Looking South: Tech Companies see Latin America as the Ideal Nearshoring Region

One of the most important reasons for nearshoring is the ability to cut down on costs. 

According to a survey by Deloitte, a whopping 87% of IT businesses stated that they considered nearshoring because of cost-effectiveness. 

It is one of the reasons why the outsourcing industry is expected to grow by approximately $40 billion by the end of 2025.

Despite being the main reason, it is by no means the only reason why US companies are increasingly turning to Latin America as the ideal region for nearshoring. 

Today, the region is home to one of the most reliable nearshoring companies with high-end developers. 

The reason why Latin America, in particular Argentina and Mexico, is ideal for investment due to its expanding consumer market and highly skilled yet low-cost labor market. 

Tech in particular is gaining a particular reputation. In Argentina there are at least 130,000 software developers with many working for global companies. 

Overcoming talent shortages 

One of the biggest and most frustrating barriers for business is the talent shortage. This is particularly true in the tech world – finding developers, UX and UI designers, machine learning experts, etc. 

With internal demand for such workers increasing yet national supply failing to keep up, North American tech companies have increasingly been tapping into the talents of Latin America. 

Whether its developers from Mexico to Argentina, the region is home to an accelerating amount of quality talent that can be channeled into the growing tech sector. 

Bring in the benefits 

Businesses look to reduce the overhead of labor while improving efficiency. Nearshoring allows businesses to reallocate their operations to do both of these. 

At the same time, because the areas of outsourcing are closer to home, so are the cultural similarities. 

These cultural similarities include: 

Clearer communication 

It’s plain to say that offshoring can lead to difficulties of language, culture, and time zones. The issues that may present themselves include legal dilemmas, long delays, and communication barriers to everyday work. 

As regards to Latin America, there are no major differences in terms of geography, culture, working practices, and time zones.

Legay similarities 

When it comes to software development, IP laws are essential. Given that nearshore zones are closer to the US, they’re more likely to comprehend IP laws and are likely to know how to navigate them under specific situations. 

Knowing the laws and how and where to navigate them is crucial for any software development company because the worst thing that could happen is land in legal troubles. 

ROI boost 

A common reason for outsourcing is to increase returns on investment. While offshoring is often less expensive, it’s likely to lead to increased costs down the road due to common challenges that spring up – such as underperformance or managerial issues.

With the shortage of tech experts around the world, particularly in the US, Latin America is currently best-placed to collaborate with tech firms.