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Many businesses in the United States are turning to Latin American countries as a key destination for outsourcing critical tasks. These countries have taken huge steps forward in recent years to be on a competitive level with other outsourcing powerhouses such as Russia, China, and India. Is Latin America a good fit for your organization? Let’s take a look at some of the pros and cons of outsourcing to Latin America.
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Pros of Outsourcing to Latin America
There are many advantages to outsourcing business services to Latin America:
Language Familiarity
English is spoken prominently in almost all Latin American countries. Some, such as Mexico, speak English very well, because of the close proximity to the United States and the fact that family members often travel back and forth between the two countries.
The governments in many Latin American countries have made teaching English to children at a young age a priority. That has translated into higher rates of English speakers in these countries. In addition to fluency in the language, many Latin American countries understand the cultural nuances of American life. This makes it easier for their residents to relate to Americans, making business collaboration even easier as well—especially compared to countries like India and China which have a greater cultural divide compared to the U.S.
Proximity
For U.S.-based businesses, Latin America’s close physical proximity is another major advantage. Shipping and travel between the two sites is relatively simple compared to other outsourcing hubs on the other side of the world. If you need to visit the site of your outsourcing services, you can jump on a flight that could be just as long, or even shorter, than a trip from one U.S. coast to the other.
Plus, most Latin American countries are located in the same time zones as the U.S. This means that business can be conducted during normal business hours without an issue.
Large, Skilled Labor Pool
Latin American countries are investing heavily in education. They have spent millions of dollars over the last few years to enhance their educational programs in high-tech fields such as engineering and IT. Many skilled workers can be found in the region with graduate degrees and certifications in high demand fields—and these workers can be hired for a fraction of the cost of U.S.-based talent with equivalent experience and skillsets.
Infrastructure
Many Latin American countries have advanced, solid IT infrastructures that provide broadband internet access to much of their countries. This is extremely important, as IT reliability is a huge key to success when outsourcing to another country. The expanded infrastructure provides uninterrupted communication access as well as opportunities for people to learn and businesses to thrive.
Entrepreneurship
Latin America is home to some of the most impressive entrepreneurs in the world. The startup community here is thriving, often with the support of local government initiatives.
American entrepreneurs can benefit from this huge pool of talent that’s being developed in Latin America, and they can learn a lot from their counterparts there, too. When these startup businesses begin to thrive, other businesses pop up in and around them to support them, making it an even more attractive place to do business.
Cons of Outsourcing to Latin America
There are still some disadvantages to outsourcing business services to Latin America. Here are some of the main drawbacks to consider:
Cost Compared to India & China
You will certainly realize a major cost reduction when you outsource to Latin America compared to the U.S., but you may not realize the same level of savings as compared to China and India. The many advantages of doing business in Latin America noted above often outweigh the minor cost-savings you’d get by outsourcing to Asia.
Business Regulations
While it’s pretty easy to do business in most Latin American countries, there are still new tax and business rules and compliance you’ll have to figure out. Sometimes, this can be difficult for U.S. businesses to manage. Compliance is a big issue, too. If you don’t do exactly what the local government requires you to do, you could face huge fines or even a ban on doing business in the country. So, if you plan to outsource to Latin America, you’ll have to make sure you do the proper research into what it takes first—or work with an experienced partner like SERVIAP who can handle these tasks on your behalf.
Expand Your Business with SERVIAP
When you’re making the choice as to whether outsourcing to Latin America is a good decision for you, weigh the pros and cons of doing business there. In many cases, you’ll find that the pros far outweigh the cons.
SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business expand operations throughout the Western Hemisphere. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization. Contact us today to learn more about how you can expand your business in South America and Latin America.