The Cost of Hiring Pre-Vetted LatAm Developers in 2023
More than ever before, US tech companies are hiring globally. And it’s a trend that will likely continue throughout the decade as demand for software developers rises and the cost of hiring increases as well.
According to Insider, US companies that can hire remote employees are looking at international markets in order to cut costs. One tech recruiting platform found that 75% percent of US companies hiring software engineers looked at sourcing talent from Latin America – a 20% percent increase from the year before and a 50% percent increase since before the pandemic. Companies around the world are catching onto global hiring, too. In 2022, the number of employers in Asia Pacific looking to hire remote workers internationally increased by an estimated 227%.
It’s not surprising that these organizations are seeing the value in hiring developers from international markets. Regions like Latin America now have thriving tech industries with large, untapped talent pools of skilled workers, and with lower rates on average than North American developers. These benefits, among others, are especially enticing for organizations that want to scale their team with cost-effective hiring solutions without sacrificing code quality.
The important decision employers must make now is choosing a region to hire from. Along with cost, considerations include developer skill level, time zone compatibility, and English communication. But with so many emerging global markets, it can be difficult to know which to prioritize.
We’ve gathered and analyzed data from the 26,000+ profiles in our network of software developers to help. In this article, we’ll unpack the hourly rates of developers broken down by region to give you a better understanding of the market. We’ll take a deeper look at why Latin America is becoming the go-to region for US companies hiring developers, including the many benefits the region offers. And we’ll share our insights from more than 12 years of experience in the software staffing industry to provide an accurate look at hiring remote developers in 2023.
Table Of Contents
How Much Does It Cost to Hire a Developer in LatAm vs. Other Regions?
Let’s start by looking at the costs of hiring pre-vetted software developers in Latin America versus other geographies. From our data, we analyzed the hourly rates from 16 different regions to see how LatAm stacks up.
Across all software roles and skill levels, freelance developers in the U.S. have the highest hourly rates, with an average of $82.50 per hour. While this is the country-wide average, rates tend to increase significantly in areas with tech hubs like San Francisco and New York. Hourly rates in Canada and Western Europe are comparable with averages of $77.00 and $76.50 per hour, respectively.
Traditionally, Southern Asia and Eastern Europe have been go-to destinations for companies looking to hire remote talent. Both regions have established markets with large talent pools and relatively affordable prices. Eastern Europe’s prices are more comparable to Latin America and, depending on where you are located, can be a great source of talent. However, If you’re based in the United States, hiring from either of these regions can come with communication and time zone challenges (which can be up to 13 hours apart).
Similar to Latin America, Africa is an up-and-coming market for software talent. Across the region, there are several hotspots with large pools of talented software developers.
Hourly rates are also affordable, with averages ranging from $30.00 per hour on the low end (Central Africa) to $64.75 per hour (Western Africa) on the high end. While Africa’s talent market has been making strides in recent years, there are some disadvantages of hiring from this region if you’re located in North America. Connectivity can be an issue, and time zone overlap is minimal, making collaboration difficult. If you’re looking to hire a developer who can integrate into your internal team, it might be worth hiring from closer regions.
When compared on a global scale, LatAm is an attractive option for US companies looking to source talent. Hourly rates for developers in this region, although higher on average than countries in Asia and Africa, are significantly less than in the United States, Canada, and Australia. Time zone overlap and a relatively similar work culture between Latin America and the US enable better collaboration and contribute to overall project success. For this reason, our team has focused on building up our network presence here.
Hiring Software Developers from Different LatAm Countries
Latin America has entered the global competition of technical talent in recent years and for good reason. With thriving startup ecosystems, governments investing in education and tech, and growing talent pools, the region is rich with technological progress and innovation.
Brazil, for instance, has undergone significant growth in recent years with advances in its startup ecosystem and multi-billion dollar investments in the tech sector. This year, the region’s technology skills proficiencies increased by 72%, a jump from 48% last year. Argentina is also developing at a fast pace. It ranked number one in Latin America for English proficiency and 38th out of 112 regions for high proficiency in EF’s EPI, the global standard of English skills ranking.
Colombia is another country making waves in the tech industry with one of the most robust startup ecosystems in Latin America. Colombia invests 20% of its oil royalties in science and technology and is the fourth largest tech industry in the region.
Mexico has one of the largest tech scenes in Latin America and ranks as the world’s 15th largest economy. Guadalajara has become a top tech hub with over 600 companies in the city, 13 universities, and 78,000 employed IT professionals. And skill levels are rising according to Coursera’s 2022 report. This year, Mexico’s technology proficiency skills rose to 52% from 10% the previous year.
Although Uruguay, Peru, and Chile aren’t the largest countries in Latin America, they’re excellent sources of concentrated talent and offer hourly rates comparable to the rest of the region. However, in today’s competitive landscape, access to larger talent pools means you may be able to find, interview, and hire candidates who are a better fit for your role at a faster pace.
What Employers are Actually Paying LatAm Developers
So far, we’ve analyzed our internal data to see what developers typically charge in different locations. In the following chart, we break down the frequency of all Latin American developers’ hourly rates in our platform in 2022 vs. the rates of developers who were actually selected and placed on client project.
The orange bars indicate the subset of developers in our platform who passed our vetting process and were placed on client projects in 2022. While their rates range from $20-99, the majority of developers we placed had hourly rates between $50-70 USD per hour. In our experience, this range offered the best combination of expertise and value.
Why is this the case? What we frequently see is that developers with rates far below the average are typically quite junior, and many aren’t experienced enough to pass our technical interviews. On the other side, we are typically able to find skilled developers to meet our clients’ needs within the $50-70/hr range, so going above isn’t necessary.
Benefits of Hiring LatAm Developers
Cost-effectiveness is a major driver for companies looking to hire remote developers through staff augmentation platforms. However, there are many added benefits that make hiring from this region advantageous.
Scalable Path is a US-based company, but our team is distributed around the world, and 50% of our members are located in Latin America. From our experience as a company in California, working with talent from this region has been an integral part of building a team that is cohesive, collaborative, and successful.
With a lower cost of living, overlapping time zones, strong English communication, and the availability of skilled workers, Latin America can offer considerable benefits to companies looking for new opportunities to scale in 2023.
It’s important to note that factors like level of education, expertise (skills and experience), and cost of living all impact how much a developer may charge. The cost of hiring a freelance developer will ultimately depend on the skill set of the role you’re looking to fill and the country you hire from.