There was a time when outsourcing in Latin America was the big secret of top companies. The geographic proximity of local talent and ready infrastructure propelled many businesses to success in the early days of outsourcing.
The outsourcing industry has snowballed in recent years, and many companies in North America are utilizing the cost-effective method of outsourcing to places like Latin America, India, and Asia. The outsourcing market in Latin American countries gives companies access to a new talent pool that helps improve business processes and functions.
US companies and service providers can create unique partnerships and new initiatives that increase business opportunities with an outsourced team. Latin America software outsourcing has attracted global leading companies such as Intel, Microsoft, and General Motors, especially in "nearshore" locations like Mexico, where infrastructure and education are thriving. This rise in outsourcing should come as no surprise, considering the increasing education standards, government-backed infrastructure programs, and highly flexible business and developmental services environment found throughout Latin America.
Whether or not Latin America is the right location for your outsourcing needs will depend upon some very specific factors; however, there are plenty of benefits to selecting this region. Latin America's geographic proximity to the US allows for nearly identical time zones and cultural similarities that create ease in the outsourcing relationship.
Choosing to outsource in Latin America gives companies access to new talent, most often fluent in English and highly educated. This will make your work transition seamless while still allowing your business to build its reputation and increase cost savings.
Latin American developers tend to have excellent language skills in both English and Spanish. Countries like Argentina, Bolivia, and Cuba have exceptionally high English proficiency rates. Call centers that house bilingual agents give employers a competitive edge.
In addition to high rates of Spanish and English fluency, Portuguese speakers are also prevalent. Due to such widespread and well-established language proficiencies, business developers can be certain to engage with every client.
Another benefit businesses experience when outsourcing or nearshoring in Latin American countries is access to dependable, well-established lines of communication.
Communication and internet capabilities are thriving because of increased investments in infrastructure from committed companies and invested governments. Different initiatives spanning a range of Latin American countries have prioritized phone and internet stability in order to attract US companies. Additional government programs provide financial benefits to foreign companies to further entice and retain those relationships.
Latin America's geographic location is particularly convenient for US companies due to shared time zones. This makes both communication and coordination of all the moving parts easier.
This nearby location often helps create a greater sense of security for companies outsourcing in Latin America. Nearshoring is increasingly popular since it gives companies quicker physical access to their outsourcing teams resulting in better control over their business operations.
For this very reason, Mexico has become a hotspot for businesses looking to outsource. Their high quality of education and lower cost of doing business make Mexico an ideal choice. In fact, nearshoring and investment research shows Mexico to be the top nearshoring destination in the Americas.
Although outsourcing to Latin America has many benefits, it may present a few drawbacks to certain businesses.
First, while labor costs for Latin American workers are lower than what you’ll find in the States, they are still slightly higher than outsourcing to other locations, such as the Philippines. If cost savings is a goal, you'll want to consider how cost-effective your Latin American location is in the long run.
In addition, Latin American countries don't follow the General Data Protection Regulation (GDPR). However, some of them, including Mexico, have their own data protection policies similar to GDPR. You’ll want to look into area-specific regulations, how they compare to GDPR, and confirm your comfort level with any differences.
Latin America, sometimes referred to as LatAm, is an increasingly popular location for outsourcing. Here are the top destinations:
Argentina is a top outsourcing destination. Argentina offers outsourcing partners who are rooted in hard work and discipline with high education levels and extreme English fluency. The time zones in Argentina are similar to North America and during certain times of the year, Europe; making it an optimal location for success.
Colombia is another popular location for outsourcing. North American companies like General Motors have long taken advantage of Colombia's vast resources, including a government-supported minister dedicated explicitly to science, technology, and innovation. Colombia is the top outsourcing destination in Latin America. Its government consistently works to develop more industry and innovation while actively supporting new technology.
Puerto Rico requires low wages and offers few language barriers, making it a favorite destination for nearshore outsourcing. Companies like Microsoft utilize the resources of this island. Puerto Rico also offers an unusually high concentration of scientists and engineers who are eager to stretch their skills with reputable operations.
In recent years, Nicaragua has grown in popularity as a top outsourcing location among IT service corporations. While there are still many opportunities for further growth,its government now plays a role in advancing these initiatives.
Mexico is one of the most popular destinations for nearshore outsourcing. Considering its geographical proximity to the United States, it presents a great option for businesses wishing to cut costs while still maintaining a high level of operational control. The country continues to offer corporations growth opportunities with a highly educated and eager workforce.
