Nearshore Americas
latin american it services

San Jose, Monterrey & Buenos Aires Leading the Latin American IT Services Market

As costs remain low and digital services continue to expand across the region, the Latin American IT services market is on track to grow at a steady rate. According to Prashray Kala, Practice Director at research firm Everest Group, the highest growth in the region is coming from the local, homegrown operations, while the second-highest is coming from global service providers, such as Accenture, HP, Infosys, and IBM. Global In-house Centers (GICs) are also seeing a little growth as they explore Latin America, but this is purely on a headcount basis.
Co-authored by Kala, a new point-in-time study from Everest Group, entitled IT Services Delivery from Latin America, has analyzed the relative attractiveness of key cities in Latin America across dimensions such as talent availability, cost of operations, and risk profiles. The results are based primarily on the company’s proprietary databases, in which they track company expansions or new centers, the cost in different locations, and available talent. The ten cities under the microscope are Santiago, San Jose, Monterrey, Guadalajara, Montevideo, Bogota, Buenos Aires, Sao Paulo, Belo Horizonte, and Curitiba.
The findings of the report have revealed that San Jose in Costa Rica, Monterrey in Mexico, and — perhaps surprisingly — Buenos Aires in Argentina are presenting some of the biggest advantages for IT services in the region: talent availability, low costs, and preparedness for digital.
Growth Drivers for LatAm IT Services

Prashray Kala: “Argentina is right at the bottom of the cost hierarchy for IT services, even after Colombia, which used to be the traditional low-cost option in the region.”
According to the report, the continued growth occurring in the Latin American IT services industry is being partially driven by regional currency depreciation, driving the cost down even further. “We’ve seen around a 20-30% decrease in the currency compared to a couple of years ago,” said Kala. “This is driving the adoption of Latin American IT services as it creates a stronger value proposition.”
The other driver of Latin American IT services are new regulations for visas, particularly the restrictions on H1 visas, which have made it more difficult for U.S. companies to employ resources from India. Latin American countries, particularly Mexico, are enjoying much more open access to visas, thanks in part to NAFTA. “Several service providers we have spoken to are definitely favoring the option to get projects done out of Mexico-based centers, especially ERP implementation projects and other systems integration projects,” said Kala. “This is because those resources will find it much easier to go to a client site and deploy the software.”
Globally, IT services are undergoing a change with the emergence of digital, whether that be cloud application services development, mobile, or Big Data analytics. This change is also occurring in the Latin American IT services market, and will start to see even higher growth in the future. “Currently, San Jose in Costa Rica and some locations in Mexico, particularly Monterrey, are leading the delivery for digital,” said Kala. “In comparison, we haven’t seen many examples of this is Uruguay, Colombia, or Argentina.”
Talent Development
Kala is not convinced that the talent shortage for IT services is any worse in Latin America than anywhere else, stating that countries in the U.S., Europe, and Asia are all facing the same issue. “There is enough availability of people with standard skills, but everybody is looking at people who have skills in newer technologies, which are significantly more difficult to come by,” he said.
The study revealed that the top three cities for availability of both entry-level talent and experienced talent are San Jose in Costa Rica, and Monterrey and Guadalajara in Mexico. Although it wasn’t part of the assessment, Mexico City is also considered one of these, according to Kala. The next cities to follow are Santiago in Chile and Buenos Aires in Argentina.
The bottom rung of this talent ladder includes Montevideo, Uruguay, and Bogota, Colombia, where smaller IT services operations are generally located—between 100-300 FTEs. “Players face some challenges here in growing beyond this unless they plan to invest in developing talent,” said Kala.
The Argentinian Advantage
According to Kala, IT services companies in Argentina already understand how to deal with the inflation, the salary divisions, and other complexities, making it very easy for them to reap the benefits, but new companies are not enthusiastic about the country. “Existing players in Argentina have been continuing with the operations and been fairly satisfied, but any new company that evaluates Argentina generally shies away because they like to be risk averse, and they don’t have full visibility of the macroeconomic situation,” he said. “Though we hear people talking about the macroeconomic situation, the cost of operations in Argentina are in fact significantly lower than any other locations. In fact, the country is right at the bottom of the cost hierarchy for IT services, even after Colombia, which used to be the traditional low-cost option in the region.”
In balancing risk and cost, Mexico and Costa Rica are still considered the best options and see the most growth, even though they both have the highest costs in the region. Again, this is linked closely to currency depreciation.
Public Support
Costa Rica has always been one government that excels in the support that it provides to the IT services industry, but it still faces its own challenges. “The issue in Costa Rica right now is the heating up of the talent market in San Jose, because the country’s industry is highly concentrated in one city,” said Kala. “Even so, Costa Rica has the most mature investment promotion agency in the region, especially when it comes to coordinating between industry, academia, and other stakeholders.”
Comparatively, Monterrey in Mexico has begun developing a niche for itself in digital service delivery, becoming a new hotspot in the region. This is another location that Kala has seen a similarly high level of industry and academia partnerships.
One final trend that is garnering interest from IT services buyers is the high concentration of people in India, which represents a high business continuity risk. As a result, U.S. companies are increasingly looking at Latin America for their strategies, creating another value proposition for the region. “It’s not about replacing India-based delivery, but about supplementing the risk profile of the entire global delivery network, reducing the concentration risk, and improving the business continuity planning,” said Kala.

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Matt Kendall

During his 2+ years as Chief Editor at Nearshore Americas, Matt Kendall operated at the heart of both the Nearshore BPO and IT services industries, reporting on the most impactful stories and trends in the sector.

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