Why outsource development to South America? Many would jump directly to the first thing that comes to mind when thinking about outsourcing which is cost. But if cost was the only consideration then we should just outsource to China and India and be done with it unless there is more to it. South America has been growing as an important destination for outsourcing in the last decade. From Argentina to Colombia, tech companies have been flocking to the region in search of El Dorado or the city of gold. But what are reasons why South America is becoming more attractive?
Access to talent: Compare to other regions in the world, South America is an untapped market for IT. With strong work values, good secondary education, and good infrastructure, South American is quickly becoming a popular destination for IT companies.
In recent years, South American governments have invested heavily in telecommunication infrastructure and in Education. Colombia for example has invested in a number of public initiatives to boost computer science enrollments in secondary education.
The quantity and quality of Latin American tech talent has seen a significant rise over the last few years. According to Stack Overflow, the average reputation of top users is higher for Latin American countries than for India and China. China and India can count on large numbers of developers but Latin America is higher or on par with quality programmers. Thanks to a large and growing supply of quality developers, outsourcing companies like Jobsity are able to tap into a large pool of qualified well educated talent.
Time Zones: If an outsourcing from North American, South America makes great sense due to the fact that most of South America is either in the same time zone or off by 1 to 4 hours all year round from either the East or West coast. This gives companies the ability to have real time communication and interaction nearly all day long, which makes collaboration seamless. Accessing developers in real time enables greater flexibility to respond to fire missions and the resolution of problems with no lag time.
Now if your development does not require any collaboration, is not time sensitive, or is potentially in front of customers and user then long distance outsourcing can make sense. For example QA is something that doesn’t require much in interaction and tends to be well suited to a “send and wait for the next day” development model. But if you need to talk to someone live it is much easier to do so in Colombia versus say India which is 9:30 hours off with the East Coast. This might lead to major difficulties in scheduling meetings, calls, or asking for support especially if urgency is required. Working with developers in South America would be no different than between different offices located on say the East and West coast.
When Jobsity was looking at setting up shop in South America we decided on Ecuador and Colombia which allows us to share virtually the same working schedules with all of our US and Canadian partners. Our developers attend daily scrum meetings and jump on Slack and FaceTime in and out all day to talk to their counterparts. We believe that a 24 hour turnaround time is well 24 hours too long.
Cultural Similarities: South American shares many cultural similarities with the United States and has had strong cultural ties for decades. US food, music, art, and movies are widely consumed in South America. Another cultural similarity is in the way developers operate. For example the culture in Ecuador and Colombia is well suited to taking the initiative, being creative, and viewing the relationship more as a partnership rather than a client – worker relationship.
South American developers tend to be more out spoken than their counterparts in South East Asia and are more likely to voice concerns about issues. This important when working on new technology or time sensitive projects. You don’t want to reach the deadline and then find out there was an issue at the beginning of the project that no one told you about which caused delays or even worse a major bug that requires a rewrite.
Communication and team building comes faster and easier due to cultural similarities. Building team cohesion and spirit takes time and effort. You must still make sure that both your team and the outsourcing team are on the same wave length. Communication, meetings, and team building exercise are important to create a great functioning team weather local or around the world.
In order to effectively manage any project, working together is crucial and communication is the key ingredient to a successful partnership. We at Jobsity value frank dialogue and communication.
Language: Where ever I go in South America I have noticed there are plenty of people that speak English. My travels to Japan and South Korea while exciting and fun left me amazed at how little English was spoken in those countries. In South America, schools that teach English are abundant, the youth and the upper middle class tends to speak English. Many have either studied in the United States, attended American schools locally, or taken courses in English.
According to the EF English Proficiency Index 2015, a number of Latin American countries including Ecuador and Colombia have surpassed China in English proficiency. At Jobsity, we do many of our training session in English in order to practice, practice, practice and learn, learn, learn. We are strong believers in continuous education and training and have placed special attention to learning and speaking English.
Geographic Proximity: Most of South America is within a 4 to 10 hour direct flight from the East coast and have the added benefit of no jet lag. There are no visa requirements for business travelers for most of South America. Bolivia and Brazil are the two countries that require a visa for US Citizens.
