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Why Outsource to Latin America: Benefits, Case Studies, and Top Destinations

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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 function. 

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.

Benefits of Outsourcing to Latin America

Whether or not Latin America is the right location for your outsourcing may vary on a few different factors; however there are plenty of benefits for 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.

Communication

Latin American developers tend to have excellent language skills in English and Spanish. Countries like Argentina, Bolivia, and Cuba have exceptionally high English proficiency rates. The bilingual element can give employers a competitive edge in an ever-changing market.

Outsourcing in Latin America gives companies access to new talent, often fluent in English and highly educated. This make the work transition more seamless, yet it still allows businesses to build their reputation and increase cost savings.

Not only is Latin America high in both Spanish and English fluency, but Portuguese language skills are also prevalent. Because of such language proficiency, business developers can trust that their outsourced operations will engage with any potential clients.  

Infrastructure 

Another benefit that businesses experience when outsourcing (or nearshoring) in Latin American countries is the ready access to solid lines of communication. 

Communication and internet capabilities are thriving because of increased investments in infrastructure from companies and governments alike. 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.

Location

Latin America’s geographic location is particularly convenient for US companies due to shared time zones, making communication and coordination easier for all parties. 

This nearby location often helps create a greater sense of security for companies outsourcing in Latin America. Nearshoring is an increasingly popular outsourcing model, as it gives companies quick access and better control over their business operations. 

For this reason, Mexico is quickly becoming an especially popular hub for businesses looking to outsource. The high quality of education and the low cost of doing business make it an easy choice. In fact, nearshoring and investment research shows Mexico to be the top nearshoring destination in the Americas. 

Successful Companies that Outsource to Latin America

Outsourcing to Latin America has proven particularly beneficial for software development companies, programmers, and IT services of all kinds. Because the IT industry tends to have high overhead costs, IT outsourcing is one easy 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. These tech companies take full advantage of the highly educated workforce who is ready and willing to take on more responsibility. 

Latin America is also a hub for other manufacturers, like General Motors. General Motors is one of the leading outsourcing partners in Mexico. 

Intel 

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 in domestic plants, while other corporations moved 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

Microsoft was founded in 1975 in New Mexico, and over the past four decades has built their 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. In an attempt 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

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, which include roles in both manufacturing as well as 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. 

Top Outsourcing Destinations in Latin America

Latin America, sometimes referred to as LatAm, is an increasingly popular destination for outsourcing. Software development companies have been particularly successful in sending business operations to Latin American countries, including the following: 

Argentina

Argentina is one of Latin America’s top outsourcing destinations. Argentina offers outsourcing opportunities rooted in hard work and discipline with high education levels and extreme English proficiency. The time zones in Argentina are primarily similar to North America and even Europe during certain times of the year, making it a convenient location for successful business. 

Colombia

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, with the government working to bring more industry and innovation to the country. With the country actively supporting new technology, opportunities come with great ease. 

Puerto Rico

Puerto Rico has lower wages and few language barriers, making it a favorite destination for nearshore outsourcing. Companies like Microsoft utilize the resources of the island to increase efficiency. The country also offers a high concentration of scientists and engineers eager to stretch their skills with a reputable outsourced operation.

Nicaragua

In recent years, Nicaragua has grown in popularity as a top outsourcing destination amongst IT service corporations. While there are still many opportunities for further growth, the country continues to shift towards hosting more outsourcing opportunities. The government now plays a role in advancing these initiatives. 

Mexico

Mexico is one of the most popular destinations for nearshore outsourcing. Especially considering its geographical proximity to the United States, it presents an easy option for businesses wishing to cut costs while still maintaining a high level of operational control. The country continues to offer corporations many growth opportunities and a highly educated, eager workforce. 

Chile

Chile is another popular location for outsourcing, especially for work within the IT industry. Chilean sites offer low cost, new infrastructure, and a motivated working population. North American companies benefit from the cost-effective and convenient options when outsourcing to Chile, plus a high level of English proficiency amongst the workforces.

Additional English-Speaking Latin American Countries

While the six countries listed above are all very popular, 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

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.

Brazil

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

Costa Rica offers a large concentration of English speakers with high levels of English proficiency, making it a prime location for outsourcing. 

Belize

Located in Central America, Belize also lists English as an official language. 

While possibly less proficient, almost all other South, Central, and Latin American countries offer at least some level of English-speaking ability. This should be considered in tandem with other relevant factors when selecting your outsourcing destination.

The Latin American countries detailed above were just a selection of top Latin American outsourcing destinations. For more detail, take a look at our full overview of top outsourcing destinations


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