Regional Hubs and Global Expansion
All across Latin America, regional hubs are sprouting up to help US- and European-based businesses expand globally. These companies are also outsourcing development to cut costs, get to market faster, and mend the internal skills gap. Latin America, in particular, is going to be a prime destination for 2018.
Though Asia is still a popular outsourcing destination, organizations are realizing the benefits of working with Latin American-based outsourcing companies and moving work there. Here are five reasons why outsourcing development to Latin America will increase in 2018.
#1 Cost Savings
All companies want to cut costs, which is why outsourcing development is an attractive option. Accelerance released the 2017 Guide to Global Software Outsourcing Rates which revealed the cost of various technical positions around the world. Compared to North America, the costs in Latin America are drastically lower. For example:
- Junior Developer in the US $95 – $101 per hour; in Latin America $25 – $35 per hour.
- Mid-level Developer in the US $120 – $127 per hour; in Latin America $35 – $45 per hour.
- Senior Developer in the US $140 – $148 per hour; in Latin America $35 – $50 per hour.
- Junior QA in the US $70 – $74 per hour; in Latin America $20 – $30 per hour.
- Mid-level QA in the US $90 – $95 per hour; in Latin America $30 – $40 per hour.
- Senior QA in the US $130 – $154 per hour; in Latin America $35 – $45 per hour.
For companies looking for cost-effective solutions, Latin American developers keep cost down without sacrificing quality of work.
#2 Ease of Work
Latin America enjoys distinct benefits over Asia when it comes to working with US-based partners. Latin American countries do not have time zone problems, so US-based companies can collaborate in real-time with developers, instead of starting and stopping work. Furthermore, there are far less cultural boundaries since Latin American countries are more like their North American neighbors in terms of work etiquette. Lastly, as a Deloitte report on outsourcing points out, “Latin American governments continue to support free trade and promote various English language support programs to attract global service providers and companies alike.”
#3 Trust is Building in the Region
According to a Deloitte survey on outsourcing, 78% of respondents felt positively about their outsource development relationship. In the same survey, business executives noted they plan to increase outsourcing by 14 – 36%, depending on the business function being outsourced. Deloitte also found that Latin American countries are becoming regional hubs at an increasing rate. All of this points to more trust in Latin American outsourcing companies, who find themselves called upon more and more by US businesses looking to expand.
#4 Geographically Close
Many companies want to visit their outsourcing partners, and most Latin American cities are far easier to get to than those in Asia. Eduardo Araujo, vice president and general manager of HP Enterprise Services, notes, “There is a very flourishing market for outsourcing in Latin America partly because it’s on the same time zone as the rest of the Americas, so it’s a natural connection.” Latin American-based developers can offer real-time support to US companies looking for a closer relationship with their outsourcing partner.
#5 Strong Infrastructure
Latin American city hubs such as Buenos Aires and Santiago have robust infrastructures, making them a good partner for outsourcing tasks. Since almost all communication takes place over the phone or online, it’s vital to partner with a company located in an area with high-speed broadband connections and reliable mobile Internet.
As companies of all size continue to outsource development, many are realizing the benefits of working with a Latin American-based company. Since outsourcing across almost all industries is set to grow next year, we expect to see more and more organizations partnering with Latin American outsourcing firms for the ease of doing business, high quality of work offered, and cost-effective rates.