Over the course of the last two decades, startups and growing tech companies have outsourced developers or services to grow or help thrust the company into the next stage of development. The idea is the same (to access remote talent & recruit specialized support for specific tasks) but the process, structure, and —to some degree— the mindset towards outsourcing has undergone quite the transformation.
COVID changed everything.
Yet, tech powerhouses—such as Google and Facebook— used outsourcing as a tactic for growth long before the remote work revolution took hold. Outsourcing talent to other regions has been useful for companies in various stages of development. The main reasons for the success of outsourcing were its cost-effectiveness and efficiency. Today, efficiency and cost (particularly the salaries in tech industry) are still top of the list, but companies now hire remote developers for another reason: to reach top tech talent.
We review how big companies used outsourcing early on and how that model has changed, and why there’s a rise in recruiting developers in Mexico and Latin America. As we see it, software development for startups is a competitive market as they search for all-star talent to reach their goals.
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Examples of Companies that Used Outsourcing as a Tactic Early On
Traditional outsourcing models involved a straightforward contract or SOW (statement of work) that outlined very specific tasks or project completions. The main advantage for businesses was the cost reduction and quick access to professionals capable of getting a job done. Most of the time, workers had no connection to the central happenings of the company. This was, and still is to some degree, arranged through third-party companies.
In the early aughts, the rapid technology expansion drove companies to find alternatives to traditional outsourcing models and employ other similar options like IT staff augmentation and recruitment that could better fulfill the complex needs of tech organizations. Other models like BOT (Build-Operate-Transfer) emerged much later as companies sought to build reliable nearshore teams. Still, the global outsourcing market in 2018 was at a significant $85.6 billion. Not only was the dynamic and outsourcing model shifting, so were the regions companies looked to for building their remote team.
Some of the early users of outsourcing models include household giants like:
As early as 2016, Google was well aware of the advantages possible with hiring remotely and outsourcing models. One spokesperson for one of the outsourcing firms said, “Outsourcing is not something that’s new to Google…Google sees greater value in outsourcing, as it is more cost-effective.”
During this time, Google was one of many large companies that had embraced outsourcing models to countries like India. The company understood the value of an outsourcing strategy and delegated tasks such as IT infrastructure management, software development, and maintenance.
During the early stages of the company, Apple also outsourced work to Indian IT service companies and Chinese manufacturing like Foxconn. Outsourcing the manufacturing aspects of the company allowed Apple to keep costs low and avoid the complexities that come with that side of the business. Even in 2020, a majority of the company’s spending on manufacturing, materials, and assembly was through 200 suppliers, most of which (85%) are in Asia.
Since then, the company has tried to diversify its supply chain. The company’s outsourcing strategy allowed it to maintain its rigorous design process in the states and take other aspects of development to an overseas third-party provider.
The social media giant always hired in-house employees for most of its IT and tech programming and development. However, early on, Facebook was forward-thinking when it came to outsourcing certain tasks to external partners. The company outsourced (and continues to do so) workers in countries like India and the Philippines to perform some of the content moderation responsibilities.
The Evolution of Outsourcing Developers Towards a New Kind of Talent Search
As a result of the remote work revolution, as well as the tech talent shortage in the U.S., the outsourcing model has shifted. Outsourcing developers and hiring remotely is not just about cutting costs. It’s about the ability to tap into talent pools previously inaccessible and circumvent the hefty Silicon Valley salaries. For companies, this translates into the possibility to build diverse global teams that collaborate across borders and are cost-efficient.
Traditional outsourcing models have evolved into more nuanced partnerships with developers and tech talent in other countries. Tech giants such as Facebook and smaller companies have embraced hiring remote talent as an exciting opportunity to build a robust global workforce. In 2021, Facebook announced its push to hire remote workers as a way to extend the hiring pool.
Similarly, startups looking to jumpstart their business or move into the next development stage, hire remote developers as a means towards stronger growth and committed teams.
At the same time, new emerging markets create opportunities for companies to build supportive teams that reinforce their main operations in the States. Those same companies that used outsourcing early on are employing new approaches of scaling and growth. For example, Google is now opening up engineering centers in Latin American countries like Mexico. Google’s newest Mexican office will provide support services to cloud computing clients across the world.
The Rise of Tech Talent in Latin America
Outsourcing development to faraway countries proved useful in cutting costs, but it had its own shortcomings and limitations. After a few years of overseas outsourcing to countries like India, companies realized a couple of things:
- The tech industry has changed enough that companies seek more integrated tech teams that work closely with central operations to improve collaboration and cohesive company cultures.
- Companies didn’t have to go to the other side of the world to find elite tech talent. Latin America (LATAM) had an extensive and burgeoning tech ecosystem that showed promise.
In the U.S., companies are in a fierce war for talent. This phenomenon has been called the tech talent shortage or talent gap. Latin America has caught the attention of startups and investors, demonstrating a focus and dedication to training and educating software developers.
Companies like Pinterest, for example, have expanded offices in Mexico as well, recruiting top-of-the-line software developers to join their ranks. The number of companies seeking talent south of the border is a testament to the competitive attributes of the Latin American tech ecosystem.
Our Mexico Tech Salaries Report 2023 takes a deep dive into the world of Mexico’s IT ecosystem. It compares salaries from various LATAM countries and regions within Mexico, listing average salaries across some of the most popular tech roles in the industry. As industries continue their digital transformation, startup software development is in high demand.
According to our recent data, Brazil, Mexico, Argentina, and Colombia have the largest pools of developers in the region. Hiring software developers in Latin America also provides companies with several benefits. It allows companies to:
- Hire within similar time zones without having to account for a seven, eight, or nine hour time difference. Mexico, for example, shares time zones with the United States and has frequent flights to the region’s tech hubs.
- Hire developers that are well-trained in English and, due to proximity, share a lot of cultural characteristics that make integration easier.
- Hire top-level talent for a fraction of the salary expected by U.S. software engineers.
Build Committed Teams with Developers in Latin America
Software development for startups is key for companies to drive their growth. Top talent is a competitive advantage. Innovation and development depend on sound digital infrastructure. For that, you need skilled developers and engineers.
CodersLink is committed to helping companies bridge this talent gap, grow their operations, and establish resilient remote teams. Whether it’s setting up an additional office in Mexico or hiring a few developers for your next project, we guide you through the ins and outs of hiring top tech talent in Latin America.
Want to learn more about how it works? Connect with our team today.