Today, you may have heard that one in four US businesses currently manufacturing in Asia plans to move their outsourcing operations to a nearshore location like South America.
That trend extends further than just manufacturing. Tech giants like IBM, Amazon, and Google have invested heavily alongside manufacturers to expand operations in South and Central America. Read more about that in our article on why to create a nearshore software development center in LatAm.
That’s because South America is increasingly advantageous to US enterprises due to its:
- Cost of labor
- Close proximity to North America
- Rapidly growing local economies
- Similar work culture
We created our business, TECLA, to help ambitious businesses tap into this growing nearshore movement simply, quickly, and legally. Here’s our explanation for why nearshoring in South America is growing in the IT outsourcing field and how you can use our service to tap into it.
Content Overview
What is Nearshore IT Outsourcing?
Nearshore IT outsourcing is the practice of hiring IT (programmers, analysts, and other tech-related positions) workers in neighboring countries. In contrast, offshore outsourcing is where these services are provided in distant countries.
For a US company, nearshore outsourcing could be in any country in South America or Canada. Offshore outsourcing would be classic locations like India or the Philippines (remember the 2010s comedy Outsourced?).
The Advantages of Nearshore in South America
To the savvy IT department looking for quality talent at a bargain price, South America provides:
- Geographical proximity to the US and Canada – That means reduced travel time and costs for management.
- Overlapping time zones with the US and Canada – This makes communication and collaboration much smoother.
- Budget-friendly service – While IT is still a growing industry in South America, its current programming workforce offers comparable talent to the US at a fraction of the price (more on that below).
What is the IT Talent Pool Like In South America?
Here are a couple of regions businesses today hire from today and the kinds of talent they offer:
- Brazil – is the largest country in South America with over one million professionals working within the IT industry. It’s known as one of the best regions for sourcing frontend developers.
- Argentina – has a highly educated population with huge amounts of new graduates majoring in programming, psychology (which trains them for HR roles), and business.
- Colombia – is becoming a powerful tech industry giant with multiple cities becoming rising tech hubs. Medellín is often referred to as the "Silicon Valley of Latin America."
- Peru – is investing heavily in its IT education industry and boasts a high level of local proficiency in fields like artificial intelligence.
For more in-depth information on where each nation specializes, check out our guide to the top nearshore outsourcing destinations in Latin America.
How Much Does Nearshore in South America Cost?
South American IT workers often cost as much as three to four times less than US workers of the same skill level. Outsourcing website Deel reported to Business Insider in 2023 that average salaries were in the $70,000 range per year while median salaries in the US were over $127,000.
We have a graph of the different costs here that we pulled from a previous article written in 2023 on how much Latin American software developers cost compared to their US equivalents. It’s worth noting that Mexico and Costa Rica are technically Central, not South America.
What Are The Time Zone Differences in South America?
Since most countries in South America lie on the same longitude lines as the US, most are within only a couple of hours of almost any part of North America (except Hawaii). This means that your team at home can more easily stay in contact with the remote teams.
Here’s an older chart from Wikimedia commons showing the different time zone placements in the region (with their corresponding GMT times).
How Is South America Evolving into An IT Hub?
Emerging Tech Hubs In South America
- São Paulo, Brazil is becoming a popular destination for multinational tech firms, such as Google. Brazil’s government has generated tech-supporting policies, including tax incentives for tech companies to further encourage its IT professionals.
- Buenos Aires, Argentina is rapidly becoming known for its impressive tech talent pool as well as its successful and creative tech start-ups.
- Bogotá, Colombia has been working towards improving its tech success and encouraging entrepreneurship.
- Lima, Peru. The convenient location of the city supports global business practices and is rapidly climbing the tech start-up scene. The Peruvian government has been fostering support for tech companies in their infancy with campaigns like “Startup Peru”.
Policies and Incentives Affecting South American Tech
Here are just two (of many) examples of new pro-IT nearshoring policies affecting the region:
- Nova Industria (Brazil) – In 2024, Brazil announced a new policy lasting until 2033 digitally transforming 90% of all digitized Brazilian industrial companies (currently 23.5%); and tripling the share of national production in new technology segments. They also plan to improve the business environment and make the country more accessible for outside investment.
- Teleworking laws (Argentina) – In 2020, Argentina began crafting legal frameworks for remote working policy. While right now it’s little more than a basic rights outline, it’s part of a general shift in Argentina’s traditionally strict, protectionist system. They’ve also made it possible for anyone (including foreigners) to establish local legal entities within 24 hours. In addition, the law aims to give 75% tax deductions for tech startups down the line.
Real-World Success Stories of South American Nearshore
We pulled two examples from TECLA's case study archives to highlight how businesses might use nearshore outsourcing for their IT departments.
Scene Health
In 2022, TECLA helped a telecare company called Scene Health to outsource three senior Full-stack JS Developers, one Sr. QA Test Engineer, and one Sr. React Native Developer from Argentina, Peru, and Colombia in less than eight weeks. Two years later, four out of five candidates still work with the business.
Read more about how we helped Scene Health in our case study.
Wesper
Also in 2022, TECLA helped Wesper, a healthtech startup with $6M in funding and 22 employees based in New York City. Wesper was unable to attract a sufficient number of qualified applicants in the U.S. for roles including:
- Senior data scientist
- Product manager
- Android developer
- Python developer
- QA engineer
- iOS developer
- Product designer
The high salary expectations of experienced professionals in the U.S. (especially in New York) made Wesper’s founders worried about burning too quickly through its runway. We helped them source all of their roles across multiple South American countries within weeks.
With their impressive numbers gained from saving on hiring, Wesper was able to receive another $9 million Series A funding round shortly after.
Read more about how we helped Wesper in our case study.
South America vs Other Destinations
As you’re probably aware, businesses have been outsourcing IT operations to other locations around the world for decades. Two primary regions traditionally have been Eastern Europe (Poland, Ukraine) and Southeast Asia (India, Philippines, Vietnam).
Below is a chart showing how these other regions stack up with South America based on cost, cultural differences, time differences, ease of doing business, and talent availability.
How to Create Your Nearshore IT Department in South America
If you’re looking to quickly outsource your IT department to South America, we recommend you check out our nearshore outsourcing service at TECLA first.
We founded TECLA to help businesses like yours create nearshore development teams quickly and without all the headaches of doing it yourself in a foreign environment. We specifically provide:
- White-glove talent sourcing from our vetted nearshore network
- Checks for experience, GitHub entries, and past projects
- Technical assessments and a thorough qualification matrix
- Vetting for soft skills:
- English, communication, and technical skills.
- Tests for English and communication
- Background checks:
- We will check references and report findings for each team member
- We’ll run a criminal background check on each hire
- Employer of record services:
- You have an MSA (Master Service Agreement) with TECLA (a U.S.-based company)
- Your legal risk and compliance requirements are effectively eliminated
- Agent of Record & Full Legal Compliance
- We manage all benefits and HR with each of your team members
- We support each of your team members with equipment and HR
- You have an assigned Performance Manager who makes sure that each of your team members is performing and staying long-term
Interested in building your own nearshore development team? Check out our monthly rate calculator here. Or get a custom quote here.
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