The US tech companies have proved their tendencies to hire LATAM developers: Crunchbase reports that in 2023, the yearly hiring grew by 50%. What drives them to the region?
I’m David Gomez, Lead of the IT Recruitment department at Alcor, with 7+ years of experience in hiring senior developers across LATAM. Our R&D center services and IT recruitment agency helps tech product companies scale by building high-performing software engineering teams from 0 to 100 employees within a year.
In this article, I’ll share my insights, demonstrate the region’s growth, draw a portrait of Latin American developers, and unveil salaries in top-tier locations. Let’s begin by answering the question…
Is Outsourcing to LatAm a Trend of 2024?
Looks like it. Not only does Latin America boast skilled tech talent, but it also offers a vigorous software engineering landscape. Just see the figures:
- The South American software market shows positive revenue dynamics: over the next four years, it will grow by more than $3 billion, ultimately reaching $18.7 billion in 2028.
- As for the revenue in the Latin American outsourcing market, it will surpass $25 billion by 2028.
- The region houses over 9,000 startups, including 60 unicorns, which attracted $3.9 billion in VC investment in 2023.
- Latin America is home to 23% of global fintech businesses. In this regard, the fintech unicorns, such as the Mexican company Stori, are driving the demand for financial services that are not accessible in the traditional sector, Nasdaq informs.
- Transportation unicorns have secured another top spot: Kavak from Mexico and Rappi from Colombia are the leading unicorns in LatAm.
- The region is famous for its high digital transformation potential. So far, the change is what it’s cracked up to be: the Global Innovations Index 2023 singled out three LATAM countries: Brazil, Chile, and Mexico.
Finally, what are the merits of the decision to hire Latin American developers? Here’s what you should know:
Pro: Skilled and Abundant Talent Pool
Latin America has amassed a 1.75M+ pool of top talent. Brazil comes first with a 750K-developer talent pool, followed by Mexico and Colombia with 700K and 150K, Argentina with 115K, and Chile with 61K. In addition, software developers in LatAm possess an impressive tech stack that I’ll discuss later in the article. Stay tuned!
Moreover, the region has embraced software development trends such as mobile development, AI, fintech, and cloud. With a striking presence of 430 Latin American universities in the 2024 QS World University Rankings, the tech stacks of software engineers will improve even further.
Pro: Developed Tech Infrastructure
The continent heavily invests in its tech infrastructure: Mexico alone boasts 20 tech parks, not to mention buzzing IT hubs in Mexico City, Monterrey, and Guadalajara, the “Silicon Valley of Mexico”. Developers in LatAm benefit from government incentives to speed up tech education: take just the Argentina 4.0 Program, Chile Digital 2035 plan — the first aims to train 70K programmers a year by offering free coding courses, while the latter boosts security and public services digitization. Last but not least, marvel at the growing startup scene in Colombia, which scored high in the 2023 Global Startup Ecosystem Index.
Pro: Remarkable Cost Efficiency
Transferring your software development to South America can help you slash costs in three. Compare annual salaries: a Full-Stack developer in the US earns up to $104K, while LATAM developers make an average of $38K-$42K a year, according to our internal salary data.
Pro: Seamless Cooperation
Thanks to geographical proximity, the nearshore software development process is hassle-free. The time zone difference amounts to 1-4 hours at most, making team management a no-brainer. To add to it, geographical closeness results in cultural affinity and similar working ethics, further enhanced by high levels of English proficiency, present in the skill set of Latin American best talent. For a fuller Latin American developer profile, keep reading until our next sections.
What about the pitfalls of scaling to LatAm?
Con: Data Leakage
Latin America has proven vulnerable to cybersecurity attacks due to the insufficient legal enforcement of corresponding measures. This poses a threat to your product’s core intellectual property. While Argentina, Brazil, Mexico, and Chile are adopting frameworks to guarantee data protection, it is better to stay vigilant if you hire developers in Latin America. Ensure database security and encryption and choose a model where you keep the IP rights within the company. For example, traditional IT outsourcing or IT staffing services in Latin America involve an external agency that leases programmers for you. In contrast, alternative models discussed further in the article allow you to hire coders directly into your team.
Con: Intricate Taxes
Latin American taxation is generally appealing to foreign tech companies. In Colombia, for example, IT companies investing in R&D can receive a 25% tax discount and a full tax deduction for investing in innovation.
