5 Myths About Outsourcing to Latin America – Debunked

Latin America has become a global hub for software outsourcing in the past 20 years. With its proximity to the U.S., a highly-talented pool of developers, and growing English proficiency across the region, Latin America is now competing with India as a top destination for software outsourcing. Nonetheless, although the region has undergone significant economic growth in the past 20 years, many organizations still hesitate before sending their development projects to Latin America due to beliefs that the region may not be as developed or stable as India or China.

Here are the five biggest myths about outsourcing to Latin America – and why it is time to leave these perceptions in the past.

Myth #1: Outsourcing software development to Latin America is sending U.S. jobs abroad.

This myth is often thrown around as a political tool in the United States to encourage xenophobia and unify a group of people who have struggled in the wake of the U.S. manufacturing crash. The reality is that until 2020, it is predicted that there will be one million more new jobs than candidates just in the computer science field, not to mention other tech fields.

There is a demand for tech skills that the U.S. alone cannot meet and Latin America is helping close the gap. Software development is one of the fastest growing industries in the world, clocking 24% growth in 2016. Outsourcing to Latin America helps grow the U.S. economy by allowing powerful tech companies in Silicon Valley grow even faster.

Myth #2: Communication across time zones is challenging.

Most of Latin America operates on the Eastern time zone, making collaboration across international offices relatively simple. In comparison with India, which has a 12.5 hour time difference with San Francisco, outsourcing to Latin America means your team is in the office at the same time as you.

Furthermore, many of Latin America’s major cities are well-connected to the U.S., with direct flights coming in from Houston, Miami, and New York. Guadalajara is now just a 4-hour direct flight from San Francisco, meaning executives can fly into back offices in the morning and be back by dinner.

Myth #3: There is not enough tech knowledge in the region.

Latin America as a region has one of the highest rates of Internet penetration in the world. Over 56% of Latin Americans have access to the Internet, which is far above the global average of 42% worldwide. Argentina specifically has extremely high Internet penetration, reaching 70.6% of the population in 2016. India and China, the main competitors for software outsourcing, have Internet penetrations of 19% and 51% respectively. Furthermore, of the top five countries that spend the most time on the Internet, three are in Latin America. Brazil, Argentina, Chile, and Mexico are highly connected to social media, meaning many young people are digital natives who have grown up comfortable with technology.

Beyond Internet access, Latin American universities like Tecnologico de MonterreyUniversidad de São PauloUniversidad de Chile, are also graduating thousands of talented developers every year who are native on the web. Many countries, namely Argentina, invest heavily in higher education, subsidizing costs in order to guarantee a highly-educated and competent workforce for the future. As a result, Argentina’s literacy rate is up to 99% and Argentina consistently ranks in the top five countries in Latin America for level of tertiary education, with 21% of the population participating in higher education programs. Latin American developers are on par with those in India and China, and the overall population of the region is highly technologically literate.

Myth #4: Cultural differences will pose a major barrier.

There is no doubt that culture plays a large role in the ease of communication for business. When setting up an outsourcing team, you want to be certain that you and your developers will be on the same page, and that any disagreements can be communicated and resolved rapidly.

While there may be major cultural differences between Latin America and the United States, these disparities are likely to be significantly smaller than those between the U.S. and India or China. In terms of business culture, Latin American developers are often encouraged to be open and honest about problems so they can be resolved early, and they are not afraid of occasionally disagreeing with superiors if they see a better alternative.

Furthermore, due to the geographic proximity, many Latin Americans are accustomed to North American culture, as they have grown up watching American TV, listening to American music, and even eating imported American foods. These minor points of coincidence can help you communicate better with your nearshore team.

Myth #5: English is not widely spoken.

Much like the myth of cultural difference, there is still a perception that Spanish is the only language of business in Latin America. However, Argentina, Chile, Peru, Costa Rica, and the Dominican Republic have recently become global leaders in English proficiency, beating out both India and China.

By comparison, up to 70% of Indian software developers are not proficient in English. Despite enormous spending by China to improve English language skills, China ranks 36th out of 80 countries for English proficiency.

With English becoming increasingly widely spoken across Latin America, the language barrier is becoming a thing of the past, and should no longer be a leading concern when it comes to outsourcing development to Latin America.

While Latin America has grown considerably in the past 20 years as a software outsourcing hub – now competing with industry titans such as India and China – the region still suffers from a reputation of instability. However, many major cities in Latin America are now safer than cities in the U.S., English language ability is on the rise, and Internet penetration in the region far outstrips other regions.

As a result, outsourcing development to Latin America has become a popular tool for North American organizations on a budget. It’s time to recognize Latin America’s global importance as a hub for software development and move beyond these myths.

Ignacio de Marco is the CEO of BairesDev.

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