10 Reasons Latin America Should Be Your Next Nearshore Outsourcing Destination

Need a good reason to outsource your software development project to Latin America? We’ll give you 10! Latin America’s broad landscape of opportunities for nearshore outsourcing brings with it a multitude of benefits beyond just price and proximity. With over 30 years of experience in the tech space, PSL knows a thing or two about outsourcing and nearshoring software development projects. We know that choosing where to outsource your IT software projects is definitely a decision that requires quite a bit of consideration. That’s why we’re more than happy to help you spot a few aspects that might’ve flown under your radar. Here are 10 reasons why Latin America is the place to go when it comes to outsourcing software development.

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1. Latin America is worth the extra $$ On average, blended rates in Latin America are 10-20% higher than India or China. But as we’ve mentioned, the sticker price isn’t all it’s cracked up to be. If you were to compare the cost of larger, more experienced firms in Asia to those in Latin America, you might find that the rates are actually lower! Besides, the real value becomes more obvious when you consider the next 9 reasons to choose Latin America as your nearshore option.

2. Latin America’s value lies in time-zone proximity​ When you think of IT outsourcing projects, you’re probably thinking about agile or scrum methodologies. Agile delivers software faster, in part, because written communication tends to be replaced by conversations about requirements—conversations you can’t have with a team that’s asleep while you’re awake. When does agile work best? When both teams can work in real-time or near real-time, so you need an outsourced team close to your time zone.

3. Latin America is a great cultural fit​ Culture is a tricky thing to navigate, especially when the difference is significant. As opposed to vendors in Asia, Latin America’s culture is much closer to that of the US and enables better collaboration. Workers in Latin America feel confident enough to push back or raise flags when something isn’t going well, admit mistakes and address issues before they get out of hand, as well as disagree or propose improvements as they see fit.

4. Latin America means reduced flight times​ Speaking of culture, in our experience, nothing helps bridge the gap between an in-house and an outsourced team better than on site visits. However, if you have to fly for up to 18 hours, it’s not only an incredibly tiring experience but a costly one too! Visiting a software development partner in Latin America can take one day (back and forth) at most and is much more affordable than going halfway around the world. NEARSHORE SOFTWARE DEVELOPMENT | OFFSHORE OUTSOURCING CENTER

5. Latin America’s creativity-driven culture​ As neighbors, North and Latin America share a lot in terms of aesthetics, culture and even taste in movies, music and art. These, no doubt, manifest in our GUI and UX designs, and fit in with American products seamlessly. Additionally, countries like Colombia and Argentina are known for their creative prowess in advertisement, game design and other creative endeavors.

6. Latin America is Agile​ When it comes to fast, cheaper and lower risk software delivery, nothing beats agile. Latin America, more than any other region outside the US, has adopted agile software development which makes it a strong competitor in the IT outsourcing world. Additionally, due to our proximity, Latin American universities have been influenced academically by the US and push agile as the preferred method to develop software.

7. Latin America’s experience in software development​ It’s been a trying journey for Latin American companies to learn to make good software. For many years, the region was closed off to software imports, which meant that large companies had to develop their own banking cores, ERPs, CRMs, and any other product they needed to run a business. This resulted in a heightened awareness of customer needs and experience, and, consequently, customer-oriented software products

8. Latin America’s significantly lower churn rates The problem with attrition is you face having to recruit and train more people as others move on. This is not only time-consuming but elevates costs every time a team member needs to be replaced. But, because Latin America has a significantly lower employee churn rate (11-16% a year to India’s 25-30%), an outsourced project in the region could benefit from greater stability, productivity and savings.

9. Latin America is safer than ever​ A couple of decades ago, thinking twice about outsourcing Latin America might’ve been reasonable. But nowadays, Latin America’s political landscape is much more stable and safer. Colombia, for instance, rose from a highly publicized era of drug violence to a rising star in Latin America, as well as an innovation hub. While basic safety precautions still need to be taken against petty theft, the only real risk you run is “wanting to stay.”

10. Latin Americans exhibit a strong work ethic​ We’ve mentioned the importance of culture before, but Latin Americans’ strong work ethic can’t be overstated. Yes, we party hard, but we also work very hard. It’s part of our culture to have a strong sense of loyalty, purpose, and pride in our work, so it’s not uncommon to see a deployed team burning the midnight oil to meet a deadline for their client. For more info: https://www.pslcorp.com/ PSL CORP – USA

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Finding the Value Beyond Price in Nearshore Software Outsourcing

When it comes to making a decision, the human mind will always look for the “path of least effort”. For pricing, the most immediate and simple piece of information to consider is the “sticker price”; so, it’s no wonder clients look for vendors with the lowest rates when choosing a software development outsourcing partner.
However, basing your decision on “sticker prices” is misleading. When it comes to choosing an IT services outsourcing vendor, there are a number of other variables that contribute to your project’s Total Cost of Ownership, and that you can’t afford to ignore.
Total Cost of Ownership (TCO)
Total Cost of Ownership, or TCO, is a term coined by the Gartner Group back in 1987 to help buyers determine both the direct and indirect cost of a system. What we understand as TCO for software engineering is the cost of an application, including its development, enhancement, maintenance and support. So, when you look at a “sticker price”, what you may think is a definitive price is actually just an incomplete one.
We posit that to make an informed decision, you need to keep in mind the following key variables:
Process
Like any engineer will tell you, the success of a project involving more than one resource will hinge on how well the team works together. That’s why process —meaning behaviors, methods and practices that determine how a group performs— is critical to the success of all but the tiniest of software initiatives.

Cost
Finally, let’s take a look at the numbers. If we’re going to take cost at face value, it’s simply the price paid per unit of time (cost per hour, or cost per developer per month). However, the real cost of an engineer doesn’t stop at salary pay; it also includes the basic infrastructure needed for them to perform their job. An actual, fully burdened blended rate will likely go up between 50%-70% per engineer, which accounts for the cost difference between a US-based and a it outsourcing company outsourcing vendor.
And, as we’ve seen, it’s not enough to think about how much any given “unit” will cost, we also need to consider what the effect of that unit (hour of work or developer costs) will have on the project in the long run.
[READ MORE: Discover the real cost behind your software development project in our Total Cost of Ownership whitepaper.]
All things considered, finding a vendor that can help you achieve your technology goals at a reasonable cost means finding a partner that understands the right mix of process, risk management, quality and productivity is the key to a successful engagement. PSL’s approach to engagements doesn’t start off by just answering the question “What are your rates?”, but rather exploring a project to ensure we can deploy the best talent and best practices, and develop world-class software engineering solutions at the lowest possible TCO. https://www.pslcorp.com/it-outsourcing-services-companies/