Latin America has growing economies and provides a strategic foothold for US businesses seeking to outsource software development. This trend has been particularly noticeable in Mexico, where the skilled workforce and proximity to the United States make it an attractive destination for outsourcing, contributing to its status as one of the largest US trading partners. The country even surpassed China with a trade volume of $462 billion as of 2023, according to Statista.

As an outsourcing destination, Latin America offers a growing talent pool and good value for money. That’s why many global industry leaders have benefited from outsourcing their software development to tech companies in Latin America.

How can you benefit from outsourcing to Latin America? What are top outsourcing locations in the region and why? How to choose the right software development partner? And how to establish effective cooperation that ensures your sustained growth?

Let’s find out the answers in the ultimate guide.

Market Statistics

After analyzing the IT market of several Latin American countries, we selected Mexico, Colombia, Brazil, and Argentina for their robust tech expertise, number of potential tech partners, and government support initiatives.

Thanks to countries like Mexico, Argentina, and Colombia, Latin America has one of the fastest-growing IT industries worldwide, with software development leading in the region. Its outsourcing market is estimated to reach almost $16 billion by 2024, according to Statista.

In 2021, Latin America became the most prominent venture funding place, attracting $19.5 billion in investments. The region’s IT industry is expected to grow by 6.5% each year from 2023 to 2028, based on the 2020–2022 market value research. And the Big Data analytics sector will likely hit $13.01 billion by 2029.

Network of tech companies

The tech landscape in Latin America spans diverse sectors, including Fintech, Edtech, and Health tech. The region has experienced increased attention from global investors seeking opportunities in the growing tech market, with venture capital funding playing a crucial role in supporting the expansion of tech companies.

Unicorn startups like KAVAK (Mexico), Nubank (Brazil), MercadoLibre (Argentina), and Rappi (Colombia) highlight the potential for significant achievements within the region’s tech ecosystem. This is thanks to a collaborative atmosphere within the startup ecosystem, with many initiatives, accelerators, and incubators supporting early-stage companies.

The number of companies that offer software outsourcing in South America also provides promising opportunities. Clutch provides the following figures (note: the numbers may change with time):

• Mexico – 390 companies
• Colombia – 340 companies
• Argentina – 260 companies
• Brazil – 250 companies

Time Zone

Latin America is compatible with North American time zones, making collaboration more convenient compared to outsourcing to regions with significant time differences.

Some countries in the eastern part of Latin America, such as Brazil (Brasília Time – BRT)  and parts of Argentina (Argentina Time – ART), share a time zone that is close to Eastern Standard Time (EST). Mexico has a time zone that aligns with Central Standard Time (CST), though parts of the country are in the Pacific Standard Time (PST) zone.

This compatibility will vary based on where your company is located. Still, many software development providers in Latin America can adapt to flexible working hours to accommodate the needs of U.S. clients.

Mexico

Mexico presents a robust tech ecosystem with a skilled talent pool, supportive government policies, strong tech hubs, favorable business infrastructure, cultural compatibility, data security measures, and a convenient time zone for collaboration with international businesses.

The country has reliable infrastructure, including transportation and telecommunications networks. It shares cultural similarities with the United States, fostering smoother communication and understanding. Mexico’s government provides support through incentives and initiatives for digitalization and legislation for data protection and intellectual property rights, ensuring confidentiality.

When outsourcing software development to Latin America, it’s essential to consider the geographical proximity and how it contributes to the ease of doing business. Being in close time zones to the United States facilitates real-time collaboration, with over 100 major airports enhancing business travel.

Growing talent pool

As of 2022, there are over 700,000 IT professionals, and the country ranks 3rd on the Global Innovation Index in Latin America. Mexico has prioritized STEM education, resulting in a surplus of highly trained tech professionals. According to PRODENSA, nearly 500,000 Computer Science graduates contribute to Mexico’s position as the second-best in Latin America and fourth globally for developers’ qualifications.

Tech expertise

Mexican developers excel in various technologies, including DevOps, Java, C++, C#, Python, PHP, .NET, JavaScript, and front-end technologies.

Governmental support

Mexico offers a favorable business environment with a stable political climate and ranks 60th in ease of doing business. The government provides incentives, such as the National Digital Strategy for 2021–2024, aiming to expand digitalization and technology leverage. Mexico has legislation comparable to the European Union’s GDPR, ensuring data protection and intellectual property rights.

Tech Hubs

Major tech hubs in Mexico include Mexico City, Guadalajara, Aguascalientes, Queretaro, and potentially Merida in the future.

• Guadalajara is like Mexico’s Silicon Valley, with strong government support, a robust economy, and over 450 information technology companies listed on Glassdoor.
• Monterrey, near the US border, is a convenient outsourcing location with elite universities and a focus on Edtech startups.
• Mexico City, strategically located between North and South America, houses leading tech universities and a thriving Fintech startup ecosystem.

Colombia

Colombia has gained recognition as a promising software development outsourcing destination due to its skilled workforce, cultural affinity, and cost-effective services. The country has experienced increased political stability lately, contributing to a more secure and predictable business environment.

Talent pool

Colombia has a highly skilled and educated pool of over 150K IT professionals. The country has invested in its education system, producing a workforce with expertise in various programming languages, software development methodologies, and emerging technologies.

Tech expertise

Argentinian tech specialists excel in various technologies, including Node.js, AngularJS, JavaScript, PHP, and .NET.

