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Nearshore Software Development Rates: The Complete Guide for 2022

Written By

Chase Bolt

Without question, we are living in the era of hyperconnectivity. The internet, cloud computing, 5G networks, Big Data, Internet of Things (IoT), and Artificial Intelligence (AI) represent some of the technological advancements easing conventional barriers and increasing global interconnectedness.

With these advancements comes a growing need for qualified IT professionals to drive the growth and real-world application of these technologies. Thanks to nearshore software development outsourcing, IT leaders in US companies can adapt to the shortage of IT talent without compromising on the quality of their projects. 

Table of Contents

What is nearshore software development? 

Why consider nearshore software development over offshore?

     Access to a huge highly-skilled talent pool

     Overcome budget constraints

     Timezone alignment

     Cultural similarities

Nearshore software development rates

How Bluelight Consulting solves your nearshore software development needs

Conclusion

What is Nearshore Software Development? 

Nearshore software development refers to outsourcing your software projects to a highly-skilled and reliable team of IT professionals in countries sharing close proximity with the US. Geographical proximity saves you hiring costs while providing an extended team that’s timezone and culturally aligned with your in-house staff. 

Why Consider Nearshore Software Development over Offshore? 

Access to a Huge Highly-Skilled Talent Pool

When you are executing big and fast-growing projects, the need for more software development staff also increases. But, trends in the US IT talent market point to an increasing demand that surpasses the amount of talent available in the country. A survey by the Institute of Electrical and Electronics Engineers found that 73% of IT leaders in the US believe that recruiting technologists and filling open tech positions is one of the 4 chief IT problems to solve in 2022. 

The good news is a growing number of US companies are embracing nearshore software development as a strategy to solve this challenge. Latin America has a huge pool of highly-skilled IT talent that can help US companies address the talent shortage in the US market while also enjoying reduced payroll costs.

 A 2019 study by A.T. Kearney’s Global Services Location Index reinforces the growing popularity of Latin America as a home to a favorable nearshore software development landscape for US companies due to its;

  • Financial attractiveness
  • Advanced people skills
  • Relatively stable business environment

In the GSL Index, Brazil, Mexico, and Colombia hold 9th,11th, and 13th positions among the top 50 nations worldwide. This explains why Fortune 500 companies like HP and IBM are already extending their software development teams with nearshore talent from Latin America and reaping the benefits.

Overcome Budget Constraints

If you are a startup or mid-sized company, more often than not, you will be operating on a tight budget. Hiring nearshore software development talent means you can save some expenses without losing the quality of output you’d get working with local talent who may be hard to hire and retain. This is because nearshore software development rates for LATAM talent are much lower compared to US talent. 

Time Zone Alignment

It may look like a non-issue, but for software development projects, having an extended team in a similar timezone as your in-house staff is huge. It's much easier to integrate these developers as part of the team as they can join standups, engage in relaxed back-and-forths in Slack, etc. 

The timezone difference to India makes this virtually impossible, such that if you are outsourcing offshore to countries such as India or the Philippines the model is totally different. Plus, since the time zones are so off, the situation sucks for everyone because someone is either staying up very late or getting up very early.

Cultural Similarities

When working with nearshore software development talent, cultural issues are close to non-existent. For instance, Latin American developers are more predisposed to proactively speaking up and letting you know about concerns/potential issues than their Indian counterparts. 

One of the biggest issues most US companies outsourcing their software development projects face is, that while offshore talent can be fantastic technically, they loathe highlighting problems or schedule slips until it is too late due to a background characterized by a culture of deference. This can end up being extremely detrimental.

Nearshore Software Development Rates

The cost of hiring software developers is one of the main factors why founders are turning to Latin America to bolster their development teams. At the moment, the hourly rates for US-based software development are the highest in the industry ranging between $70 -$100. Canada at $60-$80 per hour and Eastern Europe at $50-$81 have the second and third highest software development rates in the market respectively. 

