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Latin America is in the midst of a tech boom, with a potent mix of factors leading experts to refer to it as the ‘Second Silicon Valley’.
In recent years, tech and Latin America have become synonymous, with the region swiftly establishing itself as a Second Silicon Valley and a player to watch in the global technology landscape.
Boasting a large, young, and tech-talented population; fantastic internet penetration; entrepreneur-friendly legislation; easy economic policies; and an influx of private capital investment to the tune of $29.4B in 2021, it’s no wonder that Latin America became tech’s next big frontier.
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Of the $29.4B investment, slightly more than half—a total of $15.7B—was made up of venture capital investments, a boom three times the previous record of $4.9B that Latin American startups received in 2019.
Private capital investment in Latin America (2014-2021)
The tech sector in Latin America has commanded the attention of global investors and recruiters angling to expand their workforces with brilliant coders and developers, and the region is now reporting its highest hiring figures by foreign and local companies—an increase of 156%—as of the second half of 2021.
Hiring in Latin America exceeded all other regions in 2021
But what is driving the investment and hiring boom in Latin America? The simple answer is unicorns. The region is quickly becoming a hotbed for startups valued at 1 billion USD or more, with some of the biggest tech companies in Latin America—names such as Brazilian financial services platform Nubank; Argentina’s answer to Amazon, e-commerce site Mercado Libre; Uruguay’s cross-border payments company dLocal; Colombia’s marketplace-building platform Rappi; and Chilean insurtech and wellness platform Betterfly—luring even more investors and recruiters to its virtual borders.
The rise of unicorns in Latin America can be traced back to 2017, dubbed the region’s “breakout year in tech”. VC investments in the region reached a new high, surpassing 1B USD for the first time. In the same year, Google and Facebook became two founding members of the Latin American Tech Growth Coalition, which established the goal of advancing high-growth startups in the region.
In June 2022, following 17 years of continued investment and digital skills training to 8 million people in the region, Google further solidified its commitment to Latin America’s digital future by announcing a 5-year, $1.2B investment plan.
“We will focus on four areas where we believe we can best help the region to thrive: digital infrastructure, digital skills, entrepreneurship and inclusive, sustainable communities,” Google and Alphabet CEO Sundar Pichai noted in a statement.
The tech giant will also be providing Google Career Certificate scholarships to 1 million people in Latin America. “Digital skills are key to unlocking opportunities for the next generation,” said Pichai, adding, “This training will help people access well-paying jobs in high-growth fields.”
Vying for competition with fellow tech outsourcing hubs Asia and Eastern Europe, Latin America has a lot to put forward, particularly for North American companies who are looking south when it comes to hiring. Close proximity, cost-effectiveness, and timezone-sharing are all reasons why onboarding highly skilled Latin American tech workers makes sound sense to them.
Pros and cons of outsourcing tech talent in Asia, Eastern Europe, and Latin America
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Home to a number of rapidly growing tech companies and highly skilled, young talent, Latin America is a goldmine for savvy tech investors and recruiters looking for quality at more affordable rates.
In addition to its growing talent pool of IT professionals, Latin American tech hubs Brazil, Mexico, Colombia, and Chile have enacted entrepreneur-friendly policies, cutting back on the legislative red tape and making it easier for startups to flourish.
With access to an influx of capital in the last few years—such as the $29.4B in 2021 alone— plus low interest rates and a strong US dollar, Latin America became tech's next big frontier for US businesses looking to launch operations in the talent-rich region.
Perhaps a little more than a hop, skip, and a jump away, Latin America is still extremely close to the US, making nearshoring an attractive and easy option for companies looking to onboard remote-working tech professionals.
With the region sharing time zones and some cultural similarities, investing in Latin American talent is a smoother process for US companies than hiring further afield. And there’s no shortage of IT positions to fill—leading trade association CompTIA’s analysis of a US Bureau of Labor Statistics report found that the tech sector in the US increased by 207,200 employees in 2022. Looking ahead on a global scale, market intelligence firm IDC predicts a shortfall of 4 million IT developers by 2025.
Among the most wanted in the information technology sector, Latin American tech workers are young, talented, and very much in demand. With a high rate of engineering and tech graduates in the region, Latin American tech professionals are the emerging rockstars of this digital age.
While concerns over the language barrier still loom for US businesses seeking Latin American tech employment, many young professionals are taking it upon themselves to learn English as a second language.
In fact, during the pandemic, English proficiency levels in Latin America rose in more than 70% of countries in the region. Popular language learning app Duolingo shared that English is the foremost language being studied by Latin American learners using the platform.
Having a high level of English is a definite plus for tech professionals, as seen by the chart below, which highlights the fact that Mexican tech workers possessing advanced levels of English get paid three times as much as those who don’t speak the language at all.
Tech salaries in Mexico, ranked by level of English (2021)
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While Brazil was first dubbed the “Silicon Valley of Latin America,” that title is now up for grabs, with other tech hubs in Latin America emerging as new players in the tech landscape.
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With the highest number of tech graduates per year, Brazil also has one of the higher average monthly salaries in the region—5,600 USD per month—which is still considerably lower than the average US tech salary.
Latin America’s top countries for tech talent
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The most popular tech hubs in Latin America include São Paulo, Brazil (the first Latin American Silicon Valley); Mexico City, Mexico; Santiago, Chile; Bogotá, Colombia; and Buenos Aires, Argentina.
Other contenders include fast-growing hubs in Montevideo, Uruguay; Guadalajara, Mexico; Monterrey, Mexico; Rio de Janeiro, Brazil; and Medellín, Colombia.
A huge draw in hiring for tech roles in Latin America are the more affordable salaries. Compared to the US, salaries for IT professionals in Brazil, Mexico, Argentina, Colombia, Chile, and Peru are relatively lower, while the workers still deliver high quality of work.
