of English skills and cultural discrepancies. With nearshore services, you can avoid many of the miscommunications that arise from these barriers. That’s because many Latin American workers speak English fluently. Additionally, the nearshore advantage means that most countries in the region share similar cultures and work styles with the U.S. That means you can be confident that you can collaborate effectively and won’t encounter cultural obstacles.

Cons

Price

While outsourcing to Latin America is often cheaper than using onshore services — and much less expensive than employing a full-time staff of software developers — it’s generally more expensive than outsourcing to offshore destinations. Less-developed economies in India, for example, enable teams in the country to offer their services at a fraction of the cost of nearshore and onshore competitors. Still, it’s important to keep in mind that you may sacrifice other nearshore advantages if you choose offshore providers, such as streamlined communication.

Impact on your business and the job loss

Some businesses come under criticism for outsourcing labor rather than keeping it within their companies or countries. For one, it can contribute to a less robust job market in the home country, as well as a loss of jobs. If your business already employs an in-house team, employees may worry about being replaced. It can also be a challenge for your full-time team to work closely with a remote team.

Access

Outsourcing to Latin America also means you’ll have less access to your providers than you would with onshore services. For example, you might have more difficulty vetting vendors, given that while it’s not impossible to meet with them face to face, you’ll have greater difficulty with the travel time it will entail. This also means potentially fewer on-site visits. Moreover, you’ll less oversight with a separate team, one that doesn’t work for you, completing your project, which means you’ll need to relinquish some control.

Lack of familiarity with your home country’s laws

When you outsource software development overseas, you’ll be working with professionals who aren’t as familiar with the legal requirements of your own country, such as intellectual property. This means you’ll need to keep a closer eye on the products they build and consult legal experts to make sure you’re following the laws to the letter.

In many cases, outsourcing to Latin America can be highly beneficial to your products and company. Still, it’s important to be aware of both the benefits and drawbacks as you make your decision. Doing your homework and establishing procedures to mitigate difficulties you might encounter will help you both contribute to a strong partnership.