Latin America and Near Shoring web development: A little perspective.

The best thing you can have, when thinking about near shoring web development, is a little perspective. Just the tiniest, accurate, mental picture can save you a great deal of grief. I hope this helps.  There is great opportunity in off shoring your development work to LATAM, but there is also great risk.

Near Shoring, Off Shoring, outsourcing, local sourcing or micro-sourcing, all have one general description: hire an expert that will save you money, weather its your local CPA , working from her home office or a collection service professional in Bangladesh, the process is more efficient, the profit margin grows or the employer is able to better compete in regards to local market price.

This is not new, this is natural and legitimate. More than 40K years ago, your brand new homo sapiens sapiens, divided the chores around the community. Some one hunted, some one collected and some one talked to the Gods… Cave Men understood the value of asking some one else to do things for them, if it made sense). This gave birth to civilization, and here we are, thanks to it, humanity is growing like a virus. I’ll blog some more about humanity’s viral growth in future blog posts.

At some point in the 80’s, some one figured out that he could arbitrage his way into a very lucrative business if he/she took advantage of the staggering contrasts between a developed country’s yearly salary (Say in today’s dollars, 65K/Year, being very conservative) and a developing country’s yearly salary, (Oh, say $14k a year, being the average entry level  executive salary for a large, respectable company). And this was the beginning of Call Centers and Outsourcing companies.

Latin America, being conformed of mostly developing countries, was located in a particularly good position, as it shares the same time zones as north america and the same contrasting wages as India. Best of both worlds? – That’s what it looks like.  Most large global business process enterprises (Mega Call Centers and giant Back offices), in India, have taken advantage of Latin America’s poor job market and coincidental time zone. So, in one way or another, rupees are also in the LATAM BPO scene.

Entrepreneurial Geeks will be Entrepreneurial Geeks.

Today ( 2013) an entrepreneurial fever is taking over the LATAM region: Free Lancing, micro sourcing, and web development firms are sprouting everywhere. Literally every latin american and his aunt is open to the tentative fantasy of getting paid in dollars, euros or yens!

Latinos are happy about companies like CAP GEMINI and 24/7, comming down to their countries and building large offices. These companies have hired pretty much every one who speaks English and is willing to listen to angry customers in exchange for 500$ a month. This in turn has disrupted the local labor market, forcing most other businesses to raise their salaries in order to compete. ( and Yes, $500 is the average entry level monthly salary of your Latin american client service professional). But, as technology enables individuals and small businesses to create solid relationships with European and U.S. based employers, micro sourcing is becoming a trend, enabling the average “Juan” to either contract or sell his services to the average “John”, IF it makes sense.

Because wages vary from country to country, experience and capabilities are valued at the eye of the beholder, and each country has its own labor laws (some requiring employers to pay a 13th, 14th and even 15th monthly salaries, severance, social security and are held hostage to the constant labor market zig-zags and political upheavals, created by, our now global, economic thump.   Micro sourcing to LATAM is very risky and confusing. On top of this, the anonymity and easily avoidable accountability that comes from working remotely, makes near shoring or out sourcing a even riskier business. Something that large transnational outsourcing companies have resolved by investing in credibility and accountability. This makes risk, this reasonable distrust toward outsourcing, is making the cost of market entree, very high and its evolution, very slow.

There still is allot of growth to be seen in near-shoring and outsourcing, one of the biggest opportunities comes from enabling small businesses to be able to compete in an international environment.

A way to enable honorable and professional people to be able to negotiate and commit to an employer or provider in some mysterious other country, is the challenge most small businesses in the world are facing today, and, to the writers perspective, doing this is the only way to compete in a globalized market.

 

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