When it comes to building large-scale innovative software products that send competitors scrambling, the topic of cost savings and operating efficiency is always at the forefront. If you or your company have ever considered outsourcing some of your product development or maintenance work, now would be the right time to do it in order to get ready for future growth.
The first important step you will need to do in defining your outsourcing strategy is choosing your remote team’s location. If you are based in the US or Canada and are looking for a development partner who can support you throughout your business hours while offering solid engineering expertise complemented with cost efficiency, the choice naturally narrows down to Latin America with one of its prime nearshoring locations — Argentina.
This article continues our series of posts on nearshore software development in the increasingly popular LATAM region and focuses on nearshore technology outsourcing to Argentina, one of its key outsourcing destinations.
Overview of Argentina’s IT market
The Argentinian IT market is on quite a roll in 2023, with nationwide cloud service adoption, legacy software migration, and the ever-growing need for mobile services fueling its headway.
Argentinian IT market size and growth projection (USD, Million)
Argentina is home to some major software development companies that have demonstrated remarkable growth and worldwide expansion over the past decades, including Mercado Libre, Prominente, OLX, ASSA, Baufest, Calipso, Neuralsoft, and Despegar, among many others.
Joining them are a plethora of US and international giants such as SAP, IBM, HP, Motorola, McAfee, and Oracle — all drawn by the abundance of engineering talent, cost efficiency, as well as the country’s convenient location for nearshore development services.
At the same time, despite being one of the largest economies in Latin America with a GDP of nearly $500 billion, Argentina is currently facing economic challenges and fighting inflation, which has been the country’s number one concern for years. As we can see from the trends above, these hindrances do not seem to stop the development of the IT outsourcing market or the IT market in general, which is expected to grow at a CAGR of 8.3% over the next 4 years. Nearshoring to Argentina still remains a priority for many companies expanding their operations into Latin America.
The influx of international capital together with the ensuing demand for qualified IT teams and engineering expertise has resulted in a dramatic increase in the number of universities offering high-quality technical degrees and the formation of various startup accelerators, IT hubs alongside developer communities — all of which contribute to further development and diversification of the IT sector in Argentina.
Over the last decade or so, Argentina’s educational system has been producing thousands of technology graduates every year through 40+ computer science programs offered by more than 50 universities, including the following major institutions:
- National Technical University
- Buenos Aires Institute of Technology
- National University of Buenos Aires
- National University of Cordoba
- National Central University
- National University Antonio Jauretche
- María Sánchez de Thompson Technical School
As many as 10 universities in Buenos Aires became featured in the QS World University Rankings 2023. Remarkably, the University of Buenos Aires ranked #1 in Argentina and #13 in LATAM for Computer Science education.
In order to further stimulate IT product development and software outsourcing in Argentina, the country’s government has launched or supported several large-scale programs, including Plan 111Mil, Argentina Programa, as well as Red Argentina in order to train, integrate, and support thousands of IT specialists working for national companies and in the international IT outsourcing market.
Last but not least, nearshore software development in Argentina has been quite successful thanks to one more very important skill that young Argentines have to offer — their knowledge of English. According to recent studies, the country ranks #1 in the entire LATAM region in terms of English language proficiency.
Argentina’s tech startup scene
Argentina’s bustling entrepreneurial ecosystem ranks 4th in LATAM and is characterized by a rapidly growing number of startups and startup incubators. The majority of them are based in Buenos Aires, the country’s vibrant capital city that is often referred to as “the Paris of Latin America.” Within its ecosystem, several unicorns have emerged, including Aleph, Tiendanube, Vercel, Bitfarms, and, of course, MercadoLibre, the largest eCommerce platform in Latin America.
Top 10 entrepreneurial & startup ecosystems in LATAM
Souce: LATAM Republic
Argentinian startups excel in various industrial sectors, showcasing remarkable success in fintech, blockchain technology alongside innovative agriculture. These areas of focus not only align with the current trends but also draw from the country’s historical expertise and specialization.
IT hubs in Argentina
The capital city of Buenos Aires has the largest IT workforce in the country being the largest source of nearshore developers in Argentina. Thousands of talented developers, data scientists, QA specialists, and project management professionals call it home — and not without reason.
With numerous universities and institutes offering technical degrees, Buenos Aires offers exceptional educational and employment opportunities, while its highly developed infrastructure, healthcare, cultural life, and business environment make it the number one choice for young IT graduates.
In terms of evolving industry segments, Buenos Aires contributes a lot to fintech, eCommerce, and mobile app development. The city has recently witnessed a surge in innovative startups as well as tech companies in these areas, contributing to its status as a regional tech hub and a top IT nearshore destination. It would not be an exaggeration to say that more than half of the country’s 125K+ IT specialists live in or near Buenos Aires.
Pros: outstanding infrastructure, Internet connectivity, numerous coworking spaces (including WeWork), startup incubators/accelerators, a growing number of venture capital funds, and quick access to international flights.
Cons: higher salary levels as well as the typical cost of hiring a remote team (compared with other locations in Argentina).
Cordoba, the second-largest city in Argentina and a major outsourcing hub, is known to host a vast community of software developers, IT specialists of various categories, and a large pool of tech entrepreneurs.
Cordoba is home to two major universities (the National University of Cordoba and the Cordoba Institute of Technology) producing a substantial number of STEM graduates every year, thus fostering the growth of the local IT industry and the emergence of multiple nearshore outsourcing companies working predominantly for US clients.