At the same time, if you want to hire LATAM developers, you need to consider the tax difference between two major employment contracts, such as traditional and B2B. How does that work? Take Mexican business taxes. For traditionally employed software engineers, the Mexican government requires a 25% personal income tax plus a 30% company tax. When contracted under the B2B model, the professionals are only subject to a 25% tax rate. Pro tip: look for providers who know the ropes of working with nearshore developers on B2B terms.
Con: Complex Labor Laws
As labor landscapes differ across countries, you will inevitably stumble across differences in PTO, working hours, and national holidays. Before cooperating with software engineers, I advise getting acquainted with the legislation and weighing up all the risks.
Another option is to seek help from local experts. For instance, Alcor boasts a professional legal team with experience in navigating foreign labor legislation. Our expertise in legal compliance has already saved the day for Ledger, Bigcommerce, and other IT product companies.
Conclusion: Nearshoring in Latin America packs a punch with its abundant talent, solid tech setup, cost-effectiveness, and smooth collaboration. Yet grappling with issues like data security, tricky taxes, and diverse labor laws calls for mitigation strategies. With the proper prep and guidance from seasoned hands, diving into Latin America’s talent pool can be a game-changer for tech firms looking to thrive.
Latin American Developer Portrait
To provide more details about software developers from Latin America, let’s overview their hard & soft skills, plus cultural peculiarities.
Argentina
In comparison with other developers from Latin America, coders from Argentina can be described thus:
- Experts in database & mobile development, plus Python, TensorFlow, SQL, NLP, R, and Cloud APIs;
- Leaders in English proficiency — #1 in LatAm!
- Prized for autonomy, meticulousness to detail, and commitment to quality work;
- Culturally famous for innovation and creativity in their workplace environment.
Chile
Chilean coders don’t lag behind as:
- Experts in data science, data analytics & statistical programming, as well as Java, Python, Node.js, Perl, PHP, and ASP.NET;
- Leaders in digital skills and #10 in LatAm for English skills;
- Prized for flexibility, thirst for challenge, and smooth communication;
- Culturally famous for modesty, solidarity, and loyalty.
Colombia
What about Colombia? Colombian developers are…
- Experts in startup programming, JavaScript, Python, Ruby, SQL, and HTML CSS;
- Leaders in JavaScript: Colombia has an entire hub with more than 3,000 members and regular JS-meetups in 8 cities;
- Prized for openness, superior time management skills, and adaptability;
- Culturally famous for valuing trust and close-knit teams and showing work initiative and dedication.
Mexico
Mexican tech specialists close the list with the following key characteristics:
- Experts in mobile development & fintech, plus JavaScript, Java, Python, SQL, and C++;
- Leaders in tech skills — #2 in LatAm and #4 worldwide;
- Prized for assertive and expressive communication, punctuality, and excellence-driven work ethic
- Culturally famous for teamwork, collaboration, and continuous learning values.
Latin American vs US Developer Salary
To hire a software development team in Latin America wisely, take a look at the senior developers’ wages — knowing the highest possible limit allows you to better calculate your total cost.
| Technology | Senior Developer’s Gross Annual Income, USD | ||||
| USA | Mexico | Argentina | Colombia | Chile | |
| Java | $150,500 | $47,000 | $50,500 | $49,500 | $49,000 |
| Node | $143,000 | $37,000 | $45,000 | $46,000 | $42,000 |
| Angular | $123,500 | $41,750 | $45,500 | $52,500 | $40,000 |
| React | $138,500 | $49,250 | $47,000 | $52,500 | $41,000 |
| .NET | $142,500 | $39,250 | $39,000 | $55,500 | $45,000 |
| Python | $145,000 | $35,000 | $43,000 | $44,500 | $37,000 |
| DevOps | $145,000 | $35,500 | $39,000 | $39,000 | $54,000 |
My team and I have gathered the data based on widely known front-end and back-end frameworks. A US front-end developer with React and Angular can earn from $123,5K to $138,5K. In Chile, the wage for such expertise is the lowest among the compared countries — from $40K to $41K, while Colombia offers the highest front-end remuneration of $52,5K.
The programmers, well-versed in .NET and Node, typically make more — $143K in the US and up to $55K in LatAm. Finally, back-end developers with tech stacks in Python, Java, and DevOps receive the highest wages in the US, from $145K to $150K. In South America, however, the salaries tend to be lower. Mexico pays $35K-$47K, Argentina and Colombia top up the wage from $39K to $50K, and Chile offers the most — $54K to DevOps specialists.
