IT outsourcing to Latin America is becoming increasingly popular with a forecast of growth from $17.89 billion in 2024 to more than $27.57 billion by 2028. It’s no surprise that 87% of tech companies are eyeing nearshore outsourcing to LATAM as their go-to strategy for cutting costs. And here is the confirmation: Business Insider reveals that around 75% of US companies are now tapping into Latin America for nearshoring, driving a remarkable 50% surge in annual developer hires from the region.
Today,LATAM outsourcing gains credit from businesses all over the world. Meanwhile, companies like Alcor ride this wave by providing full-cycle software R&D center solutions that simplify the global expansion of tech product companies into Latin America and Eastern Europe. This isn’t traditional outsourcing or an EOR service; It’s a comprehensive solution that will help you grow from 0 to 100 Valley-caliber engineers in just one year without added stress and operational headaches.
So let’s delve deeper into reasons why companies choose to nearshore to LATAM and examine the current state and primary reasons for tech outsourcing to this region. We’ll uncover the leading countries in this field and unveil game-changing solutions to propel your tech business to new heights!
In This Article:
How Does LATAM Outsourcing Work?
LATAM outsourcing is becoming a solid alternative for Canadian, US and European tech companies exploring options beyond Western Europe, the Nordics, and Southeast Asia that have traditionally led in IT outsourcing, Latin America is rapidly advancing. With Asia’s 2024 revenue projected at $114.8 billion, LATAM outpaces it with a remarkable annual growth rate of 9.34%. This growth underscores LATAM’s evolving role in global tech outsourcing—a process involving Latin American tech specialists working remotely on projects for companies in the USA and other countries. LATAM outsourcing typically doesn’t require an employee to move from their residence country but offers a remote working process in synergy with other team members who may be located 1000 miles away.
Here’s an important fact: as the US faces a significant shortage of qualified and affordable tech specialists, outsourcing to Latin America is becoming an increasingly popular solution. Software outsourcing to LATAM is nearly 2.5 times more cost-effective than hiring a specialist of similar expertise in the US or Canada. However, cost is just one reason why LATAM outsourcing is in high demand today. To gain a clearer understanding of this trend, let’s examine some key stats.
Some Stats to Familiarize Yourself With LATAM Outsourcing Market
The most pivotal stats showing the influence of the LATAM labor market in IT nearshoring are as follows:
- According to the ITSM Market in Latin America 2024-2028 report, the Latin American tech Services market will gain more than $500 million by 2028
- With over 9,000 startups and 60 unicorns, the region captured an impressive $3.9 billion in venture capital investments in 2023, solidifying its position as a thriving innovation hub.
- According to Deloitte’s study, tech outsourcing in LATAM assessed its transparency at 54%, trustworthiness at 41%, and business understanding at 40%.
These figures show the impact of outsourcing to Latin America and the value of this regional market.
5 Reasons to Outsource Software Development to Latin America
Stats are just the evidence of trends, but the main reasons to outsource to Latin America tech specialists are quite diverse. Here we have 5 of them as the core benefits of nearshore outsourcing in LATAM.
H3: A Diversity of Developers Available for Employment
Latin America boasts over 2 million tech professionals, solidifying its role in the global tech industry. With 430 universities in the 2024 QS World University Rankings, including 20 top-ranked in the region, the steady stream of STEM-educated graduates ensures easy access to highly skilled talent for tech companies.
H3: A High Quality of Software Development
Latin America’s software developers excel in languages like .Net, Java, Ruby, Python, and more, while also mastering mobile development, data analytics, cloud computing, and database systems. According to the Global Skills Report 2023, countries like Colombia, Mexico, Brazil, and Argentina rank among the top 30 globally for tech and data science skills, making the region a hotspot for high-quality software development through nearshore outsourcing.
H3: Affordability and Competitive Rates
Outsourcing software development to Latin America offers significant savings, with rates up to 70% lower than in the US, Canada, and Western Europe. While Full-Stack engineers in the US can earn up to $104K annually, those in LATAM typically make $38K-$42K, providing a cost-effective yet skilled workforce.
H3: Ease of Communication
Latin American developers are highly proficient in English, with Colombia and Argentina leading the way. Moreover, according to the EF English Proficiency Index, developers in Latin America show high and moderate fluency, ensuring smooth communication in international and multinational teams.
