Latin America outsourcing is gaining momentum and a growing list of IT managers across the states are planningto replace their offshore software outsourcing providers with nearshore ones (Latin America) mainly because the timezone issue preventing IT Managers to control projects using agile methodologies, and the fact that cost gap between nearshore and offshore software development firms continues to close especially due to inflation and attrition differences.
Countries in Latin America and in particular South American ones are looking to position as preferred IT services outsourcing destinations and take benefit from such trend. Client organizations in neighboring Spanish-speaking countries may find additional advantages, such as proximity, as well as language and cultural compatibility, in outsourcing to Latin America.
So which country an organization should choose? What factors are required for consideration? A decision maker could consider looking at Gartner reports for outsourcing, which analyze suitability for offshore outsourcing based on 10 criteria: language, government support, labor pool, infrastructure, educational system, cost, political and economic environment, cultural compatibility, global and legal maturity, and data and intellectual property security and privacy.
Countries in Latin America share the same benefits about nearshoreoutsourcing: timezone and geographical proximity. However a few of them are showing up as better outsourcing choices for those organizations looking to outsource to a South American software development firm (or setup their own captive centers), and they try to tackle some of the key factors affecting decision making about choosing outsourcing.
Within South America, Chile and Uruguay are on top of outsourcing destination lists because even when its population is below giants as Argentina and Brazil, and this is some big limitation for big volume outsourcing business, they are ranking great about some of the key outsourcing enablers:
• both countries achieved a continuous economic growth over the past few years, remarkable among competition in Latin America
• reached a world-recognized political stability, in contrast with Argentinean or Colombia reality, and most of Latin Americancountries
• Language is not such barrier like in Brazil, one of major competitor in South America for volume outsourcing
• Government is pushing hard and supporting growth of IT companies, by enabling IT parks, taxes redemption, FTAs, and initiatives such as the One Laptop per Child initiative developed by Uruguayan government: By November 2010, the government had distributed 380,000 laptops, trained 18,000 teachers, created 280 free Wi-Fi areas in Montevideo and had given 220,000 families their first computer, unique initiative in Latin America
• educated workforce with a high literacy rate, among the highest in Latin America
• Outstanding technology infrastructure (According to “The Global Competitiveness Report, 2010 to 2011,” Uruguay is ranked No. 53 in infrastructure globally, ranking above other Latin American countries, such as Brazil and Argentina.