In comparison, nearshore software development rates in Latin America range between $45-$65 for Junior, Mid-level, and Senior positions. We simplified the latest data on the average nearshore software development rates across Latin American countries and the ease of doing business index for you in the table below: 

Country

(Name)
Average Nearshore Software Development Rates

(Hourly)
Ease of Doing Business Index

(Out of 100)
Panama $50 - $69 65.27
Peru $45 - $65 69.45
Ecuador $45 -$70 57.83
Mexico $45 - $65 72.27
Chile $50 - $65 71.22
Colombia $45 - $65 69.41
Brazil $42 -$65 56.45
Argentina $48 - $65 58.11
Uruguay $50 - $70 61.99
Costa Rica $50 - $65 69.13

Average Nearshore Software Development Rates - Latin America (LATAM)

Evidently, Latin America is a huge region. However, the countries that US companies have found the most success in when outsourcing their software development projects to nearshore talent are: 

  • Brazil
  • Mexico
  • Argentina
  • Colombia

Here’s how the countries compare in terms of nearshore software development rates for Junior, Mid-level, and Senior positions, as well as QA and Architect roles. 

Country

(Name)
Junior

(Av. Hourly Rate)
Mid-Level

(Av. Hourly Rate)
Senior

(Av. Hourly Rate)
Architect

(Av. Hourly Rate)
QA

(Av. Hourly Rate)
Brazil $41 $46 $56 $66 $40
Mexico $33 $40 $52 $59 $39
Argentina $34 $41 $53 $58 $39
Colombia $41 $45 $58 $62 $40

With that being said, you are wondering whether the lower nearshore software development rates mean that there is a drop in skill level. The reality is far from it as the HackerRank Programming Olympics and the TopCoder rating show that software developers from Latin America are among the top-rated IT professionals globally. 

Country

(Name)
HackerRank Position

(Out of 50)
TopCoder Position

(Out of 50)
Brazil 38 13
Mexico 33 35
Argentina 39 15
Colombia 45 37

Notably, the two countries that contribute the greatest number of developers, India and the United States don’t rank in the top half. India ranks 31st, with an overall score of 76 and the United States comes in at 28th, with a score of 78.

 In comparison, the scores of the top nearshore software development destinations are as follows: 

  • Mexico (75.7) 
  • Brazil (73.4) 
  • Argentina (72.1)
  • Colombia (66.0) 

How Bluelight Consulting Solves your Nearshore Software Development Needs

When you expand your team with nearshore talent, some of the challenges you have to address include finding the right fit, mode of compensation, issues of labor compliance, just to name a few. With our industry-leading nearshore staff augmentation services, we help you: 

  • Prospect the Latin American market for tech talent for every role. 
  • Interview and vet world-class talent, filtering out 99.5% of candidates and presenting you with the most qualified candidates within 2 weeks.
  • Negotiate and mediate compensation and work conditions between you and the candidates. 
  • Hire, onboard, and carry out contracts, expense management, benefits, payroll, and other compliance-related support. 
  • Provide equipment and co-working office space necessary for an effective engagement. 

Learn more about our Nearshore staff augmentation services here. 

Conclusion

Latin America is rapidly developing into a hub for innovation and a source of tech talent, as companies increasingly turn to the global market to secure skilled workers at competitive rates. This is in part because Latin America has the second-fastest-growing software development population in the world, second only to the Asian Pacific. 

While nearshore software development rates may be slightly higher than offshore, additional benefits such as timezone alignment, cultural similarity, and ease of doing business for US companies in the region have been proven to be critical to successful software development projects. 

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Bluelight Consulting is a nearshore DevOps & Software Outsourcing company that helps startups, SaaS, and enterprises with cutting-edge solutions.

More cost-effective than hiring in-house, with Nearshore Boost, our nearshore software development service, you can ensure your business stays competitive with an expanded team and a bigger global presence, you can be flexible as you respond to your customers’ needs.

Learn more about our services by booking a free consultation with us today!

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