The city has successfully nurtured a highly conductive ecosystem (#2 in Argentina) for nearly 200 startups (around 36% of the country’s startup pool), establishing itself as a convenient base for companies specializing in software and game development. This ecosystem successfully attracts investments from both Argentinian VCs and international funds, thus gradually transforming the region’s diverse tech landscape.
Pros: multiple startup incubators, technology parks, government-backed IT initiatives, modern infrastructure, a large pool of skilled engineers available for outsourcing to Argentina
Cons: relative remoteness from Buenos Aires, the cultural scene is less represented compared to BA, lower population and talent availability
Mendoza is Argentina’s 3rd largest ecosystem and a still-growing location for nearshore outsourcing to Argentina. Having a smaller IT workforce than Buenos Aires, the city nonetheless boasts substantial expertise alongside practical experience in areas like general software engineering, data science, energy & environment technologies, as well as educational software development.
The Mendoza-based National Technological University and the University of Mendoza offer modern programs in computer science and information technology, while the region’s rich agricultural heritage is reflected in the specialization of local startups that focus on agritech and wine-making technologies. On top of that, many IT companies from Mendoza are involved in the development of platforms and applications for the travel industry.
Despite being an emerging center of nearshore outsourcing in Argentina, Mendoza has solid potential for becoming one of the most lucrative locations in the country for foreign companies seeking affordable nearshore options for their in-house team augmentation purposes.
Pros: competitive pricing due to competition with Buenos Aires or Cordoba, modern infrastructure
Cons: lower talent availability compared with other locations, recruitment times may be longer
Nearshore software development in Argentina: benefits for the US companies
For US companies, the concept of outsourcing is anything but new. However, in relation to software development for many businesses out there, the focus has been traditionally on offshore locations that unlocked previously unfathomable saving opportunities compared with what the local market could offer.
As projects grew increasingly more complex and required a different level of communication, collaboration, and overall alignment, US-based companies turned to nearshore locations like Argentina that presented a healthy balance of cost, cultural similarities, process maturity on top of ease of day-to-day interactions.
So what are the benefits of hiring a dedicated nearshore team in Argentina?
Education and technical skills
As we mentioned above, the success of Argentina’s software outsourcing market rests primarily on a large number of young STEM professionals graduating from the country’s universities every year. Popularization of IT professions through private together with government-backed initiatives and support programs also contribute to its further development.
For potential employers, this abundance of graduates translates into direct access to a variety of young professionals in different technology areas that are open to new challenges, have a sense of responsibility for their work, and possess agile, highly adaptive minds, which is invaluable for new product development.
Number of software developers in different LATAM countries
We’ve already mentioned that Argentina is considered the country with the highest level of English-level proficiency among other Latin American nations. In real life, it translates into outstanding communications as well as better integration between in-house and remote teams — everything you need these days for iterative software development based on Agile methodologies.
Few things can be more disappointing than failing to connect with a partner on the most basic level of understanding, and yet it is not uncommon when representatives from completely different cultures jointly work on the same project. Fortunately, this is not the case with Argentina’s tech populace, who share an extremely similar mindset with their US clients. Whether it’s a single engineer working on a part-time assignment or an entire team building a product for your company, you can rest assured that no subtlety will be overlooked and no requirement will be lost in translation or be misinterpreted.
Time zone overlap
Argentina may be far, but its longitudinal position and the UTC-3 time zone are perfect for working with the US and Canada. No matter which city you outsource to in Argentina, you’ll be able to get 5 to 8 hours of productive time with your remote team, which is more than enough for daily meetings, fast reaction to feedback, or on-the-spot decisions resulting in better business outcomes.
Ease of travel
Although Argentina may not be right around the corner, traveling there is relatively easy. US citizens do not require a visa to visit the country, and daily flights to key Argentinian cities are offered by nearly all major airlines, including Delta, which will take you from its base in ATL to Buenos Aires in a little over 10 hours.
Choosing to nearshore in Argentina means working with highly motivated, socially mobile English-speaking individuals with a high adaptation potential and a profound sense of responsibility for the final result — attributes that are vital for large-scale, long-term projects in any industry.
As a result, all these factors make Argentina a great country for nearshore outsourcing your software development.
Nearshore outsourcing rates in Argentina
When it comes to outsourcing, the cost is invariably among the top three reasons why companies resort to this practice partnering up with a professional software engineering company like Intellias.
If you decide to try nearshore outsourcing to Argentina, expect to be paying around $65/h for a senior developer, $50/h for an experienced QA specialist, $55/h for a trained project manager, and $40/h for a business analyst. These numbers are based on the most recent report from Accelerance, a trusted source of information in the outsourcing industry.
According to ZipRecruiter, the 75th percentile for software engineering salaries in the US (which approximately corresponds to senior developers) is $173,000 or around $83/h as of the end of June, 2023. However, if you do not want to hire a software engineer directly and choose to turn to a US-based company to work with one of their staff, you can expect rates to go well beyond $100/h under any cooperation model.
Despite some macroeconomic struggles, Argentina remains one of the key locations for nearshore software development outsourcing in Latin America, especially for clients based in the US and Canada. Combining deep technical expertise, availability of high-quality engineering talents, a well-developed communications infrastructure on top of strong government support of the IT sector, it checks all the boxes for any company considering an attempt at nearshoring.
Transparent hassle-free nearshoring requires a reliable software engineering partner. Intellias is here to help you. With over 20 years of experience and a profound understanding of the client’s business needs, we are rapidly expanding our presence in the LATAM region and are ready to be your nearshoring guide.
Contact us today for a comprehensive analysis of your outsourcing goals together with a detailed action plan laid out by our experts.