Staff augmentation is nothing new. With firms like Accountemps and Kelly Services offering able bodies in various sectors, companies have been ramping up with temporary workers for decades whenever the need arises. In the tech world, it is very common to contract with external and freelance developers for a short-term project.
Until recently, however, few companies were reaching outside the U.S. border to benefit from the vast network of cheap, independent developers and coders in Latin America. The trend still hasn’t truly taken off as a widespread model to complete projects successfully, quickly, and inexpensively. But some companies are starting to see benefits, and others are creating networks to help connect the talent with clients.
One CIO at an educational technology company told Nearshore Americas that he has found great results working with a handful of programmers in Argentina. They came highly recommended, and he was cautious about just hiring anybody — price wasn’t the sole concern — but the outcomes were great, and the per-hour rate was a boon for the project’s budget. Based on that experience, he says that although few companies are looking at IT staff augmentation in the nearshore, they should be.
Staff Augmentation Networks
Scalable Path is one company trying to make IT staff augmentation easier. Like the popular Upwork, eLance, and Toptal, it maintains a network of on-demand tech talent for hire. Founded in 2010, it now has 1,200 individual providers in the network, with the majority living in Latin America. This helps keep the costs low, with hourly rates of just $40 to $65 for work that founder and CEO Damien Filiatrault says would cost at least $90 per hour — and likely much more — when hiring an employee or working with a traditional contractor in the United States.
But there are developers with such skills in his network, and he wants to make the good ones more accessible to U.S. firm. He says Scalable Path is also unique because it can supply team leaders for these programmer who can step in as project architects to oversee the work. Especially the smaller, less-tech-savvy companies find this option useful, even when they want to keep costs down and only paying for a few additional hours per day. The client can use staff augmentation to source a leader who, in two hours per day, spends half an hour hosting an Agile standup meeting, a half hour of doing one-on-one counseling with the programmers, and an hour of responding to emails about the project.
The bulk of Scalable Path’s Latin American talent comes from the high-population markets: Brazil, Colombia, and Argentina. It does have a surprisingly low number of Mexican developers, however. Filiatrault isn’t sure why, but he says that the company hasn’t uncovered any smaller countries with some untapped skills oasis.
Ignacio De Marco, CEO of BairesDev, another company that helps clients access the pool of talent in Latin America, knows that the less-unexplored markets do have something to offer, however. BairesDev gets nearly half of what he calls “great” software engineers from these off-the-grid locations.
“Almost no market-relevant IT outsourcing companies have presence in countries like Nicaragua, Ecuador, Bolivia, or Venezuela,” he said. “In those countries, we literally can hand pick the best existing talent, regardless of their specific skills. Most of the companies don’t even bother going to those regions and those few companies who do, they have a huge advantage.”
In addition having the skills to do the job well, he notes the additional advantage of these developers being eager to work. “The loyalty — and the corresponding extraordinarily low attrition level — of those software engineers is greater, as they are not always offered opportunities to work with U.S. companies,” said De Marco.
Staff Augmentation Risks
There are still reasons to steer clear of using staff augmentation to hire independent nearshore developers. The main issue is the risk. If a person outside the country can be vouched for by a consultant and has a workstation in a secure office building, that is one thing. But if they are working from their home in Bogotá or Mexico City, there are concerns.
What if data transmitted gets lost or stolen over an unprotected network? Do they actually have a proper workspace? It is rarer for people to have a spare bedroom or home office in the crowded, heavily populated metropolises throughout Latin American than in the United States. Even when they do, Latin America’s infrastructure issues mean that connectivity disruptions, and even electricity brownouts, are more common.
Most importantly, do they understand the basic U.S. laws and best practices that a contractor in, say, Virginia can be assumed to follow? There are ways in which someone unaccustomed to common practices in the United States could run afoul of regulations even without any malicious intent.
All this, on top of the uneasiness many IT execs have when they cannot interview someone in person no matter their home location, means that staff augmentation from Latin America is not on the verge of a major boom.
It is increasing in acceptance though. And with the barriers of borders becoming smaller by the day, it will continue to gradually grow in popularity. The price benefits — and the scarcity of specialized talent regardless of geography — just offers too many benefits.
The educational tech CIO summed it up well. He said that many executives at his level in big companies would have to be desperate to look to Latin America for relatively widespread skill sets on major projects. But for smaller, shorter-term, less-strategic work, it the costs savings add up. And especially when it comes to highly specialized skills, like those needed for niche hardware or coding languages, then firms will hire whoever they can find.
IT decision makers are paid to get the job done, and in such cases, the ability to find providers in Brazil, Mexico, or Colombia is a welcome addition to their staffing arsenal. There is talent in development and coding talent in Latin America, and companies are starting to realize that it is more accessible than they previously realized.