To cite an example, software developers in the US get paid an average of 7,360 USD per month (PM), while base software developer salaries in Mexico and Chile average 1,695 USD and 2,381 USD PM, respectively. (Note that these figures, and the ones below, are the average base salaries without commissions, bonuses, tips, or profit sharing.)
Average monthly tech salaries in Latin America as compared to the US (2023)
Besides the regularly sought-after IT professions listed above, Bloomberg has identified the most in-demand tech jobs in Latin America in 2023:
Bloomberg also reported on a Harvard study on emerging technologies, which found that 73% of those surveyed cited a shortage of tech talent as the biggest obstacle to the digitalization and expansion of their businesses.
Low US interest rates, a surging US dollar, and the injection of capital into Latin America have caused hiring in the region to increase more than in other areas of the world, and investments have been on the rise as well.
According to the 2022 Trends in Tech report by the Association for Private Capital Investment in Latin America (LAVCA), the $15.7B boom in investment was three times that of the $4.9B invested in the region in 2019.
Venture capital investments in Latin America (2019-2021)
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In terms of how the investments were divided, LAVCA reported that the fintech and e-commerce industries received the most capital, with 6.09B USD (39%) and 3.97B USD (25%), respectively.
Total capital invested in Latin America, per sector (2021)
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Taking a look at the data per country, Brazil and Mexico received the highest amounts of investment at $7.57B and $3.57B, respectively.
Deals and investments in Latin America, per country (2021)
In terms of who is investing in Latin American startups, Atara Partners noted that investment bank SoftBank, entrepreneurial capital firm Kaszek, and venture capital firm Monashees are the most active investors in the region, each backing between 31 and 34 Latin American companies.
The most active investors in Latin America (2021)
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SoftBank, Japan’s largest investment house, initially launched a $5B fund in 2019 for Latin American startups in e-commerce, healthcare, digital financial services, and other tech fields. In September 2021, following a net USD Internal Rate of Return (IRR) of 85% on the inaugural fund, the investment firm renewed their commitment to the region with a second fund of $3B.
In the company’s official press release, Chairman and CEO of SoftBank Masayoshi Son said that the firm was “expanding our presence and doubling down on our commitment” in Latin America, noting that it was “one of the most important economic regions in the world” and “a critical part of [SoftBank’s] strategy.”
“There is so much innovation and disruption taking place in Latin America, and I believe the business opportunities there have never been stronger,” Son reiterated.
The linchpin of the innovation and hiring growth of tech in Latin America and the main draw of foreign investors are unicorns, and there were 47 of them in the region at the close of 2021, while several startups had achieved close to unicorn status. Brazil tops the list as the country with the most unicorns (18) and some of the biggest tech companies in Latin America.
In the final quarter of 2022, there were eight new Latin American fintech unicorns, as reported by finance news portal Iupana: Betterfly (Chile), Neon (Brazil), Habi (Colombia), Dock (Brazil), Nowports (Mexico), Kushki (Ecuador), Stori (Mexico), and the merger of Yaydoo (Mexico) and Paystand (US).
New fintech unicorns in Latin America in Q3 of 2022
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In 2022, tech startups that had already previously reached unicorn status continued to grow. Kavak (Mexico), Rappi (Colombia), and QuintoAndar (Brazil) were named the most valued startups in the region, with valuations of 8.7B, 5.2B, and 5.1B USD, respectively.
Most valued startups in Latin America (2022)
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Why Latin America will continue to be a hotbed for tech talent and growth in 2023
Despite recent investor pullbacks, private and VC investments in Latin America are still above pre-pandemic levels, according to The Wall Street Journal, and entrepreneurial conviction in the region remains strong.
The pandemic also catalyzed the remote, work-from-home trend that many businesses have continued to implement and that tech workers largely continue to prefer. The IT Labor Market Report 2022 study by Hireline found that 90.9% of IT professionals in Mexico seek greater flexibility when it comes to where they work, with work-from-home and a hybrid model as the top two choices.
Remote work distribution before and after the pandemic
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In tech in Latin America, 46% of work is fully remote, with a tiny 8% working remotely a quarter of the time.
Remote work distribution by sector
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Tech professionals may opt to work from home, but they are delivering a higher quality of work than ever before, as evidenced by the number of startups that have reached unicorn status in the region.
Finally, as noted in the Harvard report on emerging technologies, tech in Latin America is fueled by three key drivers—efficiency (lower costs, higher production), altering the customer experience, and reinventing processes and business models.
Investors and recruiters looking into the tech sector in Latin America should note that these drivers will continue to accelerate the digital transformation of businesses in the region, where the opportunities for future disruption and tech solutions remain wide open.
With myriad talent acquisition companies and recruiting platforms calling out to customers online, it can be challenging for businesses to choose just one that will help them expand their workforce with tech professionals in Latin America.
Embedded talent platforms that plug seamlessly into your recruitment process and offer HR-as-a-service, from finding and hiring talent to working on all the nitty-gritty— including legislation, forms, and policies—are helping make the process much easier.
Much more affordable than regular US recruitment processes, they offer speed, efficiency, and quality when it comes to matching with professionals who meet exact standards, factoring in everything from cultural backgrounds to personalities to finding the right talent.
Many offer all-in-one apps that help businesses study candidates’ profiles and communicate directly with them, giving them full control of the hiring process.
This new business model allows businesses to take full advantage of economic trends like the tech boom in Latin America and craft a workforce fit for the digital era.
[Eager to expand your tech workforce but put off by the red tape of hiring foreign workers? Book a call with Remoti’s HR-as-a-service team today to take the first step toward expanding your talent pool with ease and at minimal cost.]
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