While outsourcing destinations such as India, the Philippines, and Eastern Europe have traditionally been the go-to choices for businesses seeking cost-effective talent pools, there’s a vibrant and often overlooked region that deserves your attention: Latin America.
As US businesses search for competitive advantages, nearshore outsourcing—outsourcing to nearby countries—has become a growing trend.
With its skilled workforce and advantageous time zones, Latin America presents a compelling case for businesses looking to optimize their operations through outsourcing. Over the past decade, this region has become a hub for IT services, customer support, finance, and more, attracting global corporations and startups alike.
In this article, we will explore why you should seriously consider outsourcing to Latin America (LatAm) by looking at the benefits while considering the challenges. We will also explore which processes are best to outsource to LatAm and the six best destinations for finding top talent.
What Are the Pros of Outsourcing to Latin America?
Outsourcing has become a strategic operational move for many organizations. Whether offshoring to distant regions, onshoring within the company’s home country, or nearshoring to nearby locations, each type of outsourcing brings distinct advantages.
Here are the key advantages of nearshore outsourcing to Latin America:
Cheaper costs
One of the primary reasons that businesses opt to outsource is cost savings. It’s simple: By outsourcing non-core competencies, companies can benefit from the same quality of work at a lower cost.
Latin American countries generally have lower living costs, which translates into lower labor costs compared to the United States. This cost differential can be especially appealing for businesses in industries like customer support, IT, software development, and back-office operations, where labor costs are a major expense.
In short, in Latin America, you will be able to secure talented workers without breaking the bank.
For instance, in our experience, the salary for a Customer Success Manager in Latin America would likely be between $30,000 and $42,000, offering potential savings of nearly 48% compared to a US-based worker.
Time zone compatibility
US companies often encounter project delays or communication struggles due to significant differences in time zones when outsourcing to countries like India, the Philippines, or China.
However, because of the geographical proximity to Latin America, US workers can work with their LatAm-based outsourced teams in the same or similar time zones. This means real-time communication, collaboration, and timeliness of project delivery are much easier.
Highly skilled candidates
Latin America has a large pool of highly skilled, well-educated professionals. Mexico and other countries have significantly improved their higher education systems, producing graduates with strong technical and professional skills.
Tech specialty
Over the last few years, there has been substantial growth in Latin America’s IT and technology sector, with countries such as Mexico, Argentina, Brazil, and Columbia positioning themselves as tech hubs.
A thriving software industry in LatAm, affordable access to top software developers, and the availability of niche knowledge make Latin America an attractive destination for tech outsourcing.
Intellectual property protection
Most Latin American countries have implemented IP laws and regulations in line with international standards and are signatories to international agreements protecting IP rights. This provides US companies with the reassurance they need for outsourcing operations.
For example, Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and many others are member states of the World Intellectual Property Organization and its many treaties, including the WIPO Copyright Treaty (WCT).
Government support and incentives
Many Latin American countries, like Colombia, provide various incentives and support programs to attract foreign investment and promote their outsourcing industry.
Some offer tax breaks, subsidies, grants, and streamlined administrative processes. This government support further enhances the region’s attractiveness for outsourcing operations.
What Are the Cons of Outsourcing to Latin America?
While Latin America offers numerous benefits for outsourcing, like any region, it has challenges. Awareness of these hurdles and appropriate planning can help mitigate—and often overcome—them.
Language and cultural barriers
While English proficiency is generally widespread in Latin America, variations in accents and language fluency exist. Some workers may have a higher level of proficiency and fluency in English, while others may have limited proficiency. Limited proficiency can affect the clarity of communication, understanding of instructions, and ability to convey complex ideas or requirements accurately.
However, the English proficiency rate is rising, and it’s not difficult to find outsourcing partners with a high level of proficiency to make working together practically seamless.
While LatAm’s proximity to the United States implies cultural similarities, discrepancies do, of course, exist and will vary by country. But in general, accommodating these differences takes no more effort than accommodating a diverse workforce within the US. (It’s also worthwhile to remember that cultural differences often bring fresh perspectives and innovation.)
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Infrastructure limitations
Infrastructure (particularly technological) can sometimes be less developed or stable in some Latin American countries, particularly in rural areas. Yet this is changing rapidly, with many regions investing heavily in technical and logistical advancements.
The right outsourcing partner will have the necessary infrastructure to deliver high-quality services.
Quality and consistency concerns
There might be concerns regarding ensuring quality and consistency when outsourcing to a new region or vendor.
Vetting potential partners thoroughly, seeking references, and establishing clear expectations and communication channels can help overcome such concerns.
Political and economic instability
Certain Latin American countries (like Venezuela and Ecuador) have experienced political upheaval and economic instability in recent years, which can affect business operations.
However, many areas are politically stable with strong economic growth, and a well-informed, strategic choice of outsourcing location can mitigate much of the risk.
What Are the Top Services To Outsource to Latin America?
