The Future of IT Staffing is in Latin America

Since 2020’s global pandemic and the Great Resignation that followed, the U.S. workforce has taken a step back from the job market, while Latin America’s workforce has taken strides forward in the IT industry.

For decades, thousands of companies have relied on outsourcing, particularly in European and Asian countries. Now, some company leaders are rethinking their recruitment strategies, turning to talent closer to home — where candidates are more accessible, more affordable, and provide the same quality of service.

As the IT industry is already a heavily competitive one, the need for acquiring top talent is growing more dire. Niche software skills in tech development are in high demand, yet the supply of workers to fulfill that need has seemingly disappeared.

Fortunately, Latin America is picking up the slack. With a surge in remote development opportunities, higher quality education, and instruction of company culture and workplace values, outsourcing in Latin America has become the hiring method of choice for growing tech businesses.

The Recent Boom In LATAM IT Workforce

One of the main reasons for the Latin American tech boom is the growth in education programs. Extensive training courses are becoming more widespread for young students, which dive deeper into advanced IT development fields.

These programs focus not just on the instruction of knowledge, but how to solve real-world problems. Students must create innovative solutions for unique issues, teaching them how to practically apply their IT skills.

Most courses last from three to six months, and universities can partner up with IT companies to ensure students are training and practicing with the most up-to-date software. Meanwhile, as the LATAM curriculum changes, so do the needs of IT companies. For example, more U.S-based organizations are finding greater value in nearshoring talent, rather than recruiting locally.

Over recent years, the cost to hire U.S. candidates has become more expensive, and workers’ skill sets have simultaneously gone down in number and value. This forces U.S companies to look for other talent hives to find affordable and quality talent — and Latin America has become the latest tech hotspot.

What LATAM Candidates Bring to the Table

Perhaps the most obvious reason why nearshoring LATAM developers is so popular is due to their geographical proximity. Closer regions can generate more consistent communication, which is a key element for any successful company in the tech field. This offers greater room for innovative collaboration, as teams can expand meeting availability and accomplish more work.

What’s more, Latin American countries have a closer cultural match to that of the United States. Initially, this might seem irrelevant for a tech company looking to hire a developer. However, similar culture means the general population is consuming the same media, the same technology, and the same brands. This, as a result, allows local and remote teams to blend more seamlessly and effectively connect on projects.

Another benefit that particularly stands out to most U.S-based companies is pricing. According to Zippia, the average cost per hire in the US is $4,700 — costing up to 40% of an employee’s base salary to recruit a new hire.

Enter, Latin America, whose lower cost of living allows for more cost-effective job rates. Local businesses can hire three Latin American developers for the price of one US worker. With many still recovering from the financial effects of the pandemic, lower hiring expenses might be all its takes to convince a company executive to look elsewhere for workers.

So, what does this mean for U.S-based IT companies?

Since many small to mid-sized tech companies have already realized the benefits of LATAM nearshoring, internal project management teams can integrate with nearshore specialists to offer niche services and complete projects. This opens up a whole new talent pool for growing businesses to draw from — one with similar work habits, education, time zones, and cultural behaviors.

Growing In Skill, Not Just Size

While the talent pool itself is expanding, many LATAM workers are accomplishing more in the IT industry than ever before. A larger number of startups have launched in the past few years, with engineering and IT development as the top line of work.

Since 2019, the number of IT startups has increased by nearly six times in value — escalating from $38 billion to more than $200 million in just three years. As interest in these markets increases, so does the demand for highly skilled workers — and Latin American countries are doing their part to further this initiative.

Columbia, for example, dedicates 4.4% of its GDP to education, with IT and software development as the leading academic fields. Likewise, Argentina has boomed in its evolution of expansive metropolitan economic centers, which cultivates technologically-fluent developers.

Just behind Argentina is Brazil, which leads the way in cost-effective working environments and instills creativity and innovation in its software developers. While these countries serve as just a small example of the growing skill sets in Latin America, US companies are already taking notice, recruiting nearshore talent to meet their tech development needs.

Outsourcing Your Tech Needs to LATAM

As the job market grows more volatile, companies must reevaluate their hiring and recruitment strategies. While hiring locally remains an option, shrinking talent pools and diminishing skill sets aren’t making it easy for organizations looking to bring on new team members.

That’s why so many are turning their attention to nearshore staffing in Latin America, where candidates are qualified, accessible, and affordable. Proximity offers consistent communication, and similar cultural trends also allow for seamless collaboration between teams.

This trend doesn’t end with short-term projects, either. More companies are making their remote LATAM workers permanent team members, as the benefits of nearshoring only grow more evident. Rising education standards generate larger pools of up-and-coming developers trained to fit the needs of U.S-based IT organizations.

The immediate benefits are clear, but companies are also participating in ongoing successes. The lesser-trodden LATAM market allows companies to offer more flexible working conditions, which enriches company-staff relationships and boosts retention rates. Combined, these benefits directly lead to lower expenses, higher profits, and a greater ability to scale in the future.