Outsourcing to Latin America: What Are the Key Benefits and Considerations?

Latin America is emerging as an outsourcing destination that offers the benefits of nearshoring, including geographic proximity and cultural similarities. Latin America’s Business Process Outsourcing (BPO) market is expanding rapidly, and revenue is expected to increase at a compound annual growth rate (CAGR) of 3.63% from $16.59 billion in 2025 to $19.82 billion by 2030.¹

Countries like Mexico and Brazil are attracting US businesses of all sizes looking for competitive advantages to complement their onshore operations. However, before making the move, it’s important to understand the challenges as well as the benefits. In this article, we look at the reasons to choose Latin America for outsourcing and the concerns to be aware of.

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What Are the Benefits of Outsourcing to Latin America?

Moving some operations outside the US offers businesses strategic, operational and financial gains. Below, we explore the key advantages of outsourcing to Latin America that make it an increasingly attractive destination.

High-Value Service Offering

Over the past two decades, the sector has evolved beyond basic customer service and support functions. Brazil, Colombia, Argentina, and Chile have established markets offering higher-value services such as software development, IT support, digital marketing, design, and finance and accounting. The emergence of technology hubs and favorable trade agreements has further accelerated the industry’s development.

These countries are now competing with established outsourcing destinations like India, the Philippines and China. A global business leader survey found that 24% of executives plan to shift work to Latin America to reduce their Asia-based operations and 29% who are considering Latin America would be moving processes outside the US for the first time.²

Proximity to the US

Unlike offshoring to Asia, where large time differences can delay collaboration, nearshoring to Latin American locations with similar time zones enables effective real-time communication and faster problem-solving.

Most US companies operate within a 1-4 hour time difference of outsourcing hubs. Mexico is in the GMT-6 time zone along with Chicago, while Colombia is in the GMT-5 time zone that aligns with New York, Washington D.C. and Virginia.

Remote teams can work alongside their US colleagues, which is key for projects that require ongoing interaction and immediate feedback. Such proximity offers an edge for businesses selling physical products, as shipments can be delivered to US locations in less than 24 hours.

Nearshoring also makes regular travel to in-person meetings more practical than time-consuming and costly trips to Asia. This can maximize productivity and strengthen relationships with clients, partners, and remote employees.

Skilled Workforce

With more than 300,000 IT support jobs going unfilled in the US, it’s unsurprising that tech businesses are looking to fill roles overseas.³

Several Latin American countries have large pools of well-educated, highly skilled workers to fill employment gaps. They have substantially improved the standard of their education systems in recent years, producing a growing number of graduates with strong technical and professional abilities in fields like software development, finance, and customer service. For example, Chile has an estimated 66,000 software developers, while Mexico has a talent pool of up to 800,000 to tap into by outsourcing software development to Latin America.⁴

US businesses can gain a competitive edge by building an adaptable and innovative remote workforce.

Competitive Costs

One of the main reasons businesses consider outsourcing is to cut costs. Latin American countries generally have lower living costs than the US and Europe, allowing employers to pay lower salaries.

For example, senior software developers in the region earn around $60,000-80,000, compared with US salaries ranging from around $120,000 up to more than $200,000.⁵

While Asia has traditionally offered the lowest labor costs, wages there are rising and Latin America may deliver similar savings. Salaries may be slightly higher, but the total cost can be lower once you take into account the higher efficiencies and cheaper travel.

These lower operational costs put opportunities within reach of small business budgets that they may not otherwise be able to pursue.

Government Support and Incentives

Governments have established various incentives and development programs to attract foreign investment. These include tax breaks, subsidies, and simplified regulations.

For example, Colombia has set up free trade zones that offer tax advantages to outsourcing companies and Mexico’s PROSOFT program supports IT development and training. Countries like Costa Rica and Uruguay have invested in education and digital infrastructure and set policies to create business-friendly environments.

What Are the Main Challenges of Outsourcing to Latin America?

Although there are clear advantages to outsourcing to Latin America, there are drawbacks you need to be aware of before deciding whether to go ahead.

Economic Instability

Persistent high inflation and currency devaluation have disrupted business in certain Latin American countries in the past. Business owners should be aware of the possibility that their operations or contracts could be affected.

Countries like Venezuela and Argentina have experienced political upheaval and economic volatility in recent years, however the likes of Chile and Uruguay tend to be more stable, supporting economic growth. It is important for US businesses to do due diligence to make a well-informed choice of location and reduce the risk of disruption.

Legal and Regulatory Environment

It can be difficult to navigate legal systems in other countries, particularly in Latin America where bureaucracy is a common obstacle.

