Why US companies are looking to work Latin American Developers

June 18, 2021

Tags: IT Staff Augmentation

software development


Software outsourcing is one of the biggest market within the IT industry, with the global market size reaching an amazing number of 85.6 billion U.S dollars just last year.


When you combine that to the fact that during 2017 57% of US companies increase the use of outsourcing in their core tasks, it is not surprised software outsourcing is so incredibly popular.


But the reason behind why the United States is amongst the top outsourcing countries (it is actually the #1 outsourcing buyer, followed by European countries), is not because they only want to cut cost and save time, but because there is a software developer shortage in the US.


software development


How the software development shortage affected the outsourcing market in the US

The real, and most urgent reason why US based companies are looking to work with Latin american developers, is due to the very much real software developer shortage in the country.


You see, this is something that has been going on for years now. Actually, according to a study made by Experis Engineer, software engineers are the hardest positions to fill in any company or enterprise.


However, this is not due to the fact there aren’t people graduating as software engineers/developers but because those who are, aren’t really qualified to do the job required.


This is extremely alarming, specially when you compare it to the impact Latin American developers have had on the outsourcing world and how well prepared they currently are.


However, is this precise shortage of qualified and well prepared software developers that has pushed US companies to look for help in the nearest region: Latin America.


But the problem doesn’t stop there, since not only there are a reduce amount of available software engineers, but the costs rates are also incredibly high, which puts US based companies in a very difficult decision.


software development


US vs Latin American software developers

We won’t go through a deep analysis of these two groups of developers in this blog, however, we will talk about the significant difference in the salary these two groups are experiencing.


You see, companies all over the US choose to work with nearshore companies from latin america because their prices, compared to the ones US developers are charging, are much lower.


According to the graphic shown by Justin Backer, software developers can charge anywhere from 80$ up to almost 200$ per hour (depending on the type of developer and the region of the country).


When you take these prices and compare them to how much a software engineer in latin america charges per hour, the difference is incredible, and represents a huge factor to most US companies.


Top factors that are currently affecting US companies

By now we have talked about how the shortage of US software engineers and the high costs that hiring represents has pushed US companies to look for help in Latin America.


However, those aren’t the only reason behind the huge amount of american companies that have started to outsource their software development processes in the last couple of years.


To be precise, there are a total of 5 reasons why U.S companies are working with nearshore companies and choosing Latin American developers over their own ones:

  1. Extremely high costs

  2. Lack of experience

  3. Lack of formal engineer education or title

  4. Lack of technical skills

  5. Lack of applications


software development


This, of course, according to a study made by Experis Engineer report of 2017, a study that still maintains relevant nowadays, when software outsourcing is at its highest point ever.


Of course, there’s also the fact latin american developers are well qualified, have competitive rates and costs, have a huge talent pool where to choose from, and are known for being exceptional at what they do, which also directly influences the decisions taken by the US companies.


If you have a company and would like to work with experienced, skilled software engineers, contact us! We are ready to help YOU get the software solution you deserve.


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