H3: Geographical Proximity and Singular Time Zones
Geographical proximity makes nearshore software development in Latin America ideal for US and Canadian tech companies. With time zone differences of just 1-4 hours, coordination is seamless, enhancing team management and supervision. This closeness also accelerates onboarding and strengthens team cohesion.
That is, nearshore software development outsourcing is beneficial for businesses that need to engage talents with no extra expenses.
Best LATAM Countries for Outsourcing in 2025
Although the region attracts true tech business sharks like Microsoft, Google, Amazon, and Apple, these giants typically choose a particular area where the best LATAM countries for outsourcing are located.
The list of the best countries for outsourcing to Latin America includes the following:
H3: Mexico
Mexico hosts over 400 tech companies and benefits from its proximity to the US. Besides, Mexico in recent years has become a popular e-migration spot for Eastern European software developers who fled from war conflicts.
Key features of Mexican tech outsourcing:
- Over 225,000 developers engaged in the tech industry
- Ranks 1st in the region for the Global Startup Ecosystem Index, with a total of 12,900 startups and 10 unicorns.
- 120 tuition-free tech universities
- Innovative tech hubs in Guadalajara, The Central Tech Powerhouse (the Mexico City), Tijuana, and Monterrey.
H3: Argentina
Argentina is known for its advanced tech development and high software readiness. Its expertise in software engineering, app development, and customer support makes it a leading LATAM outsourcing destination. Additionally, a skilled Eastern-European diaspora enhances its tech talent pool.
Key features of Argentina’s tech outsourcing:
- Projected increase in tech services revenue of $4.5 billion from 2023 to 2028.
- The 69th place on the Global Innovation Index 2022
- The 3rd largest Tech market in the region
- Innovative tech hubs located in Buenos Aires, Rosario, Mendoza, and Cordoba
H3: Colombia
Colombia is quite a new member of the best LATAM outsourcing destinations. After the Colombian government decided to enforce its tech attractiveness and invested top dollar in this sector, Colombia’s tech market is projected to grow at a CAGR of 13.63% to soar past $35 billion by 2027. Columbian tech talents became highly sought-after, especially in such niches as IT support services and business process outsourcing.
Key features of Colombia’s tech outsourcing:
- Over 150,000 tech experts in the country’s talent pool
- Innovative tech hubs in Bogota and Medelin
- Ranks 3rd in South America and 40th globally for its startup scene
- Tech giants like Microsoft, Google, IBM, and Oracle outreach Colombian nearshore pros.
H3: Chile
Unlike other countries in the region where global and political changes often dramatically strike the economy, Chile remains an ‘island of stability’ of LATAM with a strong focus on innovations and high technologies, especially.on digital transformation projects, and software development.
Key features of Chile’s tech outsourcing:
- Over 61,000 software developers in local talent pool
- Over 4,000 software development companies
- Chilean city of Santiago is among the top 5 largest tech hubs in LATAM
- Revenue in the Tech Services market is projected to reach $2.07 billion in 2024
As for the top outsourcing companies in LATAM, they are numerous, and each country can boast of 100+ companies engaged in the hi-tech outsourcing sector. Regarding various types of services, you are welcome to choose among them, yet, it is better to get some help from recruiters focusing on this region and knowing its specifics.
Better Than Outsourcing Software Development to LATAM
Today, specialized companies streamline tech businesses’ entry into the LATAM market by providing highly skilled developers with ease and security. However, traditional outsourcing may fall short. That’s where all-in-one solutions proividers like Alcor come in. This provider offers a blend of tech recruitment, EOR services, and operational support. With Alcor, you can access the top 10% of Latin American developers without buyout fees and save up to 40% on costs, compared to outsourcing. Plus, you can establish your R&D center without setting up a legal entity, allowing you to focus on developing your product in your preferred location while the provider handles the operational details.
In conclusion, LATAM outsourcing has significantly evolved over the past two decades, transforming from a region with limited tech infrastructure into a key player in the global tech market. As American and Canadian tech businesses seek cost-effective solutions post-pandemic, LATAM offers a compelling option for non-tech companies needing software development.
Key benefits of LATAM IT specialists include:
– Proximity and similar time zones with the US and Canada
– No language or cultural barriers
– High professionalism and expertise
– Affordable rates compared to the US and Canada
LATAM outsourcing is now an attractive choice for all tech companies, from indie developers to large corporations. If you want to enhance your business and enter the LATAM market, you can do this with your local dedicated outsourced team. How can you do this with minimum effort? Just get in touch with Alcor, a reliable company working for the sake of businesses’ expansion in Latin America
