The tech industry faces a serious talent shortage, with businesses needing more skilled specialists than ever in dev teams and few qualified candidates to take up these crucial roles. So, IT nearshoring has become an increasingly popular solution for tech startups and giants looking to access top talent in a competitive market.
Nearshoring, as the name suggests, involves tech companies outsourcing software development projects to skilled professionals in neighboring countries, offering cost-effective solutions and access to specialized skills.
Forbes estimated that the software outsourcing market would grow by 70% between 2022 and 2023, which shows how big of a deal nearshore outsourcing is. But what other nearshore outsourcing trends are currently shaping the tech scene, and is it necessary for your tech startup to implement nearshoring to scale your team? We look at 10 IT nearshoring stats shaping the tech industry in 2023, giving you a better understanding of the nearshore landscape and how it can help grow your business.
Nearshoring, an Effective Solution for U.S. Companies
Tech companies looking to address technical gaps in their in-house team or searching for a rare in-demand skill are generally torn between onshoring, offshoring, and nearshoring. While the nearshoring model involves outsourcing services to top talent from nearby countries, offshoring refers to outsourcing projects to top talent from faraway countries. Here are the main differences between the two outsourcing models:
Nearshoring gives your business access to instant tech talent at a competitive rate, making it the best solution for U.S. companies. LatAm is currently the preferred outsourcing destination for tech giants and startups looking for top tech talent because of its close proximity to North America, the growing pool of tech talent, cheaper developer rates, cultural alignment, and more. So, tech businesses looking to scale their teams should consider nearshoring software development to LatAm.
IT Nearshoring Facts
These facts will help you understand how much of an impact nearshoring has on the tech industry and to see whether it’s a fit for your business:
#1: By 2030, 85+ Million Jobs May Remain Vacant Due to a Shortage of Talent.
There is a predicted global human talent shortage of over 85 million people, which, if left unchecked, could lose the globe roughly $8.5 trillion in unrealized annual revenues in 2030. When you look at the tech scene, the U.S. is currently the leader, but the talent shortage could change that (it’s no secret that the U.S. is facing a significant tech talent drought). In tech alone, the country could lose out on $162 billion worth of revenues yearly unless it finds more qualified tech workers. LatAm governments have made talent strategy a main priority, focusing on educating, training, and upskilling their existing workforce.
#2: Hiring Nearshore Talent Saves Costs Between 50%-70%
Software engineers from LatAm are 50-70% cheaper than their American counterparts. US-based developers have the highest hourly rates, varying from $70.00 to $100.00 per hour, while LatAm developers’ hourly rates range from $45.00 to $65.00. Hiring nearshore developers from LatAm is far less costly because of the lower cost of living in the region compared to the United States, the lower average wage, and the fact that there’s always been lower demand for the skill in the market- until now. So, tech companies can hire the same high-quality talent from LatAm at a fraction of the cost.
#3: 61% of CEOs Say “Talent Acquisition” is their Top Priority
61% of CEOs reveal that talent acquisition is their top priority, and it should be yours. However, CEOs admit to struggling with talent acquisition, causing project delays, lowered productivity, reduced innovation levels, and difficulty meeting customer demands and adapting to growing market needs. The most successful companies have active talent acquisition and development programs in place, which are necessary to attract and retain the world-class talent needed to drive your transformation.
Source: GLG Insights
#4: LatAm is the #1Talent Pool for Outsourcing in the World
LATAM is still the fastest-growing region of organizations hiring abroad, with a 161% rise. American tech companies discovered the benefits of nearshoring to LatAm in 2022, and thanks to the cost savings offered by LatAm tech talent, this trend will rise further in 2023. LatAm also has a sizeable growing pool of talent, thanks to the training initiatives implemented by their governments. So, companies looking to hire can recruit remote tech talent from LatAm.
#5: Argentina, Brazil, and Mexico Top List of Hires from LatAm
Argentina, Brazil, and Mexico are the top three LatAm countries where remote talent is hired, mainly for technical roles, including product manager, software engineer and developer, and graphic designer.
#6: The Software Outsourcing Market Will Grow by 70% in 2023
The demand for software development services globally continues to rise exponentially. The talent shortage and increased reliance on tech have led to companies increasingly relying on outsourcing as an ideal, cost-effective solution for their software development needs. And this trend isn't about to slow down.
#7: LatAm Countries Consistently Rank Well on the English Proficiency Index
Argentina is the top country in English proficiency in LatAm with a score of 556 (high proficiency), while other countries in the region have moderate levels of English proficiency, ensuring easier communication, cultural alignments, and more. It also helps promote improved collaboration between teams and better delivery of software solutions.
#8: Latin American English Speakers Have the Fastest Improvement Rates Globally
LatAm has the highest increase in English proficiency and is keeping pace with the latest software development advancements. LatAm governments have also invested heavily in STEM education, contributing to the region's large pool of English-speaking tech talent.
Source: Education First
#9: 80% of North American-based Companies are Actively Considering Nearshoring
Companies are changing their outsourcing strategies for cheaper and more efficient solutions. A competitive global marketplace is increasing the demand for nearshoring services, making it an increasingly important consideration for North American-based companies.
#10: Nearshore IT Outsourcing Will Add $78B to LatAm’s Export Sector After 2023
LatAm will generate roughly $78B in revenue from software outsourcing in 2023. So, tech companies need to think beyond for their next project(s) and tap into LatAm’s thriving nearshoring scene. The region is poised to be the next Silicon Valley and the IT outsourcing hot spot, letting you:
- Access top talent
- Saving time and money on hiring
- Grow your company thanks to flexible scaling options.
- Streamline processes and hasten time-to-market
Diversifying Your Hiring Strategy During an Economic Downturn
For your business to survive and thrive during the economic downturn, you’ll have to rethink and diversify your hiring strategy. That includes broadening your hiring pool to access top talent without cutting your profits. The above nearshoring stats prove that Latam should be your go-to destination for nearshore outsourcing. By looking beyond your backyard, your business can support the CTO with scale while minimizing costs. However, finding a reliable and trustworthy outsourcing offshoring partner can be challenging.
TECLA understands this, so we are committed to helping you augment your staffing needs. We’ve been in the nearshore outsourcing industry for over a decade, having served more than 300 U.S.-based tech companies. Our team of 40,000+ LatAm pre-vetted developers is skilled, fluent in English, and committed to helping accelerate organization growth. Also, the entire process is hassle-free- let us handle legal, payroll, HR, and more while you focus on core business functions.
Book a call to let us know what you’re looking for, and we’ll connect you with top developers in a few days. And our hiring process is risk-free because we offer clients a 14-day trial period and a 90-day guarantee.