Chile is another popular location for outsourcing, especially for work within the IT industry. Chilean sites offer lower costs, newer infrastructures, and a highly motivated working population. North American companies benefit from the cost-effective and convenient options found when outsourcing here. Plus, Chile boasts a very high level of English proficiency among its workforce.
While the six countries listed above are all great options, they are still only a subset of the outsourcing opportunities available in Latin America. Many US-based companies find it easy to outsource work to a location with at least some professional English capability, making the transition more convenient and minimizing any need for language training. The following countries offer English proficiency worth noting:
Guyana is the only country in South America that lists English as its official language is English. Guyana is an excellent option for US outsourcing.
Larger cities in Brazil, including Sao Paolo and Rio de Janeiro, feature a more educated workforce, usually with a working knowledge of the English language.
Costa Rica offers a noteworthy concentration of proficient English speakers, making it a prime outsourcing location.
Located in Central America, Belize also lists English as an official language.
Most other Latin American countries, such as Peru or Uruguay while perhaps less proficient, afford speakers with some English-speaking ability. These factors should be considered in tandem with other relevant components when selecting your outsourcing destination.
The Latin American countries featured above were only a few top outsourcing destinations. TDSGS also offers a full overview of the world’s top outsourcing destinations.
Latin America has proven particularly beneficial for outsourcing software development companies, programmers, and many other IT services. With high overhead costs, IT outsourcing is one way to save money and operate more efficiently.
Intel and Microsoft both outsource work to Latin America, utilizing the talent pool available to build better business models and establish growing routines.
Latin America is also an outsourcing hub for manufacturers like General Motors. GM is a leading outsourcing partner in Mexico.
Intel is a renowned company of software engineers who create microprocessors for computer systems. Working with some of the biggest technology companies in the world, Intel plays a vital role in developing new and innovative operation resources.
For a long time, Intel was known for being the one company that did not outsource software development. The company focused operations on domestic plants, while other corporations began outsourcing production to China, Vietnam, and Latin America.
However, the 2020 COVID-19 pandemic changed Intel's course, and outsourcing entered the discussion. Intel remains the largest microchip maker in the United States, but the company began outsourcing manufacturing to reduce costs and keep the company growing. For a company founded in the 1960s, it seems remarkable that it only recently started this practice. Intel is now moving towards microchip manufacturing centers located outside the United States, partnering with factories that outsource in places like Costa Rica.
Intel outsources most of the manufacturing work for the microprocessors they create. Costa Rica is the primary location in Latin America that Intel currently outsources to, though the company appears to have expansion plans in the coming years. During the pandemic, Costa Rica became a hotspot for investment opportunities. Tech companies, in particular, took advantage of the friendly market and poured heavily into industry investments. In addition to Costa Rica, Intel has outsourced to Malaysia, China, and Vietnam.
Outsourcing microchip manufacturing allows Intel to improve its software development team and build on the successful work model that has long defined the tech mogul. With new engineering jobs opening up in the Latin American branch, the company is looking to continue its growth and opportunity development in the coming years.
Microsoft was founded in 1975 in New Mexico, and over the past four decades has built its product line to include computer software, electronics, and personal software devices. They maintain a significant outsourcing presence within Latin America, in addition to other locations worldwide.
Nearshoring has proven beneficial for Microsoft, and the company has moved much of its IT work to Latin and South America. Over time, Microsoft has built an outsourced network across Chile, Brazil, Colombia, and Mexico to boost their business.
Since its inception, Microsoft has searched for new and innovative ways to create helpful tools and improve resources. To maximize resources, the company began outsourcing internal support and IT services in the mid-1990s. Finding success, the company continued to partner with outsourcing providers. Outsourcing to Latin America sparked an opportunity for the company to grow rapidly and successfully while incorporating a wealth of talented workers whose education bolsters the company's goals.
This outsourcing model cuts development and production costs and increases efficiency while also providing jobs to neighboring countries and communities. With a market value of over $2.2 trillion, both Microsoft and its customers benefit from outsourced services.
General Motors, an automotive manufacturing company that started in Flint, Michigan, in 1908, is now a multinational corporation and one of the largest automobile manufacturers in the world. Nearly a century after it first opened its doors, General Motors began outsourcing its tech services in the mid-1990s.
