Originally published in Business News Ledger
Over the last few years, the negative stigma of outsourcing has all but disappeared. According to Amalga Group CEO Jens Erik Gould, companies across various industries have realized the immense benefits of nearshore outsourcing.
This has become particularly attractive for companies seeking to leverage Latin America’s talent-rich IT pool.
“In addition to gaining access to highly-skilled professionals, U.S. companies can now enjoy other benefits like proximity and cultural alignment when nearshore outsourcing IT services to Latin America,” Jens Erik Gould said.
Here are some reasons why the practice is so beneficial.
Shortage of IT Talent in the United States
Thanks in large part to emerging technologies such as AI and the need to respond to significant challenges like the COVID-19 pandemic, industries across the world have undergone digital transformations. This has caused a spike in demand for top tech talent.
But there’s a significant shortage of tech talent in the United States. In fact, an August 2023 study by Deloitte revealed that 90% of business leaders said retaining and recruiting talent was either “a moderate or major challenge.”
This has caused a two-fold problem for U.S. companies. Not only is necessary tech talent harder to come by—and hang onto—but these positions have become more expensive because of the shortage.
According to Jens Erik Gould, that has forced companies to look elsewhere.
Nearshore Outsourcing on the Rise
A recent Bloomberg report highlighted the fact that 80% of North American companies are considering nearshore outsourcing—in large part because of the shortage in IT talent.
A Lightcast study also revealed that, over the last three years, large employers in North America have increased their Southern American nearshore partners (including Central America and the Caribbean) by 70%. And for U.S. companies, professionals from Latin America are often the ones most in demand.
“Nearshore outsourcing IT services is no longer just an idea—it’s a viable way of doing business,” says Jens Erik Gould. “Companies throughout the United States, both large and small, are realizing the benefits it brings to their organizations.”
Latin American Investment in Education
A big reason for the increase in Latin American tech talent, according to Jens Erik Gould, is the region’s investment in education.
Earlier this year, J.P. Morgan outlined that Latin American investments in education technology had increased sixfold in 2021 compared to recent years. From 2000 to 2017, Latin American investment in education grew from 3.9% to 4.5% of GDP, and public expenditure on education increased from 14.9% to 17%. These figures fall within the Sustainable Development Goals set forth by the UN.
A UNESCO report showed that Costa Rica led this investment in education in the region, followed by Brazil, Argentina, Mexico, and Colombia. This government investment in education has helped produce a class of IT workers who are well-trained for the modern technology needs of U.S. companies.
And the best part? Nearshoring is a win-win for everyone involved. Engineers and developers in Latin America can earn higher salaries than they would usually find locally, increasing their purchasing power. At the same time, U.S. companies can hire at lower costs, reducing their overhead.
About Jens Erik Gould
Jens Erik Gould is the Founder & CEO of Amalga Group, a Texas-based nearshore outsourcing company specializing in providing highly qualified talent in IT, software engineering, contact centers and business process outsourcing. Previously, Gould spent over a decade reporting on topics such as business, politics, and energy in the United States and Latin America for esteemed media outlets like Bloomberg News, The New York Times, and TIME Magazine.