To sum up, the costs to hire LATAM developers show less distinction between front-end and back-end tech stacks, as opposed to the US.
| Sphere of Development | Senior Developer’s Gross Annual Income, USD | ||||
| USA | Mexico | Argentina | Colombia | Chile | |
| Web | $165,000 | $52,000 | $50,500 | $46,500 | $37,250 |
| App | $194,000 | $34,000 | $36,000 | $27,000 | $36,000 |
| Software | $180,000 | $47,000 | $56,000 | $43,000 | $49,500 |
| AI | $186,000 | $52,000 | $30,000 | $40,2500 | $43,000 |
Similarly to the previous table, this data shows that Latin American salaries are 3-4 times lower than US ones. Another result worth noting is that in the US, senior software engineers in the AI and App industry tend to show a wider gap between the US and LatAm — $186K-$194K against $33K-$41K, respectively. The opposite goes for the software and web spheres, where the difference between the salaries of software developers in Latin America and the US is narrower.
Why is that so? Latin America drives AI & app development, whereas software and web stand out less. It also abounds with developers possessing Fintech or Healthcare development experience. Alcor’s research shows that Latin American devs earn $58,5K-$74,5K in the Fintech sector, as opposed to whopping American rates ranging from $114K to $186K. As for Healthcare development, the remuneration contrast is the following: $56,5K-$70K against $108K-$168K, respectively. In addition, the countries with the lowest wages in these spheres are Argentina and Colombia. Therefore, while in the US, this additional factor, coupled with the overall tech shortage, will drive salaries higher, LatAm provides access to highly skilled programmers at a lower rate.
What Else to Consider When Hiring LatAm Developers
How to Hire Latin American Developers
Once you’ve chosen the location, it’s time to hire developers. But what is the best way to nearshore product development? Should you outsource? Resort to staff augmentation in LatAm? Whatever your plans, I can suggest more optimal alternatives.
The main concerns about outsourcing are possible IP issues, low dedication levels, and its short-term nature. The long-term models of EoR, IT recruitment, and R&D center imply hiring programmers directly, and thus contribute to closer cooperation and higher loyalty. As a bonus, you remain absolutely in control over your foreign team.
EoR, or Employer of Record, involves an agency that hires software engineers you have already found on your behalf and manages payroll & accounting, as well as legal compliance, tax payments, and employee benefits.
With IT recruitment, you’re entitled to full-cycle IT staffing in Uruguay, Mexico, Argentina, and other LATAM countries, from candidate search & interviews to onboarding, payroll & tax management, and ensuring legal compliance with local laws. You can also benefit from RPO services, executive search, employer branding, and consultation on developer salary and talent availability. If needed, you can find agencies offering operational support.
Finally, an R&D center offers all of the above and even more: your own office abroad with lease management, equipment procurement, and other back-office support. In the case of People.ai, a US-based machine learning platform impatient to scale, the R&D solution fits like a glove. Cooperating with Alcor, the company got an offshoring team with over 25 coders with rare tech stacks. Plus, our robust team managed to lease an office and procure equipment in just 4 weeks. We also made sure People.ai was fully compliant with both American and local legislation. Another benefit on top — tax & salary costs slashed. All the while, the company took part in major decisions and maintained control over its remote R&D branch.
Interested in comparing the models further? See the picture below:
How to Choose Your Provider
While you can follow Clutch ratings, there are a few other guidelines for you to find a perfect provider match:
- Value market experience and expertise. The more experience a provider has in hiring tech specialists, the better. Do not fall into the trap of jack-of-all-trades agencies; instead, choose providers with full-fledged teams of IT recruiters.
- Check the track record and client reviews. A consistent stack of client praise speaks for itself. While reading the reviews, pay attention to comments about communication, willingness to meet the client halfway, and readiness to go the extra mile.
- Make sure there are cooperation guarantees. For example, we at Alcor promise to hire 5 software developers in a month, over 20 — within 3 months, and 100 in a year. If we don’t meet these deadlines, we hire the rest at no charge to our clients. Additionally, Alcor provides a 3-month warranty to substitute a candidate we hired for free.
Your Own Software Development Team in Latin America Fast and Easy
Looking to hire in Latin American countries? Alcor has a 360°-solution to get your own R&D center in LatAm!
We operate in Mexico, Argentina, Colombia, and Chile, and Eastern European countries like Poland, Romania, Ukraine, and Bulgaria. On top of an all-in-one R&D solution, we also provide Employer of Record services with full operational support. Speed and “wow” results are our middle names: we hire in 2-6 weeks, and 98.6% of our candidates pass the probation period. As a result, Alcor promises you a fully-backed R&D center with 10 devs on board within 2 months.