Latin America has long been an essential location for automobile manufacturing, so it makes sense that General Motors opened sites in Colombia, Brazil, Ecuador, Mexico, and Argentina. Due to the number of jobs they've created and the amount of work outsourced, GM is recognized as a leader in outsourcing manufacturing jobs overseas, including roles in both manufacturing and IT services.
This structure of global management that GM has created deals less in complexity and more in results and allows the company to thrive on a worldwide scale. Outsourcing has given the company speed in execution and success in creating a standardized work process for all its locations. The strategic use of outsourcing has allowed General Motors to remain one of the largest companies in the industry, striving for efficiency in each new endeavor.
The Latin American outsourcing industry can successfully provide services across a range of industries. Some of the most common services that US companies outsource to Latin America are business process outsourcing, IT services, manufacturing, telemarketing, and bilingual services.
Business process outsourcing (BPO) occurs when a company contracts out an aspect of either its front-office or back-office operations to a third-party provider. Back-office BPO includes services such as accounting, payroll, and human resources. Front-office operations include customer service or sales.
Latin America has increasingly become popular as a call center destination. Call centers can be inbound or outbound.
Many North American companies also find that IT outsourcing to Latin American countries may be more effective than performing IT services in-house. Many Latin American governments have launched initiatives to boost their IT industry, including providing free education for tech careers such as programmers and software engineers. Both existing businesses and startups outsource software development, cybersecurity, and infrastructure development to Latin American partners.
Companies find Latin America a key destination for outsourcing manufacturing operations because nearshore outsourcing uncomplicates logistics and the supply chain. Many partners in Latin American countries offer high-quality factories with technical innovations. Goods shipped from Latin America also can enter the United States tax-free as long as the working conditions and trading are fair and ethical.
Telemarketing, which includes cold calling, lead generation, and client acquisition and retention, is also a popular service to outsource to partners in Latin American countries. Call centers in Latin America operate at about half the cost of similar centers in the United States yet still operate in similar time zones.
Latin America is a hotspot for outsourcing any task requiring Spanish and English. Countries such as Argentina, Bolivia, Cuba, Paraguay, the Dominican Republic, and Costa Rica have many bilingual or multilingual workers who speak both Spanish and English fluently. Similarly, many Brazilian workers can provide services in both Portuguese and English. Argentina’s Buenos Aires has the highest English proficiency of any Latin American city.
The success of your outsourcing depends upon developing a smooth relationship with the right partner. Here are some considerations in choosing the right outsourcing partner.
A company's performance in recent years can be a good indicator of its future performance. Consider the company's track record, how long their partnerships have lasted with current or past clients, and their consistency in providing high-quality service and deliverables. Also, look at the company’s reviews and rankings among its peers, and don’t be afraid to ask to speak to a current client to discuss their experience.
Ensure the partner's business processes are efficient and modernized, and that their in-house infrastructure and tech set-up will meet your needs to guarantee constant real-time communication, on-time deliverables, and data analytics tracking over time.
Language skills are essential. Your relationship will go much more smoothly if your outsourcing partner is fluent in your preferred language or languages. Your target customer may prefer English, Spanish, Portuguese, or some mixture of all three languages for phone-based lead generation, customer service, or tech support.
And while some US-based managers may need to communicate in English, it’s important to remember that not all of your outsourced workers need to speak English. Think of an outsourced team of designers or software developers—as long as they can do the work, and there’s an English-speaking team lead to maintain communication, the partnership still works.
An ideal partner would offer an array of outsourcing services, such as a call center that provides both inbound customer or technical support, as well as outbound cold calling, lead generation, and customer upselling services. Or, a software design partner that helps you build programs, and provides marketing and digital design services to promote them. As your product and product line grow, your partner will be able to provide the staff augmentation to grow with you.
Outsourcing to Latin America is an excellent solution for many businesses that want to lower their costs while still maintaining high-quality products and services.
TDS Global Solutions has been connecting businesses with the outsourcing services they need since 1990, and has become the #1 leader in the industry. Our vast network of proven outsourcing partners helps us connect you with the most ideal match for nearshore and offshore outsourced teams. Our more than 750 past clients include names such as Amazon, Bayer, Microsoft, Coca-Cola, Visa, Bank of America, Wyndham, Accenture, and ADP—just to name a few.
Even still, we recognize that every business is unique. Contact us to learn how we can help you find the best provider for your specific outsourcing needs.
