There’s been a noticeable shift in how companies are hiring, many of them pursuing candidates outside of their home countries’ borders. But hiring abroad has always been a thing, it just didn’t grow into what it is today until recently. It’s likely that because of this new growth and exposition of the remote hiring tactic, people have a magnifying glass on its uses, how it benefits them and what the cons are.  

Over time, the effects of recruiting far from home became clearer, and there was a paradigm shift called Nearshoring. Many have heard of this but in case you haven’t here is a quick definition:  

“The practice of transferring a business operation to a nearby country, especially in preference to a more distant one.”  

Nearshoring remote work has become increasingly popular, especially for software developers and other tech professionals so what preferences would motivate companies to nearshore their hiring? In the following we will compare an offshore location, the Philippines, and a nearshore region, Latin America, to see why a company may choose to nearshore 

Latin America Versus the Philippines 

The Philippines has been a power player in the world of outsourcing for over a decade now. Filipino tech workers are known to be talented, hardworking and highly cost competitive. Many companies are willing to put up with the 12-15 hour time difference with their employees in the Philippines, in exchange for rock-bottom pricing. 

At Zipdev, we source IT professionals solely from Latin America. We wanted to explore how LatAm tech professionals stack up against their counterparts in the Philippines, exploring key factors global companies should consider when deciding whether offshore or nearshore developers are more their speed. 

Here are some of the main pros and cons when making that decision… 

English Fluency 

Latin America encompasses many companies and English fluency rates vary greatly. According to Borgen only 20% of Latin American professionals can speak fluently, however Argentina ranks 27th in worldwide while Brazil and Uruguay aren’t even in the top 30. Although there are many who can speak English with extremely high rates of fluency, knowing where to look is a key part of the search process. 

When looking to offshore, the Philippines could be one of your best choices. In the English Proficiency score, the Philippines rank exceptionally high. They are second among all countries in Asia, and 11th in the world. Language barriers are no problem here, in fact, Chinese and Korean are spoken widely, an added plus for global companies. 

Turnover Rates: 

If you’re looking for employee longevity, the Philippines in unlikely to be a good fit for you, given their very high rate of turnover, due to Business Process Outsourcing (BPO). This system allows employees to have the ability to quickly switch between job options to find one that pays them the most. This system has been working for a long time in the Philippines and is embedded in their remote work system, however it’s much less common in Latin America, which leaves room for more “long term” employment opportunities and relationship building.  

Time Zone Differences: 

All offshore regions share a significant issue of providing very little shared working time, if any at all. In the Philippines there can be between 12-15 hours of a time difference relative to the United States, depending on where they are located. This can be make-or-break for many companies, especially the ones that depend on quick and efficient communication, which tends to be the majority. 

In stark contrast is Latin America, of all benefits one of the most appealing, is the time zone congruency. Latin America is much closer to the US in time zones with only a 0-5 hour difference. This allows for a workflow and business day that’s akin to what US businesses are already used to. 

If you choose to offshore hire you will inevitably have to deal with time zone inconsistencies, which can become a significant problem. The adjustment can be more cumbersome than one initially realizes. Sending emails that won’t be responded to until the following business day, having meeting late at night or in the early hours of the morning. These sound like small inconveniences, but when someone is forced to wake up at 3am for a call, they can really stagnate the growth of the business or the effectiveness of an employee.  

Does waking up in the middle of the night to work sound enticing? 

Cost-Effectiveness:  

The Philippines has a much lower standard of living as compared to the United States, so they will happily accept a lower wage, on average being paid only 14% of a US salary. 

Latin America is very cost competitive as well, with wages often being 40-60% lower than in the US. Although these costs are often less cost-effective than similar services in the Philippines, it can be accounted for through differences in quality of work and real time collaboration.   

Tech Talent: 

Tech workers can be found in both places but the ease of finding high caliber employees varies greatly. In the Philippines, its recommended to find tech employees that work in highly documented tech areas, since these workers are often okay with accepting lower wages and can speak English fluently. When it comes to work that relies on lower documentation and higher skill (engineers and developers, etc.), Latin America is more recommended. They have a stronger track record in being able to produce high quality work for more complex job roles. There are still many who can do this work in the Philippines, but a smaller pool of them. 

So Why Nearshoring? 

The main reason for nearshoring is location. This is because time zone matters, and proximity in business is valuable, whether you are setting up infrastructure or hiring an employee outside of your domestic market. Not all outsourcing is made equal and with nearshoring, increased proximity decreases many barriers, the most important being time zone differences. 

All factors being equal, regional demographics have an important edge that can be what pulls a company in. For most companies, however, regional demographics are unlikely to be the deciding factor. For US tech companies, Latin America can offer the benefits of nearshoring and a large talent pool of skilled engineers.  

If you’re strictly looking at talent pools, while both regions are cost competitive, in Latin America you can find more quality and highly skilled workers, that offer lower turnover rates. On the other hand, if you’re looking for more volume and lower-skilled work, the Philippines offers many more professionally fluent English speakers at a lower price.  

If you find nearshoring is what your business needs, then you should consider what region suits you best. First do some research into demographics, most importantly tertiary education, talent pool makeup, and English proficiency. A well-rounded hiring agency will be able to guide you best with where to start looking to best meet your needs. Zipdev specializes in remote hiring for Latin American tech employees and has the background knowledge to know where to look and how to your right match.