Bridging The Talent Gap: Latin America’s Outsourcing Boom

  • Agile
  • Nearshore
  • Software Outsourcing
  • Latam Outsourcing
  • Nearshare Sofware Development

13 January 2022


Difficult times beget prosperous times, or so the saying goes. Insurmountable obstacles lead to creative solutions, as people tend to rally up their available resources in order to solve unprecedented complications. In recent memory, no other year has yielded a better example than these last two. The pandemic funneled a decade’s worth of tech adoption and digital transformation into one immense maelstrom of creativity.

It’s easy to look back on this and see only the brightest moments. Technological advancements lead to widespread expertise, and now big tech companies are driving up big wages, paying for more efficient workers in order to gain an edge on the competition. Big players are not looking in their own backyards anymore - the whole world has become fair game, to put it in simple terms.

This is nothing new. As early as 2009, CEOs showed concern for potential tech shortages. By 2019, this preoccupation had been exacerbated even further, according to Forbes magazine. In the times known by many as “The Great Resignation”, industry leaders are learning new ways to manage their workforce whilst acquiring newer talent and handling inflationary concerns.

Perhaps this is why many companies are turning their gaze towards Latin America. In recent months, it has been shown that LATAM’s become a viable region for technological prosperity, covering the empty spaces traditional institutions have failed to take note of. It’s no surprise that, given the region’s technological boom, many companies would seek out to bridge the talent gap using those (human) resources.

A Brief History

The 2021 CompTIA Workforce and Learning Trends Report shows that at least 40% of all companies hired tech staff in the past year, with 66% looking to up the ante in the following year. This is especially noticeable as tech staff used to be a separate entity from run-of-the-mill companies. In the past, a restaurant chain would hardly need to invest in a tech workforce and find the right talent in order for their company to succeed. In the post-pandemic reality, this same restaurant might need to invest in tech staff just to survive.

Digital channel adoptions have created a ripple effect across many industries. Payment apps, delivery services, inventory management, and e-commerce platforms are just a few elements that are not going to disappear overnight. A lower infection rate will simply not be able to change public opinion, which tends to favor faster and direct experiences via digital channels.

At the same time, a great exodus might be on the way. The 2021 Microsoft Work Trends Index estimates that over 40% of employees are considering switching jobs. Employees have found that they can be picky with regards to their preferred environment, and the fact that tech skills are so in demand yields credence to that perception. In order for many companies to successfully navigate this development, they will need to get creative to cultivate tech talent. Otherwise, according to a Korn Ferry study, the US alone could miss out on $160 billion of annual revenue by 2030 if their companies don’t assess this problem early.

Right now, the current labor climate looks grim. Workers demand more flexibility and higher wages. The hybrid schedule is not going to disappear either, and companies must realize that. However, the lack of available and willing personnel might be salvaged if the industry leaders switch their focus to other countries.

Shaping The Outsourcing Economy

Outsourcing has become quite a popular trend - 72% of companies prefer doing it, according to Deloitte’s Global Outsourcing Survey. Of course, there are myriads of alternatives that one could seriously consider before investing in an outsourcing initiative. Why don’t companies simply focus on upskilling their employees? After all, tech apprenticeships have also risen in popularity, eliminating the need for a four-year degree requirement.

But there are limits to this outlook. Yes, eliminating the qualification barrier does help to bridge the talent gap. It’s also noteworthy that many companies seek to alter inmigration policy, helping potential workers along the way in the hopes of attracting more talent. However, the fact remains that a lot of these strategies are very well suited for big companies. Medium-sized enterprises and startups still have to contend with bigger wages and the competitive edge they need to provide to these potential employees.

As such, there are plenty of potential benefits that these medium and small companies can reap by deciding to outsource their workload.

Product Development Benefits of Outsourcing

Cost Effectiveness

Outsourcing, be it nearshore or offshore, provides plenty of chances to decrease budgetary expenses, as well as increase productivity. Office rent, insurance, and payroll savings become easier to handle, allowing for an allocation of resources towards developing an MVP. This in turn shapes productivity, as the company’s better equipped to handle this task.

A statistical report published by Quartz says that up to 46% of companies fail in the beginning due to budgetary expectations or simple lack of funding. This makes it the bigger outlier out of all possible dangers a startup faces. LATAM’s past economic troubles have created a generation of workers who would be willing to partner with startups that provide the financial security they need.

Enhanced Time Management

The difference between outsourcing and training new staff is easily observed when taking into account time constraints. When working with nearshore developers, their proximity to the United States brings you two potential benefits:

One, they live in similar time zones. One of the main reasons CEOs don’t outsource their workload immediately is because they fear having to manage multiple working hours and watching their project fall apart amidst the confusion. Due to LATAM’s similar time zones, this point becomes moot. The secondary benefit lies in the fact that this workforce, unlike newly-trained staff, is already equipped with the necessary skills to work in an agile environment.

Talent Benefits

Tech behemoths already take up a lot of space, and not just in the metaphorical sense. Their scope is large, so they can easily nab the best individuals at a local level, and startups have a hard time competing on that level. On the other hand, the inverse happens to LATAM workers: they have a hard time getting noticed by US companies, despite their level of expertise matching or even exceeding the usual parameters.

By expanding your scope, your company or startup has access to a huge pool of talent, reserves and individuals filled with great ideas yearning to prove themselves. Due to the fact that LATAM is culturally closer to the US than other countries, this also eliminates some cultural barriers that otherwise might be difficult to assess. This is not an invitation to put a blanket over the region and treat every country as one and the same - but the challenges will be significantly lowered when one takes into account elements like language, politics and religion.

What To Consider When Outsiurcing Nearshore Developers?

To hire an outsourced development team can be a daunting task. There are many elements to consider when recruiting nearshore personnel, but some key aspects to consider are the following:

  • Budget: Licensing, recruitment costs and basic requirements should always be considered first and foremost. Countries like Colombia, with an hourly rate of $25 to $45 an hour might seem attractive, but you need to carefully review every expenditure before jumping in.
  • Countries of Choice: Locations, firms, andand and team structure will vary depending on your country of choice. Each company has its own advantages, cultural preferences and language options, so these will likely come into play when deciding on your potential workforce.
  • Plan of Action: Nearshore developers are willing to work, yes. Argentina, Venezuela, and Colombia are filled with efficient people - but they need to know that your company has a definite goal in mind. Treating them as equals and letting them know your objectives and needs will help your company a long way.

Being aware of your limitations and your scope will remain vital. By investing in efficient nearshore development teams, your company is making a compromise to work towards a common goal. In the end, nearshore outsourcing in Latin America brings a lot of benefits to companies in a time when many of them need outside help, so it’s best to maintain an open mind and an honest assessment in order to make this wonderful partnership work.

  • latam outsourcing
  • Nearshore Software Development
  • Software Outsourcing
  • nearshore outsourcing

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