From the east coast, you can hop on a flight from most major international airports and fly directly to most of South American’s major cities. Hubs like New York, Miami, Houston, and Atlanta also serve many large secondary cities in South America.
Great excuse for a workvaca: From Argentina to Colombia, South America has a very diverse and rich culture. Take the opportunity to meet face to face with your outsourcing team. In our case you could visit our office in beautiful Cartagena Colombia and get to know some of our staff and enjoy the beach between meetings. From crystal clear waters, colonial architecture, afro Cuban culture, to emeralds Cartagena is one of the most beautiful cities on the Caribbean.
We also have an office in Quito Ecuador high up in the Andes which is home to some of the oldest and most beautiful colonial churches in South America dating back to 1600’s. But no matter where you nearshore in South America be sure to visit and get to know your partner. A visit can create a stronger working relationship and help you get a better sense of who they are and understand the local environment and how it affects your teams.
And Yes Finally Costs: Yes hiring developers in South America is less expensive compared to developers in the United States. Developers down south can be up to 1/3 less expansive when taking account taxes, healthcare, 401k contribution and benefits. But when deciding to outsource or nearshore, I would suggest that costs be one of the last factors to consider. Not all developers are the same. Companies should focus on capabilities and talent versus costs. It takes more than writing code to be a developer. Many companies have fallen in the trap of the lowest bidder only to find out later they had to spend way more to fix and rewrite applications due to poor quality, miss communicating their vision and or little project management. In my view a good developer is part:
- Scientist: Like scientists, developers must observe first, come up with a solution, build out the solution and then test the solution. They must use logic and experimentation to found the write solution that meets the desired outcome.
- Artist: they must take a blank screen use abstract thinking to envision a way to connect different system and an order and a flow and then write a completely unique peace of code. Like painters it takes years of training and practice to master the trade and requires inspiration, creativity, and patience to touch and retouch until the final product is perfect.
- Diplomat: They must walk the fine line between what can be done and what is impossible and sometimes they must be the bearer or bad news. A good developer will always say “X” cannot be done but “I have a compromise for you”. He must play the role of negotiator asking for more resources but without breaking the bank, he must find the right compromise between speed and amount of data.
- Miracle worker: Sometimes the diplomat is not listened to and the developer has no choice but to put on his miracle hat and save the day with a last minute piece of technology or a hack. Think of them as Scotty from Star Trek. He always says it can be done and that the ship is about to break apart, only to reconnect the power coupling in Jefferies tube 3 to realign the dilithium crystals to save the Enterprise from certain doom.
At Jobsity, we spend a considerable time vetting, evaluating, testing, and training the developers that join our team because talent is the most important factor in the success of our business. It is the core of our business and as such we look for that developer who is part scientist, artist, diplomat, and especially part Lieutenant Commander Scott (Chief Engineer on Star Trek’s star ship Enterprise).
Currency: Yes currency exchange is a big part of the business. Recently the dollar has been on a roll making outsourcing in South America even less expensive. From Ukraine to India, developers are paid in the local currency and therefore outsourcing companies are currently gaining from very favorable exchange rates. Unfortunately currencies tend to fluctuate. Companies that outsource and outsourcing outfits that do not have a currency exchange risk plan could find themselves expose to drastically minimize savings and financial risk when currency unexpectedly fluctuates.
A few countries in South America actually are dollar economies such as Panama and Ecuador making currency fluctuation a non-issue. Jobsity early on, chose to operate in Ecuador a dollar economy and Colombia which uses the Colombian peso. This strategy of operating in two different markets hedges against currency fluctuations. Even when the dollar is strong, our Ecuador office attracts top talent from all around the continent (staff includes developers from 5 different nationalities from across South America). When the dollar weakens, thanks to a distributed staff, we are able to weather the storm. Be sure to ask if your outsourcing partner has a plan to deal with unexpected fluctuation in currency exchange rates. You do not want to be hit all of sudden for more money because the US dollars just dropped 20% in the middle of a project.
In conclusion, South America is a great destination for outsourcing development and it’s not just about costs. From time zones to culture, South America is quickly becoming a large development hub that you cannot ignore. So the next time you are looking at outsourcing development, take a second look at South America and Jobsity as well.