The Definitive Guide to Outsourcing in LatAm 2023
Whether it is the need to reduce and control costs of operation, local tech talent shortage, or the goal to improve the company's focus on its core business, more and more organizations worldwide, especially in the US, are ripping the benefits of a correctly implemented outsourcing strategy. This article will share the main aspects of a successful outsourcing model and some key questions you should ask your potential outsourcing partners. We'll explore why Latin America is the go-to region to find great talent at competitive costs
Key points to you find a great outsourcing partner
Asking the right questions when looking for an outsourcing partner for your company is a critical success factor.
Here are some of the essential aspects you can ask your potential software development providers about to find the best match for your business.
1. Track record in building similar solutions
Customer satisfaction is a primary indicator of a company's efficiency.
Let potential providers know that you're interested in hearing about their previous projects.
They may focus on their solutions, but look beyond that and focus on their experience.
2. Development Process reliability and Quality Assurance practices
Look for modern, well-executed testing policies. This practice often indicates that a software development company is competent and can deliver reliable and scalable software.
3. People turnover and team configuration stability throughout the projects
While it may be ideal for the assigned team to be the same from day one until the very end of a project, this may not be the case for many reasons.
Focus on managing turnover and rotation, which onboarding processes are implemented, and what happens if a position has to be replaced.
Make sure you're offered a team that is stable, reliable, and responsive to your needs.
4. Hiring and talent detection practices
If you are looking for excellence, excellent communication skills, or higher levels of expertise in specific areas, make sure you know whom you can count on from the start.
Discuss which backgrounds, skills, and social traits are crucial to your business from the beginning.
5. Critical factors of recruitment and general HR processes
Recruitment processes are crucial to defining your team's quality, work ethics, and overall efficiency.
Human resources policies in your outsourced company must comply with your working values. Choose companies that treat their employees equitably.
6. Customer satisfaction methodology
If you ask this question from the very beginning, you might be able to predict and measure expectations wisely.
Make sure the company you are hiring can redo ineffective processes, present further options, and only deliver products suitable to your needs within the initially agreed upon pricing scheme.
7. Communications frequency, meetings, and communications processes in general
Beyond technical requirements, you need a team in which work is well managed, reviewed, and communicated.
Look for a company where teams have excellent communication skills, and make sure they're proactive, responsive, and experienced.
Meetings between team members are as frequent as their work is productive.
8. Communication and management tools used throughout the development process
There's a plethora of communication tools and platforms nowadays. Make sure your provider uses state-of-the-art, efficient and reliable tools for communication and management.
Tools such as Trello, Jira, or Redmine (to name a few) can significantly impact a project's workflow for the better.
Establishing solid and effortless communications from the very beginning is often the most critical (and often overlooked) aspect of assembling a successful team from the very beginning.
9. Mid-term and long-term support policies
Your software can only evolve if constantly updated, tested, and revised.
Full access to the source code and mid or long-term support to its functionalities are essential for your development project.
10. Adaptation to requirements changes
Software development is like the businesses that rely on it: not static.
Changes will be needed. Constantly.
Remember to look for software teams that develop with an adaptable and flexible structure.
11. What software development methodology does the provider use and why?
In software development, methodologies shape software quality, process efficiency, and teamwork dynamics.
In particular, Agile is one of the most popular methodological approaches in the market, as it's been increasingly showing excellent results in software development.
An agile approach enables most of the aspects covered by this article. Before you decide on your software outsourcing provider, make sure to cover this point thoroughly.
12. How are errors, bugs, and other unforeseen situations addressed?
Don't wait until bugs or defects are detected. Ask about how testing will be carried on right from the start. To lower development risks, testing processes should be carried out throughout the entire lifecycle of a project.
Make sure your provider does not wait until right before a deployment or deadline to begin testing the built codebase. Ask about what testing and QA methods and tools they will be using.
13. Ask about the benefits of near-shoring/off-shoring instead of in-country or in-company hiring
Choosing between Nearshoring or Offshoring your software development through an IT company overseas is a tough decision.
Usually, near-shoring is the way to go because these companies are located close enough. Their business hours, work culture, and ethics are not overly different from yours.
They tend to be a better fit over companies based on the other side of the globe while still benefiting from better pricing over hiring in-country or in-company.
Ask your potential partner about this and use their answer to look beyond the obvious, focusing on their value proposition besides offering a competitive hourly rate.
