LATAM/Nearshore Hiring is Hot - It Will Eventually Run Its Course
A not so quiet movement has been developing right in front of our eyes the past 12 months and it's now so well known that we are seeing articles about it on a very regular basis. I'm talking about all of the hiring for software engineering talent outside the US right now. Make no mistake that the massive number of all these Tech layoffs were mostly on account of companies overextending themselves during the pandemic. I'm not saying we have found our bottom in this labor market but that said, I am starting to see quite a few companies hiring software engineers again. But this time around, a lot of this effort is being done in a geography known as "Nearshore LATAM" which references the community of IT professionals in the Latin American regions. And this movement is very hot right now. Every day I wake up, I find myself wondering how much this shift in focus is contributing to the struggle that US based software engineers are having when it comes to finding a new job.?
Last week, LinkedIn had this article at the top of their news feed and while I don't want to say that this is a major reason for the lack of hiring in the US, we do perhaps need to take inventory of how quickly LATAM hiring has grown in the past six months. Traditionally, the US has always used offshore engineers in Poland, India, China and elsewhere to complement their existing US based teams but this movement does seem to me like it's replacing a lot of hiring that used to be done here. Here you go,?
Over the past year, the tech sector has shed nearly 150,000 U.S. jobs. But across Latin America, tech hiring is booming, Bloomberg reports . That's because businesses that wrestled with supply chain disruptions and labor shortages during the pandemic discovered “nearshoring” — the practice of shifting jobs to nearby nations. In Latin America, as in Asia, the cost of labor is lower than it is in the U.S. However, the fact that workers in the former region mostly share time zones with their American counterparts is making them increasingly appealing.
There is probably no better example here in Austin to profile this strategic pivot than a technology company called CS-DISCO.?Since 2015, this company has been a staple for hiring some of the best software engineers in this city and make no mistake, they are still hiring in volume but feel free to check out the locations for all of the engineering openings right here, https://csdisco.com/careers-product.?
To be clear, I'm not throwing stones at DISCO by any means because they're doing what they have to do in order to grow their earnings. And like a lot of technology companies, they overextended themselves on the salaries they were offering to developers 18-24 months ago. Further in their defense, going offshore is a proven strategy for a company to grow earnings. But like the title of this post says, we need this movement to run its course with the hope that some of these jobs make their way back to the US.?
How did nearshore/LATAM hiring gain momentum so quickly? My first guess is that when remote work became really popular here in the States during the pandemic, companies began to realize that it wasn't much different having an engineer work in Costa Rica than Boulder, Colorado. But then they looked at the money and realized such a massive difference in compensation between the two regions. Even just 12 months ago, the rates for Nearshore/LATAM engineers were much lower than here in the US. A side note that I'm also seeing a lot of recruiting firms offering nearshore recruiting services to technology companies. I've been offered this two times by other agencies and I declined both of them. I'm sorry but it just smells like "chasing money" to me and I'm serious, my four person recruiting team's #1 focus continues to be supporting the Austin, Houston, NYC and Bay Area markets. Make no mistake, we're taking a big hit right now but turning our focus towards Nearshore/LATAM just doesn't resonate with us.?
The point of my post here is that we all know what eventually happens with hot and trendy labor markets. Yep, they overheat and this could certainly happen with Nearshore/LATAM as well. First and foremost, the candidates feel the increased interest in their skillsets and with that comes a sense of control over the negotiating process with the company. In fact, let me itemize some of the variables that will eventually come into play as this LATAM hiring trend continues,?
I am working with a really strong senior software engineer here in Austin who has been out of work for five months now and he told me that he interviewed with a company here in Austin. Seed stage startup and they were in need of a Senior/Staff level developer. In the course of their conversations with him, they disclosed that they were considering a nearshore option for the hire. He said that the topic of salary and rates came up and the hiring manager said that they were getting quotes for 10-11k per month senior LATAM engineering hires. I jumped on these words and told him that an excellent response at that moment could have been something like this,?
Oh wow, that range is a good deal higher for nearshore talent than I suspected.?Not to mention for an engineer that you'll never meet in person and a region your company has never previously made a hire in. I thought rates would be much less than this? But then again, all I am hearing about is how hot the LATAM nearshore labor market is right now. While we're on the topic of money, I'll let you know that I'll be in the office 3-4 days/week and you can have me for 12k/month, ie. salary of 144k.?
He acknowledged my words and thanked me for the suggestion but I could tell in his eyes that he wasn't quite at the stage to where he could take that kind of cut in pay. And while I don't blame him for not immediately slashing his rates, my intent here is to do a 180 degree turning of the tables on nearshore hiring. Any time you have a strong hiring effort for talent in a given market, the scenery changes quickly and the leverage always tilts toward the candidates. As this LATAM market continues to get hotter on a weekly basis, US companies will have a harder and harder time securing talent down there. And while this won't play out for at least another six months, just like the conversations I reference in this post, companies are subtly starting to compare the rates and availability for nearshore talent with what's available here in the US.?
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If you're a US based software engineer looking for work right now, perhaps in the conversations you have with any companies right now, you can explore their efforts into LATAM hiring? If they happen to be doing so, maybe you can have that special moment where the combination of your rates, your availability and yes, your willingness to come into the office makes you a more attractive hire than their nearshore options? 18 months ago, that never would have been the case but again, times have drastically changed. It doesn't matter what the setting is actually. When you communicate to another party that?you have no more questions, no concerns and are ready to get down to work at a competitive rate, it's always well received.?
In closing, I'll say it again that LATAM hiring is hot right now and it's something that US based software engineers can't do too much about. But as you see these news articles being published that continue to highlight this trend, simply take inventory of how this super hot labor market might overheat before 2023 is over.?As a result, technology companies could circle back to their domestic markets. And you'll be in a position to significantly stand out to them. As always, make that solid first impression on the introductory call and from there, crush the code test. If things proceed to the third round, when the moment presents itself, pleasantly surprise them with how competitive your rates are to LATAM markets. And yes, if the company is in your given geography, you might have to let them know that you are ready to come into the office a minimum of three days a week.?On top of all these nice impressions you are making with the company, top it all off by telling them that you are immediately available and ready to get to work. You're ready to sign.?
Trust me that your words will be well received and you will have made a very strong impression on them.?
Thanks,?
Mark Cunningham
Technical Recruiter
512-699-5719
Excellent insights as always. Thank you, Sir!