Many IT companies in major markets are struggling to access the precise software development expertise that is required at a given time. The hiring and full onboarding of in-house talent typically requires significant costs and could take up to a year. Moreover, local employment legislation is placing pressure on these companies to retain talent on a long-term basis despite the lack of sufficient work loads. As such, outsourcing has become the modern cost-effective solution for IT companies seeking a range of necessary software development talent. In this article, we examine Brazil and Argentina as prospective destinations that help companies to meet growing demand for software development outsourcing.
IT companies are recognizing the long-term value of building a startup in Latin America or utilizing the talent in the region. In particular, the two frontrunners you must consider when selecting your destination for software development outsourcing are Argentina and Brazil. These two countries have booming technology industries and are leaders in Latin America for software development.
Argentina is the region’s third largest economy. The country has highly skilled developers and a regulatory framework that supports software outsourcing. The country offers domestic technological services that have a high penetration rate in international companies. To that end, software development outsourcing is considered as one of the sectors that bring major trade opportunities to the country.
Brazil, on the other hand, is the largest economy in Latin America. According to the United Nations Conference on Trade and Development (UNCTAD), the country was the sixth largest destination for global Foreign Direct Investment (FDI) flows in 2019. In particular, software development is a booming market in Brazil, generating over $10 billion in 2021.
According to the World Bank, Brazil and Argentina are similarly situated in a global ranking of 190 countries for ease of doing business.
| Country | Rank out of 190 | Doing Business (DB) Score |
|---|---|---|
| Argentina | 126/190 | 59.0/100 |
| Brazil | 124/190 | 59.1/100 |
Note: The top country was New Zealand with a score of 86.8.
Your company may have opportunities for software development and IT outsourcing to Brazil and Argentina. However, choosing which out of the two is more suitable for your company requires an understanding of some nuances. Choosing a software development provider in these regions requires consideration of four key factors:
In Argentina, government support for the IT market has become very active. IT education was a major focus for the Federal Education Council in 2019, which has resulted in the production of highly qualified and globally competitive software developers.
The government has also commenced programs to improve the skill set of Argentinian software developers and make the country a regional leader. Key software engineer programs also exist such as Startup Buenos Aires, which can connect a startup with either local or international investors. IncuBAte is another project that helps strengthen and consolidate innovative enterprises in Buenos Aires.
Today, an estimated 200,000 software developers reside and work in Argentina. Approximately 10% of Argentinian exports now consist of tech services, half of which are exported to the US. With that, the number of unicorns calling Argentina home is now increasing. Some of the unicorns originally from this country include Globant, MercadoLibre, OLX, Auth0, Bitfarms, Uala, and TiendaNube.
In Brazil, tech companies also receive strong support from the government. A Brazilian law commonly known as Lei do Bem provides benefits such as reduced corporate income taxes and net income social contributions for businesses associated with technological innovation.
So, Brazil is commonly known as a rising central hub for custom software development with over 500,000 developers in its workforce. With an association like Anprotec promoting the development of innovation ecosystems in the country, Brazil has approximately 369 business incubators and 100 technology park initiatives. As a result, it is home to most of the top 10 unicorns coming from Latin America, presenting strong potential to build a software company in Brazil.
Will the local software engineer you hire be qualified? Yes, the chances of hiring a knowledgeable and competent software developer is high. Both Brazil and Argentina have a growing focus on IT education and training, which is contributing toward the growing IT workforce in Latin America.
In terms of education, three of the top 10 universities in Latin America are located in Brazil and one is in Argentina. Based on another ranking of 1,750 world’s best universities for computer science courses, Brazil outperforms and outnumbers Argentina.
| University | Location | Rank out of 1,750 |
|---|---|---|
| University of Sao Paulo | Sao Paulo, Brazil | #135 |
| State University of Campinas | Campinas, Brazil | #213 |
| Federal University of Minas Gerais | Belo Horizonte, Brazil | #271 |
| University of Buenos Aires | Buenos Aires, Argentina | #496 |
However, according to the report by Coursera Global Skills Index (GSI), Argentina outranks Brazil when it comes to technological competence. The report’s criteria for ranking technological capability between countries consisted of computer networking, operating systems, human computer interaction, databases, security engineering, and software engineering.
According to the same report, Argentina was number one in terms of technological skills and regarded for delivering cutting-edge innovation. Specifically, Argentina scored 100% for software engineering and 95% for operating systems. Brazil, however, only ranked 30 and was classified as delivering “competitive” rather than “cutting-edge” innovation.
How easy or difficult would it be to collaborate with Argentinian and Brazilian developers? Both countries are regarded for having strong English-speaking skills, which facilitate team communications.
However, Argentina is top ranked among Latin American countries. Indeed, it is the only Latin American country classified as having High Proficiency. To compare, Argentina was ranked #30 with a score of 556 (High Proficiency), while Brazil was ranked #60 with a score of 497 (Low Proficiency).
