Latin America’s software industry is thriving, with a wave of tech-savvy entrepreneurs, software engineers, and skilled developers reshaping the landscape of the software market.
A recent article on the software industry in Latin America stated some revealing facts:
- In 2021, the software industry in Latin America generated an impressive revenue of USD 22.1 billion, and this will continue to increase year on year.
- Argentina’s software market alone reached a value of USD 1.9 billion in 2021, with projections indicating it will reach USD 2.8 billion by 2026.
- Brazil’s software market is expected to experience a substantial increase of about USD 6 billion by 2026.
To understand the key factors behind this tremendous growth, we uncover the six main reasons why the Latin American (LatAm) software industry is booming. We also delve into the benefits of outsourcing your software development to LatAm and the average rates you can expect to pay a LatAm-based developer.
What Is the Current State of the Software Industry in Latin America?
Latin America’s software industry is rapidly evolving. Countries like Costa Rica, Brazil, Mexico, Columbia, Chile, and Argentina have been actively fostering their software industries and establishing themselves as tech hubs.
These countries recognized early on the potential of the tech industry and have taken proactive measures to foster its growth by attracting domestic and international investments.
One particular area that is seeing tremendous growth in LatAm is software as a service (SaaS)—at a rate even faster than in the US, thanks in no small part to the interest of venture capitalists.
Why Is Latin America’s Software Development Industry Thriving?
We see the following as the six factors most responsible for Latin America’s booming tech industry:
1. Hotspot for startups and entrepreneurship
Cities like São Paulo, Buenos Aires, Mexico City, and Bogotá have emerged as hotspots for tech startups, fostering a culture of innovation and attracting ambitious entrepreneurs.
These startups contribute to job creation and economic growth and bring new perspectives, driving the industry forward.
The wave of Latin American tech startups has caught the attention of many US companies. Many find the nearshoring software development business model highly appealing for finding top-tier software solutions at competitive prices.
2. Government support
Government support has also been crucial for the software sector in Latin America, with policies and initiatives implemented to stimulate investment, incentivize software development, and promote digital entrepreneurship.
These policies include creating favorable regulatory frameworks, tax incentives for software development companies, and initiatives to support small companies and startups through incubators, accelerators, and innovation hubs.
3. An abundance of tech talent
Many Latin American universities offer computer science and engineering programs, producing new generations of incredible talent.
In addition to traditional university programs, many companies are partnering with local organizations to provide training and educational opportunities for aspiring tech professionals, offering a more hands-on approach to learning.
For instance, coding boot camps and specialized training programs are designed to meet the growing demand for tech professionals, focusing on practical skills and real-world applications.
4. Popularity of nearshoring and outsourcing
Nearshoring and outsourcing have become popular options for companies across the globe that are looking to develop software projects at a lower cost while maintaining high-quality standards.
In Latin America, one destination that has been gaining popularity with US companies in recent years is Mexico. Other top nearshore outsourcing locations for US businesses are Argentina and Brazil.
5. Increasing industry collaboration
Latin American software companies and entrepreneurs are increasingly collaborating with international partners and participating in global tech events. These events allow entrepreneurs from LatAm countries to build relationships and showcase their services and products while learning about industry trends and best practices.
Collaborating with international partners helps Latin American companies expand and improve their business. This leads to knowledge sharing and innovation, bringing new perspectives and ideas to improve products and services.
Furthermore, collaborating with international companies and organizations also promotes diversity and inclusion, driving innovation and growth in LatAm countries and for businesses worldwide.
6. Ability to overcome challenges
As part of the growth process, Latin American businesses have faced challenges such as limited funding, infrastructure gaps, complicated bureaucratic processes, and skill gaps in emerging technologies.
By embracing new technologies, tapping into hidden talent pools, and leveraging alternative financing, Latin American companies have overcome these challenges and built resilient business models that keep thriving, setting an example for many other regions and countries.
What Are the Benefits of Outsourcing to Software Developers in Latin America?
Labor costs in Latin America are generally lower than in the US, Canada, and Western Europe, which can be a significant factor if you’re working on a tight budget. Living costs and office space prices are usually lower in many Latin American countries, which reduces the overhead costs of developers, which means they can charge lower rates for work.
Depending on your industry and the products or services you offer, you may find that there are tax incentives or other government programs that make it even more cost-effective to do business in certain Latin American countries.
Proximity and time zone alignment
The geographical proximity between the US and Latin American countries, such as Mexico, Brazil, and Colombia, enables team members to operate in similar time zones. This time zone compatibility enables real-time collaboration and communication, as there is minimal delay in response times.
In other words, the ability to work without time zone differences enhances efficiency and productivity, making it easier for US-based companies to engage with their outsourced teams and ensure seamless project management.
Cultural affinity and easy communication
Having a good understanding of cultural nuances is critical when it comes to seamless communication. Fortunately, many Latin American countries have cultural similarities to the US, which can make communication and collaboration easier.
Shared cultural aspects such as business norms and similar working cultures contribute to a successful long-term partnership.
In addition, many professionals in Latin America have strong English skills, which is a significant advantage when working with US companies.
Skilled talent pool
With a focus on technology education, Latin American countries have produced a skilled talent pool of graduates with strong technical skills. This has made the region an attractive destination for companies looking to outsource their digital needs.
Many Latin American graduates have already gained experience working with clients from the US and Europe through direct collaboration, freelance work, or outsourcing firms.
This exposure to global markets has given them valuable insights into client requirements, project management practices, and international business standards.
Expertise in remote work
The software outsourcing industry has long embraced remote work as a hiring strategy, tapping into a global talent pool.
In this regard, Latin America offers a unique advantage for companies seeking remote software development talent. Professionals in the region have already adapted to remote work and possess the essential skills to thrive in a remote work environment.
Since they’re already familiar with remote collaboration tools and virtual communication, many professionals in Latin American countries can effortlessly integrate into global remote-first teams.
How Much Does It Cost To Hire Latin American Software Developers?
We’ve established that Latin America is a software development hotspot. So when you begin your search for Latin American software engineering professionals and developers, you’ll want to know how much making a hire will cost.
The cost varies based on specific project requirements and technologies, like augmented reality (AR) or artificial intelligence (AI). Talent with development expertise in older technology stacks like .NET and PHP may come at more affordable rates. In contrast, technical expertise in newer and niche technologies such as Golang, Swift, Elixir, and Clojure will come at a higher cost.
The good news is that you can obtain accurate cost estimates by establishing your requirements and expectations early on in the project. But a rough estimate of a software developer’s annual salary expectations in this industry by years of experience would be:
- Junior Developer (1–2 years of experience): USD 24k–48k annually
- Mid-Level Developer (2–5 years): USD 48k–60k annually
- Senior Developer (5–10+ years): USD 60k–90k annually
One thing’s for sure: Latin America’s software market is thriving, fueled by the growth of custom software development, mobile app development, and enterprise software solutions, including SaaS.
The region’s solid tech education system and favorable government policies are supporting the industry’s expansion, leading to:
- A consistent increase in the trend of nearshoring software development to Latin America, particularly Mexico.
- Significant growth in the quantity and expertise of skilled software developers.
Latin America is teeming with highly skilled software developers. But how do you find the top talent that is ready to efficiently take on your development projects? That’s where Near comes in. Whether you need a software engineer, UX/UI designer, front-end engineer, or any other role, we will find you talent ready to onboard in under 21 days.
If you are ready to start outsourcing your software development roles, fill out this form today to get a list of pre-vetted candidates you can interview for free. You only pay a fee once you make a hire.