14. Return of investment in software development outsourcing
Outsourcing software development services will most likely reduce your costs considerably. However, price is not the only variable to keep in mind.
Code quality is essential, and therefore QA policies should be applied according to each project's needs and functionalities.
Code simplicity is also crucial. It should be easy for other developers to read. They should have user-friendly guidelines to understand how the code works the way it does, its purpose, and its outcome.
Produced code should be flexible, allowing for scalability in both users and features without discarding the existing code
Why outsource your software development needs to Latin America?
A couple of years ago, the most common outsourcing destinations were located in eastern Europe (Romania, India, China, and Poland, for example). These regions were known for their established IT markets and low labor costs.
However, Latin American countries have developed an excellent outsourcing infrastructure during the last two decades.
While these countries may not offer rates as low as their eastern Europe and Asian counterparts, they're still more cost-effective to hire than American software developers.
They also offer distinct advantages that Eastern Europe and Asia countries cannot.
Technology in Latin America is booming. The region is home to more than 30 unicorns, most of them based in Brazil, Argentina, and Mexico.
Latin American countries have been pushing (and succeedingly doing so) for better education in technology and robust communications infrastructure to allow for reliable internet.
This directly translates to more choices and high skill sets for those businesses looking to outsource their IT work to this region.
Latin American countries are used to working with US-based and multinational companies. Organizations like IBM, HP, Microsoft, to name a few, have strong ties to many Latin American countries.
This should serve as an incentive for middle and even small businesses to outsource their software development needs to the region.
Here we present some of the great benefits of outsourcing to Latin America:
Exceptional language and cultural alignment
Latin American nations share many similarities with the United States' culture. While Spanish and Portuguese are the native languages of Latin America, English is widely spoken.
Most Latin American software developers have very high English proficiency levels.
According to Babbel, English is the third most spoken language in South America, with about 5.4 million speakers, most of them living in Argentina and Colombia.
If we include English speakers in Mexico and other Central American countries, the number is even higher. Language and cultural barriers significantly improve the chances of failure in a project.
With most Latin American nations, these barriers are practically nonexistent.
Efficient time zone alignment, Workday and Workweek Overlap
In the United States, typical business days are Monday through Friday. While this is not the case for all regions of the world, Latin American nations share the same workdays as the US. This eliminates coordination issues and enables straightforward and accessible communication.
One of the main drawbacks to off-shoring your software development needs is dealing with significant time zone differences. Southeast Asia, for example, is hours ahead of the US. This can make communication and collaboration very difficult, becoming nearly impossible in some cases.
On the other hand, Latin America has time zones that are very similar to the US.
Buenos Aires, the capital city of Argentina, is roughly 5,300 miles from the United States but only two hours ahead of New York City time zone.
Highly skilled software development professionals
While the country certainly has some excellent schools, the United States does not have a monopoly on high-quality higher education.
Many Latin American nations have made significant investments into their colleges and universities, particularly regarding IT programs.
The region has a vast talent pool that includes some of the most qualified professionals in the world.
Top-tier teams available at competitive rates
As mentioned before, Latin American professionals are among the most talented in the world. However, while labor costs can make outsourcing software development to the US cost anywhere from $80 to $150 per hour, the hourly price of outsourcing to Latin America is significantly lower.
Strong communications infrastructure
Latin American countries invested heavily in their communications infrastructure and have robust internet connectivity in the last decade.
Having real-time interactions, cloud operations, and other common software development tasks with an outsourced team is definitely not an issue.
Up-to-date Technology and Data privacy laws and regulations
Many governments have decades-long laws and regulations to ensure that their IT professionals meet the internationally accepted standards for the use and sharing of intellectual property.
Regarding data protection and privacy, Argentina, Brazil, Mexico, among others, have now initiated their data protection policies along the lines of the GDPR.
Proximity for ease of coordination and travel
While this may seem off in a pandemic or post-pandemic world, as the new normal becomes our present reality, the ability for a team to meet in person once or twice a year has a proven positive impact on communications and team-building, and overall efficiency.
In conclusion
Outsourcing is not just about reducing costs. It's about assembling a successful team, reducing time-to-market, and improving overall efficiency.
Cultural and language familiarity is key to success. Latin America has a robust internet infrastructure and top-tier professionals in a US-friendly time zone at competitive rates.
Outsourcing itself is a critical tool that enables innovation. Be sure to ask good questions from the beginning and look for the correct answers.
Considering outsourcing your software development needs to LatAm? Drop us a line!