Pandemic-era labor shortages made it hard for Austin-based Fetch Package Inc. to fill positions in the US. That led the company, which provides delivery services to marketers, to start looking for engineers elsewhere. Fetch interviewed candidates from Europe and Africa before settling on Latin American workers, in part because of the convenience of their being in the same time zone.
Now about 10% of Fetch’s engineering team is in Argentina, Brazil and Peru. “You can’t tell on a call or through their output who’s based in one location or another,” says Chief Technology Officer Boone Putney. Many résumés he reviews from Latin America often include stops at places including Amazon.com Inc. and PayPal Holdings Inc.
So-called nearshoring—hiring or outsourcing to workers in locales closer to a company’s home market rather than in distant Asia—is all the rage these days in Mexico, where new factories are springing up along the US border, built by US companies shifting operations from China. But nearshoring is also benefiting countries throughout Latin America that aren’t that close to the US.
Global technology companies are increasingly hiring workers in Chile, Guatemala, Uruguay and other South and Central American nations to handle such tech tasks as coding software. Some of those countries can be thousands of miles from the US border, but they’re just a couple of time zones away from much of the US and Europe, making them ideal for handling anything that can be done by phone or computer during the Western business day.
Global human resources company Deel Inc., which serves clients including Shopify Inc. and Dropbox Inc., estimates that 3,000 US-based companies used its services to hire in Latin America in the first quarter of 2023, twice the number from a year earlier.
This is happening while layoffs are dominating headlines in the US as high interest rates increase fears of a recession. About 760 global corporations have slashed more than half a million jobs since October, according to an analysis by Bloomberg in March, with the median layoff leaving the company workforce 10% smaller. The technology sector has accounted for about 149,000 jobs lost. At the same time, some companies are adding employees in offshore locations where workers tend to earn less.
Deel clients pay an average annual salary of about $74,400 across Latin America for full-time and contract-based workers in areas including engineering and product design. That’s compared with a median pay of $127,000 for a US-based software developer and $102,000 for a computer systems analyst as of last year, according to the Bureau of Labor Statistics. “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,” says Alex Bouaziz, chief executive officer of Deel.
Latin America-based hires are often financially more attractive options than remote workers in other parts of the world. Deel estimates workers in the region make roughly $20,000 less per year on average compared with Asia-based ones. And while salaries in some popular offshoring locales continue to go up—such wages in the Philippines soared 15% year-over-year in the first quarter—remote workers in Latin America saw wages fall 4% in the same period from a year earlier, Deel says.
India’s Tata Consultancy Services, long a global leader in outsourcing, plans to speed up hiring in Latin America amid growing demand for nearshoring and its IT services in the region. Guatemala and Uruguay are two of the countries where it’s providing those services, says Marcelo Wurmann, TCS’s head for Latin America. “Due to their location, these countries have a time zone that is beneficial and functional for North American companies,” he says.
Despite the economic slowdown, TCS’s clients keep pressing ahead. “There have been some drops in more discretional spending from our clients, but they are relatively small when compared to total spending in technology,” Wurmann says. “We are confident that we can grow our head count another 10% to 20% next year, and that is our goal.”
TCS has about 27,000 employees in nine countries in Latin America and has been steadily increasing its workforce in the region by as much as 20% per year. The company recently announced 200 new openings in Chile, focused on engineers with knowledge of cloud services such as AWS, Azure and Salesforce.
Latin America produces far fewer engineers per year than an IT outsourcing hotbed such as India. Wurmann says that tech employment services in Latin America have had to be more proactive. They’re working with local universities and technical schools to learn in advance the profiles of students in the pipeline.
Companies looking to hire can also benefit from the recent slowdown in the regional venture capital industry. The region’s recent record investments in startups, and the subsequent slowdown, resulted in a large pool of experienced workers who were laid off from unicorns and are now available for remote work.
Revelo, a provider of remote technology and developer applicants for companies, is also seeing a spike in demand and is placing developers from across 15 Latin American countries with US companies. “Our annual recurring revenue has grown 3.2 times since the beginning of 2022 through the first quarter of 2023. Demand has particularly spiked in 2023,” Lucas Mendes, a co-founder, wrote in response to questions.Read next: Data Science Is the Hot New Master’s at B-Schools
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