Processes like obtaining business permits, registering employees, or complying with labor and tax obligations can be opaque and time-consuming, especially for foreign investors that are unfamiliar with local practices. Compliance can involve interacting with multiple local, regional, and federal authorities, each with their own paperwork and procedures, causing delays.

Working with local legal experts or a reputable outsourcing partner can limit compliance risks and minimize disruptions.

Infrastructure Limitations

Latin America has made notable progress in improving its digital and physical infrastructure, but there are still disparities. Urban centers typically have reliable Internet connectivity, transportation, and office facilities. However, infrastructure in smaller cities or rural areas can be inconsistent, causing issues like frequent power outages, limited high-speed Internet access, and inadequate public transportation, which affect productivity.

Overall Internet penetration in Latin America is around 74.6%, compared with around 93% in the US, and access is far lower in certain countries.⁷

Digital infrastructure is especially important given that one of the potential advantages of Latin American locations is real-time communication. Look for outsourcing providers that have the infrastructure you need as well as strong contingency planning and technical support. You might also need to invest in backup systems.

Key Considerations for Outsourcing to Latin America

Before you decide to outsource operations to Latin America, it’s essential to evaluate several factors to make informed decisions about where and how to do it to maximize long-term value.

Choosing the Right Country

While the region offers various advantages, the outcome for your business can vary widely depending on the country you choose, your industry, and local dynamics.

Consider factors like relevant talent availability, a strong ecosystem in your industry, cost efficiency, and time zone compatibility. Infrastructure quality, political and economic stability, as well as the business and legal environment are also critical for building efficient, scalable operations.

Consider the unique strengths and industry focus of each country to find one that aligns with your goals. For example, Mexico excels in manufacturing and customer service; Argentina and Brazil are known for high-quality tech talent; and Colombia is gaining recognition for its government-backed incentives and digital nomad-friendly policies. Belize, while smaller, is emerging as a promising nearshore location with a fully English-speaking workforce.

Understanding Local Business Practices

Business etiquette can vary across the region and taking time to understand local nuances, such as communication styles and negotiation tactics, can help build strong relationships with clients and employees and avoid misunderstandings. Some tips to adapt to local business practices:

• Prioritize building a rapport before negotiations
• Be flexible with time and show patience
• Use formal greetings and titles and respect hierarrchy
• Expect slower decision-making
• Learn basic Spanish or Portuguese
• Be open to social interactions

Consider working with a local consultant to understand the business culture in your specific chosen location.

Building Strong Partnerships

• Successful outsourcing depends on choosing the right local partners and nurturing those relationships over time. Here’s how:
• Conduct thorough due diligence to find firms with proven track records, transparent communication and shared values.
• Start with a pilot project to test a firm’s compatibility before making a long-term commitment agreement.
• Set clear expectations around communication
• Invest in relationship-building
• Respect local expertise and encourage cross-cultural understanding

Review performance regularly and adjust partnerships as needed.

Making the Most of Latin America's Outsourcing Potential

Outsourcing to Latin America offers US businesses an attractive combination of cost savings, skilled talent and geographic proximity. While challenges like legal complexity and regional instability require careful navigation, business leaders can mitigate the risks with proper planning.

If you are considering expanding your business into the region, carefully research the most suitable locations for your specific needs to make an informed decision. Selecting the right country and local partners, and adapting to local business customs, can pave the way for long-term success.

Common Questions About Outsourcing to Latin America

Which countries in Latin America are best for outsourcing?

Mexico, Colombia, Argentina, Brazil, and Chile are among the top choices for outsourcing because of their strong tech industries and skilled talent.

How does nearshoring to Latin America compare to offshoring to Asia?

Nearshoring offers overlapping time zones, faster turnaround times, and often easier cultural integration, while offshoring may have lower costs but more logistical challenges.

What industries are thriving in Latin America's outsourcing market?

Strong sectors for outsourcing include software development, customer service, fintech, healthcare support, and digital marketing.

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	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

	Author:
	Nicole is a professional journalist with two decades of experience in writing and editing, she has also run her own freelance business for the past five years. Her expertise spans the financial and technology industries, including payment processing and small business banking.

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Sources:
¹https://www.statista.com/outlook/tmo/it-services/business-process-outsourcing/latam
²https://www.auxis.com/latin-america-shared-services-and-outsourcing-report-findings/
³https://www.cnbc.com/2024/11/29/demand-for-it-support-roles-is-at-an-all-time-high-google-exec.html
⁴https://alcor-bpo.com/latin-american-developers/
⁵https://alcor-bpo.com/latin-american-developers/
⁶https://www.ef.com/wwen/epi/
⁷https://www.statista.com/statistics/726145/latin-america-internet-penetration-countries
All sources checked October 2025.