Seeking the latest cutting-edge strategy in tech talent acquisition? Check south of the equator.
With tech companies embracing a new reality of remote work and economic uncertainties, a phenomenon known as “nearshoring” is booming as U.S. tech giants set their sights on Latin America for a goldmine of talent.
The Nearshoring Phenomenon
Nearshoring is the practice of sourcing or outsourcing talent from regions geographically proximate to a company’s home market, rather than opting for distant hubs in Asia, or more costly hubs in the U.S.
What makes nearshoring attractive is its ability to bridge the gap between cost-effective talent and geographical proximity in the new era where companies are embracing the functionality of remote work. Companies are discovering rich talent in Latin America, tapping into the skills and expertise of workers in countries such as Argentina, Brazil and Chile. And with video interviewing software, or pre-employment screening software, we live in a time where it’s easier than ever to hire and trust remote talent.
A Paradigm Shift in Talent Acquisition
The COVID-19 pandemic led to a notable change in how companies recognized the feasibility of operating with a remote workforce. Between 2019 and 2021, the number of people primarily working from home tripled from 5.7 percent (roughly 9 million people) to 17.9 percent (27.6 million people), according to a study from the U.S. Census Bureau.
The pandemic and resulting economic downturn also led to a significant shift in the health of the labor market. In 2023, following a multi-year rise in hiring, layoffs became a daily headline from some of the biggest names in tech including Google, Amazon, Microsoft, and Meta. Startups, too—even ones in seemingly booming sectors like AI and SaaS—began announcing personnel cuts. In 2023, over 1,000 tech companies have laid off more than 235,000 employees, according to Layoffs.fyi.
Both shifts led U.S.-based tech companies to set their sights on Latin America. With the advantage of a shared time zone and the allure of cost-effective labor, outsourcing companies began to onboard remote developers for U.S.-based enterprises.
Remote staffing firms and job boards such as Remotely.Jobs, Virtual Latinos, Remote Talent LATAM and Deel are among those connecting a thriving labor market in the region with cost-conscious tech employers in the U.S.
Deel told Bloomberg that the number of U.S. companies employing its services to recruit from Latin America has doubled over the past year. Part of the reason is clear: While the median salary for software developers in the U.S. is $127,000, the annual salary for full-time and contract-based workers in engineering and product design in Latin America hovers around $74,000.
“If for the price of 10 engineers in the US, we can hire 100 engineers in Brazil, there’s definitely something to think about there,” Alex Bouaziz, CEO of Deel, told Bloomberg.
A Win-Win Proposition
The rise of nearshoring provides mutual benefits for U.S. corporations and Latin American professionals.
While Latin America may not churn out as many engineers annually as established IT outsourcing hubs like India, the region is proactively nurturing tech talent. Local universities and technical schools align education with industry requirements, while the recent slowdown in venture capital activity has created a vast pool of experienced tech professionals, laid off from startups, who are ready and available for remote work.
Moreover, as many U.S. companies continue to understand the importance of DEI in the workplace, this type of remote work can bring together teams that are not only geographically diverse, but genuinely inclusive.
Meeting the Escalating Demand
The rise of staffing firms specializing in Latin American talent is gaining momentum. Revelo, a company facilitating remote tech and developer hires, said it witnessed the surging demand for talent south of the equator. Its annual recurring revenue has surged 3.2 times from the outset of 2022 through the first quarter of 2023, and the company told Bloomberg it is actively placing developers from across 15 Latin American countries with U.S. enterprises.
As U.S. tech companies continue to harness the cost-efficiency and proximity of Latin American talent, they are not just satisfying their staffing needs; they are also championing a new generation of tech professionals in the region. The trend underscores the dynamic nature of the tech industry and the innovative strategies companies employ to maintain their competitiveness in a competitive market.