Latin America has emerged as a premier destination for outsourcing, offering a skilled workforce, cost efficiencies, and cultural compatibility with Western businesses. Among its countries, Mexico and Argentina are prominent hubs for outsourcing services. This article comprehensively compares these two nations, focusing on key factors such as talent availability, cost, industry expertise, and infrastructure.
Why Consider Outsourcing to Latin America?
The thriving business climate in Latin America, paired with a growing pool of highly skilled talent, has ignited a wave of startup innovation across the region. In just under five years, Latin America’s burgeoning tech scene has grown from only 2 unicorns to nearly 50 unicorns. Regarding creating unicorns, Brazil takes the crown with 60% of these companies, followed by Mexico at 17% and Argentina at 11%.
Beyond the current unicorns, the region boasts roughly 100 startups valued at over $100 million. With increasing investments each year, Latin America has become the world’s fastest-growing region for venture capital. Over the past few years, the total valuation of tech startups in the region has skyrocketed nearly sixfold, climbing from $38 billion to more than $216 billion.
Latin America's proximity to the U.S., overlapping time zones, and competitive pricing make it an ideal outsourcing region. The region's workforce offers strong technical skills and bilingual proficiency, particularly in English and Spanish. By outsourcing here, businesses can optimize their operations, scale rapidly, and access world-class talent at a fraction of the cost compared to the U.S. or Europe.
Outsourcing to Latin America: Mexico vs. Argentina
Mexico and Argentina have emerged as the top destinations to outsource in Latin America. Both offer advantages in terms of cost, talent, and cultural compatibility over the United States, but there are important differences. This radar chart compares both countries on key factors such as cost, talent experience, time compatibility, culture, and technology ecosystem to help you decide which country best suits your hiring needs.
When deciding where to hire remote tech talent, understanding the key factors that differentiate your options is essential. Below, we detail the five most important aspects to consider when choosing between these two leading destinations.
1. Talent Pool and Education
Mexico:
Mexico boasts a robust IT workforce, with approximately 225,000 software developers as of 2023. The country produces around 114,000 tech graduates annually, supported by esteemed institutions like the Tecnológico de Monterrey. This continuous influx of talent ensures a dynamic and skilled labor pool.
The country receives high praise from the global tech community for local developers’ impressive expertise. According to the latest SkillValue ranking, Mexico is #2 in the world in terms of technical skills. The country has also secured 33rd position on the HackerRank leaderboard, and it holds 51st place onTopCoder’s list of the most first-place finishes in coding challenges.
According to Coursera’s analysis of their learners, Mexicans show 97% performance in technology and 90% in data science. They are particularly well-versed in operating systems (97%), computer programming (91%), data management (97%), computer networking (96%), and mobile development (79%).
Argentina:
Argentina is recognized for its high literacy rate (98%) and advanced education system, particularly in IT and software development. The country is a leader in software engineering talent, with approximately 115,000 professionals actively working in the tech sector. Its universities emphasize computer science and software development, fostering world-class engineers.
In 2023, the country’s ICT industry market size stood at $22.5 billion. The cumulative value generation opportunities for this sector are projected to grow at a compound annual growth rate of 16.57%, reaching $42.5 billion by 2027.
2. Cost Comparison
Mexico:
Outsourcing in Mexico offers savings of 35–50% compared to the U.S. The average annual salary for a mid-level software developer is around $25,000–USD 35,000, depending on the region.
Argentina:
Argentina's favorable exchange rate makes it one of the most cost-effective outsourcing destinations. A mid-level software developer earns approximately $18,000–$25,000 annually, offering significant business savings.
3. Time Zone Alignment
Mexico:
Mexico shares time zones with much of the U.S., making real-time collaboration seamless. This proximity is ideal for businesses requiring constant communication or agile workflows.
Argentina:
Argentina operates on GMT-3, which aligns closely with U.S. Eastern Time (ET). While there's a slight difference for businesses on the West Coast, the overlap during working hours remains sufficient for effective collaboration.
