With the rapid growth in the tech industry and many companies struggling to find enough tech talent within the USA, many have turned to staff augmentation and outsourcing to fill the gap.
While thousands of IT professionals from across the globe are ready to work for US companies, these companies have considered the barriers that may affect these kinds of staffing solutions. Barriers like different languages, cultures, time zones, and other factors that may make it harder to onboard them and create a productive work environment. These barriers can put a strain on the working relationship between companies and talent, which in turn hinders productivity and efficiency.
Many US companies have found a solution to reduce the barriers and their effects by using Latin American talent. The proximity of Latin America to the US has contributed to reducing the barriers and their effects—and many companies are taking advantage of these reductions. Companies including Nike, HP and BH are among the many companies that have begun outsourcing talent from Latin America to work on various technological projects. Still, this is not a new concept, since outsourcing from Latin America has existed in many other industries for decades.
US Companies Are Already Using Outsourcing in LATAM to Fill Employment Gaps
Outsourcing and nearshoring to LATAM became more popular after the global shift from traditional in-office working environments to more remote and hybrid opportunities, which allow people to work anywhere in the world, including LATAM. When companies realized the value of tapping into neighboring talents to fill gaps in the labor market, they took the opportunity. They saw the potential of profitability and growth LATAM talents could bring to their companies, and began to employ outsourcing talents. Other companies realized the success of projects done by companies who have used outsourced talent, and have begun to follow their lead. Plus with IDB’s projection of exported nearshoring services being increased up to $14 Billion dollars, many of these companies didn’t need much convincing.
With the chain of companies following each other’s leads, more companies are warming up to outsourcing. Likewise, LATAM talent are benefiting heavily from the heavy recruitment and hiring taking place within their region. Nearshoring in Latin America continues to grow daily as more US companies use nearshoring to source talent closer to home. Many US companies have since forged a solid and growing bond with Latin American professionals to work on high-quality projects. Projects that have created software and technology that power many industries across the globe and some that many of us use on a daily basis.
Though tech specialists from LATAM have some differences that may seem like barriers, they have more similarities with their US counterparts than talents from Europe and Asia, for example. These similarities make for better working relationships between the companies and those they hire. Communication is more effective. Interactions flow more smoothly, productivity is higher, and teams complete projects more quickly, proving that nearshoring is the solution to employment gaps in tech.
Reasons LATAM is an Outsourcing Hotbed for the US.
1. Fewer Cultural Barriers
An aligned culture is essential to an efficient and productive working relationship. Culture dictates how employees perform and interact with each other, their attitude toward their work, and their commitment to daily responsibilities. A cultural gap in an outsourcing environment, especially one without a physical environment for bonding, can cause significant obstacles during a project’s life cycle.
In contrast, cultural similarities foster better synergy and chemistry during collaboration. Professional chemistry among employees fosters easy and smooth collaboration. The same can be said for chemistry between the company and employees. When people feel comfortable and confident in their work environment it improves their quality of work and contributes to the success of projects.
Compared to talents on other continents, professionals in LATAM possess fewer cultural barriers like lifestyle habits, language, norms, and living costs that can affect day-to-day work or operational practices. Luckily, the proximity and the historical similarities between the LATAM and the US contributes to the reduction of each barrier’s effect. Both factors contribute to putting LATAM and the US closer to a place of equal cultural footing than Europe and Asia. For example, the work culture in the western world transcends borders, and many people in LATAM already use English as a second language.
2. Similar Time Zones
A significant challenge that outsourcing relationships face is the difference in time zones. People involved in the project being in separate countries, and operating in different time zones can hamper efficient collaboration and communication. For instance the attentiveness of a person joining a meeting at 9 am may not be the same as one joining the same meeting at 2 am in another time zone.
Projects require meetings, presentations, and run-throughs with all persons involved, which can be challenging to collaborate with people living in various time zones. For instance, developers in Asia, for example, could face an obstacle in a project that needs immediate attention. However, the hiring company’s staff may be eight hours behind and have already signed off for the day, causing delays and other interruptions. Situations like these, in addition to delays and interruptions can lead to costly misunderstandings and errors that can severely affect projects. Therefore, closeness helps to reduce these instances.
Latin American countries are a stone’s throw away from the US and, in many cases, share a similar time zone, making it easier to work on a similar schedule without much disturbance. Teams can set meetings, work schedules, and deadlines without worrying about timeline differences, contributing to better stakeholder collaboration. This also means fewer delayed responses, quicker issue resolution, less productivity disruption, and a standard business flow.
Plus, if there’s a need for in-person interactions, a trip to the US is quicker and possibly less expensive from LATAM than from across the globe.
3. High-Quality Talent
It’s a popular misconception that tech professionals outside of countries considered technological giants and innovators, are inferior. The truth is high-quality professionals are all across the globe. Especially in Latin America, where the quality and culture of university education within the system are, if not the same, very similar to that of the USA and European countries. LATAM talents are exposed to identical development practices and techniques US colleges use. This fact, coupled with the uptake in US investment in LATAM, continues to improve the skills of professionals there. Thus, more US-based companies are taking advantage of nearshoring or setting up regional companies. Making it one the most popular and profitable places to set up nearshoring companies and source talent. Some of the most prominent companies in the world, like American Express, Intel, Citibank, and Wipro, have gone there for innovation and growth and have benefited from the quality and performance of the talents in the region. This goes to show the quality of talent being developed in LATAM and the level of confidence many of the most popular and successful companies have in tech talent coming out of the region.
Remote work has become increasingly popular in the business environment. The number of remote opportunities available has significantly increased and is increasing everyday. Employees and companies now prefer the remote work model as it gives them more flexibility, comfort, and convenience. The benefits are twofold, workers don’t need to worry about commuting time or cost, and companies can spend less on operational expenses associated with having large offices and several on-site locations.
Remote work in nearshoring has allowed companies to bring people from different parts of the world into a space on the internet to work together. The remote work model has created an optimum environment for nearshoring to function and strive. Communication and collaboration no longer require interaction in a physical space. So much so that there are companies that are fully remote and exist solely in an online space. Statistics showing that 16% of companies are fully remote globally.
Thanks to advanced technology, including online meeting tools and other collaborative applications, people can work together as if they are in the same building. Daily tasks, meetings, presentations, seminars, and launches can be done online using various real-time communication, collaboration platforms, and workspaces like Zoom, Google Workspace, and Office365. With the ability to carry out all aspects of a project in an online environment, many companies have adjusted their linear perception of how work can be done
Nearshoring and outsourcing in Latin America by US Companies is the beginning of a new wave—a new way of work. Many companies have seen how efficient, productive, convenient, and profitable nearshoring can be for their business, and many are beginning and continuing to invest in LATAM talent. Over the next few years, we can expect more companies to move away from traditional work models and join the wave to nearshore. They will realize the positive effects of remote work, cultural and time zone similarities, and the quality of work LATAM talents can bring to their businesses.
Jason Bott currently works as the Founder and CEO of WebCreek Technology. WebCreek is a software development and staffing solution company with 25+ years of experience in software and staffing solutions, and over a dozen locations across the globe. Jason Bott holds an MBA degree from the University of Houston.