The time zones in both countries are also favorable to western companies, presenting nearshore opportunities for tech startups based in the US. To note, New York’s time zone is GMT-4, and California’s time zone is GMT-7. Brazil’s time zones are GMT-2, GMT-3, GMT-4, and GMT-5, with Sao Paulo being an hour ahead of New York and four hours ahead of California. Argentina’s time zone is GMT-3, similarly having an hour time difference with New York and a four-hour time difference with California.
Having Argentinian software developers who are proficient in English proves to be very practical in establishing and maintaining clear communication practices.
In the US, the average income of a software development engineer is rising. A typical tech company might pay an average annual developer salary of $133,000 for back-end, $120,000 for full-stack, and $120,000 for mobile expertise. These figures are based on a survey by StackOverflow involving over 80,000 developers.
Hence, the biggest question of all is, how much savings could companies in the US generate by outsourcing software development to Brazil or Argentina? The answer is—a significant amount. The annual salary of Argentinian and Brazilian software engineers, as provided by Glassdoor, could be less than half of their US-based counterparts.
In particular, the software engineer salary is smaller in Argentina than in Brazil, offering custom software companies a bigger opportunity to cut down on costs without compromising the quality of the work delivered.
| Role | Average software developer salary per year (in US dollars) | |||
|---|---|---|---|---|
| New York, USA | California, USA | Brazil | Argentina | |
| Senior software developer | $112,677 | $118,003 | $64,680 | $56,537 |
| Software developer | $106,333 | $113,363 | $40,296 | $36,505 |
In summary, the two countries can be compared as follows in the table below.
| Factor | Brazil | Argentina |
|---|---|---|
| Approximate number of software developers | 500,000 | 200,000 |
| Number of top ranking schools for computer science | 3 | 1 |
| English proficiency ranking | #60 (out of 112) | #30 (out of 112) |
| Time zones | GMT-2, GMT-3, GMT-4 and GMT-5 | GMT-3 |
| Ease of doing business | 59.1/100 | 59.0/100 |
| Average software engineer salary | $40,296 per year | $36,505 per year |
Brazil has a more established IT infrastructure, as evidenced by the fact that most of the top Latin American tech unicorns are here and that more top-ranking universities produce globally qualified software developers. The talent and skill level among Brazilian software developers cannot be denied, which, however, could also justify why Brazil presents a higher average software developer salary.
On the other hand, Argentina is globally recognized for being the top country in terms of delivering innovative, cutting-edge software engineering services. It also has a much higher English proficiency ranking and a more affordable software engineer salary than Brazil. Therefore, it presents a strong alternative for software development outsourcing.
The volume of completed projects by Altoros offers evidence of the robust software development outsourcing industry in Argentina. We have 50 employees and two well-established delivery centers in Buenos Aires and Santa Fe, which, to date, have completed 196 projects.
The company has well-selected talent in place, having software engineers who are bilinguals with a B2 English level (upper-intermediate) or higher and have an average experience of 6.5 years. 92% of our engineers also hold a bachelors, masters, or doctorate degree either in computer science or math.
With an in-house talent pool consisting of 56% senior-level and 44% mid-level software developers, Altoros has been recognized by Clutch as one of the leading software development companies in Latin America.
We have complete confidence in the experience and competence of our Argentinian software development team. As such, we offer a free two-week, no-risk trial period for newly onboarded tech companies. Visit our website to learn more about our Argentinian delivery centers.
How do software engineer salaries in Argentina and Brazil compare to the US?
According to a 2021 survey by StackOverflow, a tech company in the US might pay an average annual developer salary of $133,000 for back-end, $120,000 for full-stack, and $120,000 for mobile expertise. The annual salary of Argentinian and Brazilian software engineers, as discovered by Glassdoor, could be less than half of their US-based counterparts. In particular, this could be $40,296–$64,680 in Brazil and $36,505–$56,537 in Argentina for mid-level and senior engineers.
Why outsource to Argentina?
Argentina is globally recognized for being the top country in terms of delivering innovative software engineering services. The approximate number of software developers in Argentina is 200,000. The country's time zones are similar to the US ones. Key IT programs, such as Startup Buenos Aires, connect domestic companies with local and international investors. Argentina is ranked as a top country in Latin America in terms of English proficiency. The engineering salaries 2x lower than in the US offer companies an opportunity to cut their software development costs without compromising the quality of the work delivered.
Why outsource to Brazil?
Brazil has an established IT infrastructure—most of the top Latin American technical unicorns are here. The approximate number of software developers in Brazil is 500,000. The country's time zones are similar to the US ones—Sao Paulo is just one hour ahead of New York and four hours ahead of San Francisco. The Lei do Bem law provides benefits such as reduced corporate income taxes and net income social contributions for businesses associated with innovation. The engineering salaries 2x lower than in the US offer companies an opportunity to cut their software development costs while still receiving a quality service.
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