Below are some of the top services companies often outsource to Latin America:
Software development
Latin America has become a hub for software development outsourcing due to the abundance of highly talented, tech-savvy professionals—and also a reason so many top tech companies have operations there.
Countries like Argentina, Brazil, and Mexico are recognized globally as sources of reliable software and app development solutions. This industry’s growth has been powered by affordable software engineers with strong knowledge in various programming languages like Python, Java, and Ruby on Rails.
Customer support
The cultural affinity and time zone compatibility make Latin America a great option for customer support outsourcing. Many companies typically need to provide bilingual support services in both English and Spanish, so where better to find the best Spanish language skills than LatAm?
IT support and infrastructure development
As companies increasingly rely on IT and digital solutions, the demand for IT support has spiked. Latin America offers not just comprehensive IT support but also infrastructure development services. Various locations, such as Costa Rica and Colombia, have become well-known for their robust IT services.
Digital marketing
With online spaces taking up more of our time, digital marketing is more critical than ever. Latin American agencies have proven expertise in this field, offering services such as:
- Content marketing
- SEO
- Social media management
- Online reputation management
The cost-effectiveness of outsourcing digital marketing to this region allows more room for experimentation and growth for businesses.
Creative and design services
Latin American designers are known for their creativity, originality, and ability to produce designs that resonate with diverse markets.
Whether for graphic, product, website, or UX/UI design, businesses can leverage the unique aesthetic sensibilities and technical skills that Latin American designers offer.
By outsourcing creative and design services to this region, companies can keep their visual brand fresh, engaging, and culturally sensitive, regardless of their market.
Finance and accounting
It’s no secret that finding finance and accounting staff in the US job market is challenging. Outsourcing finance and accounting to LatAm can be a lifesaver for US companies, helping them to streamline their operations and improve efficiency.
From bookkeeping and payroll services to financial reporting and auditing, Latin America offers a wide range of accounting services that can help businesses better control their finances.
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What Are the Top Latin American Outsourcing Destinations?
Latin America offers a variety of attractive outsourcing destinations. Each country offers its unique blend of talents, specialization, and advantages.
If you want to narrow your search for talent and outsourcing partnerships, here are our recommendations for the outsourcing hotspots to consider.
1. Mexico
Mexico has established itself as a popular outsourcing destination due to its proximity to the US, economic stability, and growing tech industry.
The country is highly compatible with US business culture and has talent with excellent English skills, making it an ideal location for customer support, software development, and IT services.
2. Brazil
As South America’s largest economy, Brazil has made significant strides in its IT and software development sector. A highly educated workforce combined with the government’s efforts to promote the technology sector has made Brazil a strong contender for software and app development outsourcing.
3. Argentina
Known for its well-educated, tech-savvy workforce, Argentina has a strong reputation in the software development and digital services industries.
Argentine IT firms are known for their innovation and high-quality outputs. They’re particularly strong in software engineering and application development, offering robust solutions for global companies.
In addition to software development and IT services, it has become a popular location for outsourcing customer support and creative design services.
4. Colombia
Colombia has rapidly grown as an outsourcing hot spot, particularly for IT, support services, and business process outsourcing (BPO). The government’s investment in the tech sector and tech education has paid off, with a wealth of skilled professionals ready to fill roles.
5. Costa Rica
With an excellent education system and high English proficiency, Costa Rica is a popular choice for businesses looking to outsource their customer support or IT services.
The country’s strong focus on sustainability has led to a thriving tech industry. It represents an opportunity for companies to pair with responsible and ethical outsourcing partners, boosting their brand’s social and ethical credentials.
6. Chile
Known for its robust economy and political stability, Chile is a safe bet for outsourcing. The country’s strong focus on innovation and technology has boosted its position in the global outsourcing market.
Chile’s renowned tech industry and skilled workforce make it an ideal destination for outsourcing software development, IT services, and digital transformation projects.
Final Thoughts
Outsourcing to Latin America offers an attractive blend of advantages, from cost-efficiency and time zone compatibility to a highly skilled workforce ready to provide a broad array of services.
Businesses looking to leverage Latin America’s opportunities should carefully consider their specific needs and choose the best destination to fulfill them. Whether you decide on Mexico’s IT sector, Costa Rica’s customer support proficiency, or Chile’s innovation, the region offers powerful alternatives to more traditional outsourcing destinations.
Take a cue from Delve, a digital consulting firm whose rapid growth necessitated quick and efficient hiring. The firm initially sought out three positions but ended up hiring ten skilled professionals from Latin America, including:
- Sr. Programmatic Media Trader
- Marketing Automation Specialist
- Sr. Marketing Data Agent
- AdTech Solutions Consultant
- Digital Marketing Consultant
Their successful scale-up has saved them more than $500,000 annually and was made possible through nearshoring to Latin America, specifically through partnering with Near. Read the case study to hear the entire Delve story and see how you can replicate their success by outsourcing to LatAm.
Or, if you’ve already decided to find your next hire in LatAm, book a free consultation call to discuss how we can help.