4. Language Proficiency and Cultural Affinity
Mexico:
English proficiency in Mexico is steadily increasing, particularly in the tech and service industries. Additionally, its cultural alignment with the U.S. simplifies communication and work dynamics.
Argentina:
Argentinians score the highest among Spanish-speaking countries for English language skills. This reduces language barriers, making communication and collaboration with Western partners much easier.
5. Infrastructure and Connectivity
Mexico:
As Latin America's second-largest economy, Mexico boasts excellent technological infrastructure, including widespread broadband internet and strong IT ecosystems in cities like Guadalajara and Monterrey.
Argentina:
Argentina's tech hubs, such as Buenos Aires and Córdoba, offer high-speed internet and a supportive infrastructure for outsourcing. However, rural areas may lag in connectivity compared to Mexico.
Key Industries for Outsourcing to Latin America: Mexico and Argentina
Mexico
The country has a long history as a leading nearshoring destination for North American companies, notably those specializing in telecom, fintech, and consumer products and services.
Manufacturing: Mexico excels in nearshoring manufacturing due to its proximity to the U.S.
Customer Support: Call centers and BPO services thrive due to cultural familiarity and bilingual talent.
Software Development: Growing IT hubs like Monterrey are gaining global recognition. Also, the capital, Mexico City, boasts a massive talent pool of nearly 225K professionals and an innovative network of 385 tech startups, making it the largest technology center in the country.
Argentina
Argentina has established itself as a nearshoring powerhouse, gaining momentum since the dot-com era. With a strong foundation in engineering and extensive experience collaborating with Western markets, it has become one of the leading global hubs for software outsourcing services.
Software Development: Argentina is renowned for its highly skilled software developers. The government allocates significant funding and resources to enhance computer education across all school programs. These efforts have enabled Argentina to cultivate a talent pool of 135,000 skilled professionals specializing in software and mobile app development, cloud computing, Big Data, and DevOps.
Creative Industries: The country is an animation, design, and digital marketing leader.
Fintech: Argentina's booming fintech sector is driving innovation in Latin America.
Conclusion
Mexico and Argentina stand out as top-tier outsourcing destinations in Latin America, each offering unique advantages. Mexico excels in time zone alignment with the U.S., robust infrastructure, and a rapidly growing tech talent pool, making it ideal for businesses prioritizing seamless communication and real-time collaboration. On the other hand, Argentina’s cost-effectiveness, highly skilled professionals, and strong English proficiency make it a perfect fit for companies seeking specialized services like software development and creative industries at lower operational costs.
Ultimately, your company's choice between Mexico and Argentina will depend on its specific priorities, such as time zone preferences, project scope, budget constraints, and required expertise. Whichever country you choose, outsourcing to Latin America offers significant opportunities to optimize your operations, scale effectively, and access world-class talent.
To help you make the best decision for your business, use our cost calculator below to estimate potential savings and assess the value of outsourcing to these countries. For personalized advice or more information about the benefits of outsourcing to Latin America, feel free to contact our team today. We’re here to guide you every step of the way.
FAQ
1. Why are Mexico and Argentina top choices for outsourcing in Latin America?
Mexico and Argentina stand out due to their skilled workforce, cost savings, and robust infrastructure. Each country offers unique advantages based on proximity, talent, and specialization.
2. How do labor costs compare between Mexico and Argentina?
Labor costs in Argentina are generally lower due to favorable exchange rates, while Mexico offers competitive salaries closer to U.S. market rates.
3. Which industries are best suited for outsourcing in these countries?
Mexico excels in manufacturing and customer support, while Argentina is renowned for software development, fintech, and creative industries.
4. What are the time zone advantages of outsourcing to these countries?
Mexico shares time zones with the U.S., facilitating real-time communication. Argentina aligns with U.S. Eastern Time, offering sufficient overlap for collaboration.
5. How do I choose between Mexico and Argentina for outsourcing?
Consider factors such as project scope, budget, time zone alignment, and required expertise to determine the best fit for your business.
6. What are the risks of outsourcing to Latin America?
Potential risks include political instability and infrastructure variability in rural areas. Partnering with a reliable outsourcing provider can help mitigate these challenges.
