What’s Lurking in Latin America’s Tech Industry?— Surprising Facts of LATAM’s Talent Reserve

What’s LATAM’s role in the future of innovation?

Latin America is often left out of the global conversation. Yet, this massive region houses 660 million people. The most populated countries (Brazil, Mexico, and Colombia) have a combined GDP of about 3 billion.

The region has a rich cultural and political history, 6 Nobel prize winners in literature, vast natural resources, beautiful landscapes, a diverse population, and—out of the 21 world cups— it has hosted seven and won nine.

The region has recently caught the world’s attention for an entirely different reason: it is a top spot for sourcing tech talent and a go-to destination for hiring remote software engineers.

Big-name companies like Google, Pinterest, and Uber have already set up shop throughout the region, opening up engineering centers and cloud regions in places like Mexico and Brazil.

It is not just the big names either. Startups and mid-sized companies are looking to Latin America to solve their tech talent woes.

Not only is the talent top-notch, but there is a considerable difference in salary expectations—given LATAMs lower cost of living— which also makes it a cost-effective option for American companies.

Remote Work and the LATAM Talent Reserve

LATAM houses a vast number of software developers, engineers, and other specialized IT tech positions. Just Mexico and Brazil alone graduate a combined 605,000 software engineers per year (Mexico 130,000 and Brazil 475,000).

Mexico has a vast talent pool —according to our data—a high concentration of full-stack developers, back-end developers, and front-end developers. And they love working remotely: when the remote work revolution hit, Latin America welcomed the change.

Our Tech Salaries Report 2022 (annual internal survey of thousands of IT professionals in Mexico) revealed that 90% of them did not want to return to the office.

Contrast that to the United States, where the debate had some considerable controversy through 2022, and industries seemed a little more split on the matter.

When Elon Musk’s email on Tesla’s back-to-the-office policy leaked, the debate ignited in the media (of course, Elon Musk seems to have that effect on the world).

Nevertheless, it seemed to be a real conundrum that many U.S. companies faced and continue to wrestle with.

The Massive Catch-Up Game

According to a recent report by Atlantico, Latin America’s use of smartphones has increased by 40% and the internet penetration rate has surpassed that of India and China. Those numbers alone are enough to raise an eyebrow. China and India have a combined population of 2.8 billion.

Latin America has a population of 660 million. Yet, despite that vast population difference, the LATAM region shows a faster adoption of smartphone use and internet connectivity.

As the use of smartphones and the internet increases, there is a massive potential for value creation in the years to come. What that means for investors is an indication that a market is brewing in various of these Latin American countries.

The LATAM population will start demanding and creating digital solutions to issues specific to their respective societies and, thus, software developers will train in the same languages and technologies used to build those solutions.

All of this has already begun to some degree. In 2021, Latin America experienced a massive surge in VC investment. That year, it was the region with the highest VC investment activity.

Several unicorn sightings throughout LATAM have suggested to investors that there is potential for growing and scaling companies in the region. Although that investment has leveled out somewhat in 2022, the region is still on the investment radar.

Solving Tech Talent Woes by Hiring Remote Software Engineers in LATAM

The U.S. is experiencing a tech talent shortage. Software developers are in high demand. Companies need developers and designers to craft their digitization efforts and new products and services.

So, it’s no surprise that the tech industry in the U.S. has taken note that there is an entire region down south full of the skilled potential to grow, scale, or kick-start their companies.

That is not to say, of course, that there are no challenges involved.

Latin America has plenty of challenges to overcome, but there is certainly an indication that many of those governments have recognized that one way to lift their societies out of economic distress is to embrace technological change.

Why Is LATAM’s Tech Ecosystem of Any Consequence?

Our thinking is that the shortage of tech talent in the U.S. and the growth of talent hotspots in LATAM will pave the way for new relationships and an entirely new type of workforce.

Many U.S. companies are looking to hire software engineers in LATAM and with the adoption of remote work in these countries, it’s become a lot more feasible. We're on the ground floor—so to speak— of this new work paradigm that will eventually reshape the way that innovation happens.

LATAM was devastated during Covid. It suffered the loss of 1.7 million people and, like the U.S., crash-landed in an economy plagued with inflation and economic uncertainty.

However, it’s entirely possible that the disruption that happened because of Covid in the Latin American regions will force many countries to lean on technology and that, ultimately, it will lead to an acceleration of tech there.

From our view, the demand for skilled developersin Mexico skyrocketed after Covid and since the war in Ukraine ramped up.  After Russia’s invasion, entire service centers in that part of the world shut down, shifting the demand Westward.

A lot of that is still uncertain, and the region is far too complex for us to make any kind of full-fledged prediction on economic or social outcomes.  What is certain is that countries like Mexico are hedging their bets on a digital transformation happening around the world.

If they play their cards right, many of these regions can enhance their society using the tools of the future. As far as the tech sector is concerned, there is a lot of work to be done and software developers and engineers in Mexico want to be part of it.