Governmental support

The Colombian government has actively promoted the growth of the IT sector, offering incentives and support for technology-related initiatives. This support creates a conducive environment for outsourcing partnerships. For example, the ICT Ministry has employed a strategy, Misión TIC, to generate connections between Colombian IT talent and the market offers in this sector.

Tech Hubs

Bogotá and Medellín are key hubs for IT education, and the government aims to train 112,000 software developers by 2025 with a $2.5 million initiative. Bogotá, Medellín, and Cali are home to 250+ startups, providing valuable experience for local developers.

Brazil

Brazil has made significant strides in attracting software outsourcing to Latin America. Its major cities are well-developed and have a good business infrastructure favorable to international collaboration. While Brazil isn’t the cheapest option for outsourcing, it can be more cost-effective than hiring in some Western countries. Labor costs are generally lower than in the United States or Western Europe, which can contribute to significant savings.

Talent pool

Brazil has a growing pool of skilled software developers and IT professionals. Many developers here are well-educated and have experience working on various projects. According to the Brazilian Association of Software Companies, the country currently offers more than 750,000 IT specialists.

Tech expertise

Tech specialists in Brazil excel in various technologies, including DevOps, C#, C++, Java, .NET, PHP, Python, and JavaScript.

Governmental support

The Brazilian government has taken steps to encourage the growth of the IT sector, providing support for technology and innovation. For example, the National Plan of the IoT funds studies and projects that show the significance of adopting the IoT technology.

Tech Hubs

• São Paulo boasts a diverse tech scene featuring 81 software development firms specializing in e-commerce, fintech, AI, and other sectors.
• Rio de Janeiro hosts numerous fintech startups and 28 software development outsourcing companies, encompassing health and education tech.

Argentina

Argentina has a growing, vibrant tech ecosystem and a well-educated, skilled workforce. The country has a relatively Westernized culture, which can contribute to better communication and collaboration with businesses from North America and Europe. Argentina also has a growing startup ecosystem and a culture of innovation. Buenos Aires, in particular, has many tech startups and co-working spaces.

While not necessarily the cheapest outsourcing destination, Argentina can offer competitive rates for software development in Latin America compared to developed countries, making it an attractive option for businesses seeking cost savings without compromising quality.

Talent pool

Argentina boasts a sizable tech talent pool of over 100,000 software developers and engineers as of 2022, according to Statista. Argentina has a globally recognized tech industry, with the country periodically ranking among the highest-educated populations in Latin America. The country’s public universities, such as UTN (Universidad Tecnológica Nacional), offer systems engineering, software development, and UX design courses, contributing to a growing and skilled workforce.

Tech expertise

Argentinian tech specialists excel in various technologies, including Python, TensorFlow, SQL, and R, working on various solutions for AI, cloud computing, and eCommerce.

Governmental support

Despite economic challenges, the focus on education and government support has fostered a climate conducive to innovation. The government support is a contributing factor to the growth of the tech ecosystem. Policies, such as the Software Law and the Law of Entrepreneurs enforced in 2017, have made it easier for entrepreneurs and tech startups to establish and maintain businesses.

Tech Hubs

• Buenos Aires, Argentina’s primary IT powerhouse, hosts around 85% of its developers and 90% of all startup activity.
• Córdoba, the second-largest IT center, nicknamed La Docta, contributes significantly to Argentina’s software development exports, ranging between 30% and 40%, according to BNAmericas.
• Mendoza is an emerging tech hub that actively cultivates entrepreneurship through initiatives like the “Consejo Consultivo Emprendedor” (CCE), resulting in substantial employment, new establishments, and investments.

Choosing the right IT provider requires some research into the companies. Here are a few key considerations to help you make an informed decision and outsource a software development team in Latin America that will deliver solid results:

Recruitment practices

If your project requires specialists with particular expertise, the company should be able to attract and hire the corresponding talent quickly. Even better if it can find specialists globally to provide you with a diverse team.

Diversity and inclusion

A diverse and inclusive software development team can bring many benefits, from enhanced creativity and innovation to improved problem-solving and a more in-depth understanding of global markets. When selecting an outsourcing partner, considering their commitment to these aspects can contribute to the overall success of the partnership and the quality of the software developed.

Long-term partnerships

Seek a company with a proven track record for establishing long-lasting partnerships as they demonstrate commitment to providing consistent and high-quality results and adaptability to evolving project needs. You can find this information in success stories and reviews on platforms like Clutch.

Cooperation model flexibility

Some projects require a team extension, while others require an entirely new dedicated team. Seek a company that can cater to various needs, as the most appropriate model will result in an effective and customized collaboration.

Investment in the hired talent

Investing in employee professional development and retention describes a forward-thinking company that fosters a positive work environment. Providing opportunities for employees to enhance their skills and grow their careers encourages a sense of loyalty and commitment among their staff. When partnering with a team that understands current industry trends and can develop cutting-edge solutions, you can stay ahead of the competition and continue to grow and innovate.

Knowledge transfer plan

A knowledge transfer plan ensures a smooth transition of project information, processes, and intellectual property from your in-house team to the remote software development one in Latin America. This helps minimize disruptions and ensures a seamless start to the outsourcing relationship.

• ZoolaTech is a global software development company with offices in Turkey, Poland, Mexico, Ukraine, and the USA.
• Flexibility of cooperation models: ODC, Team Extension, Managed Delivery, or mixed
• 96% – client retention rate
• 60% – senior software engineers
• When starting cooperation, we provide you with a team of experts with 5+ years of experience
• Investment in diversity and inclusion – over 20 nations; 50% – female leadership.
• Trusted by industry leaders and Fortune 500 companies.