In an ever-changing business landscape, companies need to rely on their tech partners more than ever for stability and support to achieve their goals. By nearshoring their tech operations, companies stand to access multiple advantages, such as talent availability, cost efficiency, innovation, and streamlined execution. Today, we will analyze three main regions in the outsourcing game: Latin America, Asia, and Europe.
We have selected these three regions due to their distinct advantages that make them good choices for nearshoring. Our analysis focuses on key criteria for successful tech nearshoring operations, specifically in relation to the US. Although there may be certain countries that deviate from the norm, we are evaluating each region as a cohesive unit. Latin America emerges as a prominent player, and we will delve into the reasons why below.
- Trust and confidence
Mutual trust is a fundamental element in establishing successful business relationships. However, in Asia, concerns arise due to communication challenges and limited real-time interaction, leading to a lack of trust. Europe, particularly Eastern Europe, has experienced volatility and recent conflicts, which have affected expectations and trust levels. Conversely, Latin America maintains high expectations due to its political stability and consistent growth. With a population of over 600 million inhabitants, this region is not only geographically close to the US but also shares a common understanding. Although there are variations within Latin America, the tech industry in the region demonstrates a notable homogeneity.
- Viability
When evaluating the potential for achieving sustainable, practical, and suitable tech nearshoring goals, Latin America emerges as the favored option. In contrast, Asia and Europe present moderate levels of viability for distinct reasons. Asia’s viability is affected by cultural compatibility, while Europe faces challenges concerning stability and infrastructure, which have been significantly impacted by the ongoing war. On the other hand, Latin America demonstrates high viability, benefiting from exceptional infrastructure and a comprehensive set of capabilities. Moreover, the region is safeguarded by supportive legal frameworks that encourage investment, all within a culturally compatible environment.
- Rates
Rates are another aspect to consider against US costs. Asia stands out for its significantly lower costs in comparison, while Latin America and Europe offer moderate advantages, although not as cost-effective as Asia. However, it is essential to be aware that lower rates alone may not tell the whole story. Hidden costs can arise from a lack of understanding and interaction, potentially resulting in a much higher final expenditure. Therefore, it is crucial to consider not only the cost of labor but also other factors when evaluating the overall expenses involved.
- Stability
Stability, both political and economic, is crucial for nearshoring. Asia and Europe rank low in this category due to political unrest and ongoing conflicts. Latin America, in contrast, has made significant improvements in its overall stability, providing a favorable climate for growth. This is especially true in the Business and Technology sector, where standards match those of the US.
- Talent quality
Talent is integral, because it’s not only about tech skills but also soft skills that help deliver that knowledge. Asia ranks low generally speaking, while Europe holds an intermediate position. Latin America excels with skilled talent and proficiency in the English language.
- Proximity and time zone alignment
Closeness and real-time availability also impact nearshoring decisions. Latin America stands out as the closest region to the US with similar time zones, followed by Europe, and then Asia. It’s not, however, only about geographical proximity, but also about the mainstream time zone alignments that allow for flowing communication and real-time collaboration.
- Resource Availability
Latin America and Asia excel in availability. Latin America, being a relatively untapped market, offers ample opportunities. Similarly, Asia showcases a high availability of tech professionals. In contrast, Europe, while not entirely inexperienced, presents a more varied landscape in terms of benefits for the US, resulting in a comparatively smaller talent pool.
- Cultural affinity
Culture is a big part of how we communicate and, as a result, work together. In this regard, Asia is the most different from the US because it also encompasses many different cultures inside. Europe follows, but it’s known that cultural differences are present and may sometimes hinder work. LatAm’s Business and Technology sectors, in contrast, are not only more similar but have a deeper experience in working with the US and so have gained more exposure.
- Business risk
Risk, in this context, refers to the potential harm to businesses arising from prevailing conditions, often influenced by legal environments. In terms of risk assessment, Asia presents the most vulnerabilities, while Europe has a well-established system that has been impacted by conflicts and instability. In contrast, Latin America exhibits a low-risk levels, thanks to a robust legal framework, well-developed infrastructure, and a proactive government stance toward attracting investments.
- Government investment
This type of investment can help foster the right conditions for tech outsourcing by creating different outcomes like economic viability, a stronger infrastructure or a better prepared workforce. Currently, neither Asia or Europe are at a place to do so, while LatAm has been doing it for years.
Arionkoder acknowledges the abundance of talent, innovative thinking, and supportive ecosystem in Latin America. Through our extensive experience in the region, we have witnessed its remarkable ability to drive business transformation and operational optimization. Despite the internal variations among Latin American countries, Arionkoder specializes in carefully selecting top talents from across the region to form formidable tech teams. This approach enables us to create value not only for our clients but also for the betterment of humanity as a whole. We possess in-depth knowledge of the diverse strengths of different Latin American countries, as well as our base of operations in the United States.
Through our Nearshoring by Design framework, we mitigate project risks and generate value. Partner with us to swiftly achieve your business objectives. Contact us at hello@arionkoder.com to learn more about Nearshoring by Design and how we can assist you. Let us be your partner in success!