As Chile’s Tech Worker Deficit Grows, Government is Expected to Find Solutions

In this second article in our review of tech salaries across Latin America we focus on Chile. The first article on Mexico can be found here.

Chile’s thriving digital economy has not protected the country’s tech outsourcing industry from the same problems that have plagued Latin America’s other export markets. With a population of just over 18 million, Latin America’s longest, thinnest nation still suffers from a deficit of at least 6,000 tech workers. Benjamin Toselli, Executive President at IT Hunter International and Managing Partner at the Chilean Association of Information Technology Companies (ACTI) believes the government must act or the deficit will grow. 

“We are concerned about the need for the government to produce more tech talent because of the high demand and low supply. Every year deficit this is going to climb. We see two choices: increase the output of talent or open the country’s borders,” Toselli told Nearshore Americas. 

Globalized Market

The Chilean government’s efforts to position the country as a leading tech hub in Latin America have been hugely successful. The country was recently crowned the top FDI destination in the region and Chile, alongside Ecuador, was identified as an entrepreneurial “hive”, where “Total early-stage Entreprenuerial Activity” was measured by the Global Entrepreneurship Monitor at 36%. Extremely favorable when compared to the U.S.’ 18% score and the 10% given to the UK.  

Alongside tech efforts, the government has proactively sought out tech service export opportunities. Last year, it signed the pioneering Digital Economy Partnership Agreement with New Zealand and Singapore that “promotes the export of their products and services through the regulation of some crucial matters, such as the free flow of data and non-discrimination to digital products, artificial intelligence, digital identity and privacy” to underpin the country’s attributes as a Nearshore and outsourcing location. 

According to Toselli, foreign companies have increased their talent scouting activities in Chile as a result. “The rise has been dramatic over the last year. On average, developer salaries have risen by 40% for Chilean talent,” he said.

Tech talent earn an average of 25% more by working remotely in the Nearshore industry than those supplying services to the Chilean national market, said Toselli. But the increased competition from foreign workers has seen tech salaries for the national market rise dramatically too – almost doubling in six years. However, only those workers offering comprehensive English-language skills are able to export their services.

Like in Mexico, the most in demand role in Chile is the full stack developer. According to IT Hunter International’s 2020 Tech Salary Report, a senior full stack developer can expect to earn up to US$5,450 per month, though the average is around US$4,100 per month. In comparison, a full stack developer without sound English-language abilities will earn a maximum of US$3,400 monthly while the average is US$3,120. 

Tech talent earn an average of 25% more by working remotely in the Nearshore industry than those supplying services to the Chilean national market

Meanwhile, a senior quality assurance engineer with English will earn a maximum of US$4,490 per month, a Scrum Master could earn up to US$5,450 monthly while a DevOps engineer’s maximum salary stands at US$4,350 a month.

Industry worries

Increased demand isn’t the only element that is pushing Chile‘s tech salaries skyward. The advent of Covid-19 also uncovered the reality of the country’s lopsided supply and demand relationship with tech. Though it’s a regional tech hub, the country already lacks 6,000 key workers and this number looks set to climb. The education system is groaning under the strain of a booming market.

“Universities are not producing the languages that are needed for the digital economy,” Toselli said. ”They do not keep apace with the pace of change in the job market. A university degree here can take five or six years but by the end of that the industry has moved on.”

Unlike other markets like Colombia or Mexico where the size of the country enables a regionalism to develop data hubs outside of national capitals, Chile’s talent is very much centered around Santiago. Though there is talent elsewhere, the best and brightest invariably gravitate toward to the Chilean capital, situated just north of the country’s center, where salaries are highest.

Santiago dominates in size and the country’s second-largest city is the coastal city of Valparaiso, just 90 mins to the northwest. If a tech worker isn’t based in Santiago then they’re likely not Nearshore-involved. Whereas in other countries remote workers can earn similar salaries regardless of the city they’re in, this isn’t so much the case in Chile. 

“Universities are not producing the languages that are needed for the digital economy” — Benjamin Toselli

“Regions outside of Santiago have significantly lower rates of pay for tech workers. Therefore the best talent is found here, not in the countryside,” Toselli said. 

Santiago’s pull isn’t only national; it’s regional too. After establishing itself as a tech hub with South America, other tech companies looking to scale have set up shop there. Initiatives like the Tech Visa began in 2017 made it easier for foreign workers to enter the ranks of the tech talent pool and bolster the burgeoning digital economy.

“The quality of talent here is very strong. But it’s difficult to compare the country against other competitor markets like Mexico because it is unique. Generally, Chile has the highest tech salaries in South America. This means that tech talent from Argentina, from Peru, Bolivia, or Venezuela and other nearby territories decide to move to Chile to enjoy those increased salaries,” Toselli said. 

Despite this, a talent shortage remains.

Plugging the Gap

In his position as ACTI Managing Partner, Toselli has been working to promote a change in Chilean employment law. At the moment, there is a 15% cap on foreign workers in any company. But Covid-19’s acceleration of the digital economy means that for Chilean companies to meet the international demand, they need more people. The growth in salaries does not matter when cost arbitrage remains such a benefit for foreign companies.

“In Chile a Chief Information Security Officer could earn over US$80,000 a year. In the U.S., they’ll earn a minimum of US$180,000 annually. The salary rise is going to continue because the need will continue growing. Many companies are working on projects that include the Internet of Things or automation,” he said.

“Remote work shows us that today geographic restriction don’t really exist for our industry” — Benjamin Toselli

Toselli believes that the 15% cap should be lifted or adapted in a way that enables more foreign workers to enter Chile to supply the demand arriving from U.S. companies. He points out that in the tech and Nearshore industries, remote working has always been part of the package.

“We don’t believe that this restriction should apply to the tech sector,” said Toselli. “The foreign workers are good and they’re needed. Remote work shows us that today geographic restriction don’t really exist for our industry.”