“Digital nomad”, “remote work”, and “hybrid workspaces”, are all terms that we have been hearing more and more in the last few years. According to the Deloitte Global Outsourcing Survey 2020, over half of all companies surveyed said they use outsourcing for key business functions such as legal, tax, HR, or finance and roughly 300,000 U.S. jobs are outsourced each year (Zappia).
With such a high proportion of companies using outsourcing services, surely you wouldn’t want to miss out.
So, What is the best way to hire remotely?
Understanding the Concept of Nearshoring
In this article we’ll talk about nearshoring, explore its benefits, and compare salaries between the US and LATAM.
Nearshoring means outsourcing work to a foreign country that is in close geographic proximity. For example, for U.S. companies, Latin America (or LATAM) is the most popular nearshowing destination, as it shares the same time zones with the U.S.
Benefits of nearshoring for remote teams
Why is nearshoring better than offshoring when hiring a remote worker?
Conceptually, there is no difference. Both involve outsourcing some business functions to third parties (whether companies or individuals) who then perform those services. However, quality-wise, there is generally a world (pun intended) of difference.
By outsourcing to companies that are in closer geographic proximity, there are generally more cultural ties that make collaboration easier. Such countries tend to share a common language or culture and also generally are located in the same or similar time zones. Additionally, should you wish to visit your team, it would only be a short flight away.
It’s clear that the best option for a company will depend directly on their needs and requirements. For example, offshoring to India has become a popular business strategy for many multinational companies due to the low cost of labor. In cases where that’s all that matters, that is probably your best bet. However, nearshoring to Latin America can offer several advantages that are often overlooked. Let’s explore them:
Cultural similarity
Latin America shares many cultural similarities with the United States, which facilitates communication and collaboration between companies, unlike India, which has a diverse population with different regions that have different languages and cultural norms. This can make communication and collaboration difficult for organizations that are not familiar with the local culture.
Language proficiency
Countries in Latin America are recognized globally for their proficiency in English, enabling efficient communication. Also, Spanish native speakers are a pro to US companies who would want to outsource their customer support services in Spanish-speaking markets.
Timezone advantage
Most Latin American countries are in similar time zones or even in the same time zone as the United States, allowing for more overlap in working hours.
On the other hand, India is almost 7-9 hours ahead of the US making it difficult to schedule meetings and collaborate in real-time throughout the day.
The benefits of nearshoring are clear now, but what about hiring a nearshoring company?
Hiring a nearshoring partner or third-party recruitment and staffing services costs less than setting up in-house operations.
- You don’t need to find talent yourself; rather, you rely on the nearshoring company to find the best-outsourced resource for your needs. Nearshoring partners can work with exclusivity and faster turnaround time, achieving the hiring goals effectively and efficiently.
- Local partners know where and how to find the best talent in the countries you’re looking to nearshore. You can rely on their local expertise.
- With an external offshoring staffing structure, the third-party partner is responsible for managing the worker. This includes tax and legal liability, such as paying the salary, benefits or fees. The company is also in charge of supporting the development of the resource’s career.
Looking for a nearshoring partner?
Comparing salaries U.S vs LATAM
Typically, cash compensation in the US consists of a wage or salary, taxes (which can be more or less depending on the state), and may include commissions or bonuses. Benefits consist of retirement plans, health insurance, life insurance, disability insurance, vacation, employee stock ownership plans, etc.
The land of Uncle Sam is one of the few countries in the world where states and cities can set their own minimum wage, as long as it is above the minimum established by national law
That said, most if not all skilled jobs command salaries much higher than the minimum wage. Indeed, the US has some of the highest compensation rates in the world, particularly when employer taxes (Medicare, Social Security, etc.), benefits (health insurance, 401k, other insurance), and administrative costs (payroll provider, office space, etc.) are added to the total package
How Can I Save by Nearshoring?
Just like in the US, salaries can vary in Latin America based on location (urban area vs. countryside), country, level of education, and experience. However, in general, wages in LATAM are significantly lower than in the US because the cost of living is also significantly lower than in the US.
In addition, many LATAM countries offer more flexibility when it comes to the benefits. Indeed, when engaging remote workers in LATAM, US-based companies are not always under the obligation to provide the same level of benefits as those in the US. For example, many LATAM countries have free healthcare, which means that the cost of health insurance isn’t the responsibility of the employer.
By using a nearshoring agency, US companies can save even more money. Typically, agencies will charge an all-inclusive fee to their clients, which covers wages, benefits, and administrative costs, simplifying accounting and administrative tasks.
Table of Comparison: U.S. vs LATAM Salaries for Selected Positions (Per Year)
Here are examples of potential cost-savings for certain positions.
The savings can vary depending on the seniority (Junior vs. Senior), requirements, qualifications and work schedule of the candidate.
But there is no doubt that hiring a talented Latam worker can help companies save between 30% to 70% on hiring costs. With nearshoring, money is not a barrier to growing and scaling your business!
Start Your Nearshoring Journey with Backoffice Office
Backoffice Abroad has a proven track record of helping businesses leverage the benefits of nearshoring by building dedicated, highly skilled, and cost-efficient teams in LATAM. We find, hire, and manage remote talent that works directly for you, wherever you are.
With us, you can experience a full-service model with no hidden fees, a Pay-Nothing-Until-You-Hire model, premium administrative support, and included payroll services.
