Author : Nick Krym

Pros & Cons of Outsourcing to Latin America

Latin America offers one of the best options for nearshore outsourcing for the USA and Canada. It also offers great resources for Spanish localization projects getting increasing important in the states. Latin America offers a large spectrum of options roughly corresponding to the countries in the region covering almost entire alphabet from Argentina to Venezuela. Each country has its own specifics and its own set of Pros and Cons; the differences between countries could be dramatic, compare for example political climate in Mexico and Venezuela. There are still enough commonalities to considering covering of Pros and Cons for the entire region.

Infrastructure. The quality of infrastructure varies greatly from country to country but it’s quickly catching up to the required standards across the region. In countries leading of LA outsourcing – Argentina, Brazil and Mexico the infrastructure is likely to meet or even exceed your expectations, but even in countries far behind the quality is still acceptable. I was surprised how solid the infrastructure was in Chile or some cities in Bolivia. One thing is extremely important – the high quality infrastructure could be found mainly and sometime only in industrial areas of these countries. It is not at all as pervasive as it is in the USA. You must validate infrastructure sufficiency before moving forward with the vendor. The simplest way to do it at superficial level is to request a video interview over Skype.

Operating Environment. Flying to Sao Pao and getting to your vendors’ HQ is Campinas takes a while but small time difference makes it much easier to deal with than while travel to China or India. Working in many of the LA countries would not be extremely complex, challenging or dangerous. You have to know where to go and where not to but chances are you will be safe and can get your job done. Chances are your vendor operates from some of the country’s most industrially advanced area with decent standards of living and acceptable infrastructure. Of course language and cultural differences can create some challenges typically easily dealt with considering general hospitality of the region and with a little help from the vendor. All that ease falls of the cliff as you step out beyond the borders of the industrial areas. Destitution of the rural areas for most of LA countries is truly disturbing; my honest advice – leave these areas to National Geographic and Peace Core…

Skills Availability. Skill availability for high tech occupations depends on specific country / city. In general it could be characterized as medium to low. Generally you can build a small team of Java or .NET developers in somewhat reasonable timeframe, but size of the talent pool is microscopic when compared with India and China. The quality of the pool helps to some degree make up for its size, but only to some degree. In my experience putting together an 8 member team of high quality Java developers / QA engineers took over 4 months. I have to say that my quality requirements were very high and I was looking for somewhat unusual set of specifics. When you are after more run of the mill skill set you probably would have easier time. Legacy technology skills and enterprise applications skills are even less common.

English Skills. Not as good as you’d expect… and why would you even expect? I worked with many countries in the region and in each of them I met engineers who spoke English better than I, but in general you have to be prepared for language barriers or for substantially impaired hiring if you make fluent language skills a mandatory requirement. Written communications appear to be in better shape across the board; however, they still cause a drop in productivity for many of the team members.

Cultural Compatibility. I find cultural differences with LA workforce some of the easiest to bridge. That could be me personally as there are a plenty of differences to be notes. A few most important areas that I have observed while working on technology projects:

  • Developers on LA teams took very long time before they could to offer their opinion or disagree with USA team members.
  • Facts and technical quality of solutions carried less weight with LA team when it came to conflict with personnel influence. For example a less efficient solution was accepted just because it had a lot of hours invested by the team members. To appease someone / protect their feelings was enough of a motivation in making core technical decisions.
  • A very high emphasis on theory and academic values versus pragmatic business decisions.

Take a look at Cross-Cultural Communication Between Latin American and U.S. Managers for a good list of the most significant differences.

Rates. LA offers great variety of rates that depends on the country from relatively high in Argentina and Brazil to moderate in Chile, Bolivia, and Uruguay. While the rates by themselves tend to be on a high side they are fairly attractive when taken into consideration with “the entire package” that includes short / no time difference.

Resource Turnover. LA countries offer better turnover rates than many of other regions. At the same time turnover on some of my / my friends’ projects outsourced to LA showed fairly high ratio. That seemed to be related more to a specific company rather than the region.

Resource Quality / Technical Capability. Quality of resources varies greatly from a country to country, from a city to city, and specifically from a provider to provider. However, in general technical capabilities of the resources are quite impressive / above average. I was able to find people with in-depth understanding of cutting edge technologies and with proven experience of working with fairly recent methodologies in many countries across the region. There is also no shortage of resources when it comes to mainstream skills such as Java / .NET / C/C++. Legacy technology skills and enterprise applications skills are less common though.

Of course one of the most significant Pros of the region it’s nearshore advantage, mostly linked to little / no time difference. The impact of it is difficult to overestimate – small time difference, similar holiday structure and bridgeable language differences makes working with teams in LA a great experience.

About these ads

4 thoughts on “Pros & Cons of Outsourcing to Latin America”

  1. I find it interesting what you say about English not being so good in South America. I have recently moved to Buenos Aires, along with huge numbers of people from all over the world. Whatever the draw card is for people, they do all have one thing in commmon, they are all looking for work when they arrive. There is a massive expat community living in BsAs and of course many of them looking for work. I thought I would be teaching English, until I arrived and noticed how many jobs there were in outsourcing companies, that pay really well but Argentinian standards. There is definitely the English speaking population here that would be ideal for these outsourcing companies. Dutch company http://www.5ca.com has taken it even further and provides services in English, SPanish, German, French, Russian and more.

  2. I believe Argentina has a lot to offer in terms of creative outsourcing. The population is well educated, especially in Buenos Aires, there is plenty of creative talent and low incomes, is what attracts so many offshore companies here. I read this article, http://www.creative-outsourcing.com/outsourcing-of-creative-work-is-to-argentina-what-outsourcing-of-programming-is-to-india-and-outsour.html which outlines some of the finer points of why Argentina is ideal for outsourcing creative work.

  3. There are both pros and cons in outsourcing to Latin America. I believe that by far the pros outweigh the cons. To me the important factors that Latin America has to offer includes, a highly developed telecoms infrastructure, a well educated, English speaking population, a close proximity to the US and similar time zones.

  4. I have worked for an American company which has worked on some projects for fortune 100 companies. I live and work in Latin America (specifically Ecuador), and I have found this model works only when you make the process almost imperceptible to the final client.

    This is an achievable goal, because Ecuador is in the same time zone (CST) and it’s just one call or one flight away from the US majors cities.

    A key to success is to have reliable partners in both sides: A company the client can rely on in the States (if you want to make the process transparent to the client), and a reliable outsource company in Latin America.

    I have a lot of experience working under this model. If you need some advice please email me.

Leave a Reply to Jane Cancel reply

Your email address will not be published. Required fields are marked *