Salary Benchmarks in LatAm

The underlying salary insights that US companies need to know for an effective talent acquisition approach in LatAm.

One of the most common requests from companies looking to hire or expand teams in LatAm is salary benchmarking. A key motivation for hiring remotely is getting great value for the investment, so pricing plays a major role in decision-making.

However, this is much more challenging than in the US market. In this article, we’ll explain how to approach salary benchmarking and provide resources for further information.

TL;DR

A good starting range is $60k-$120k for various roles and levels of seniority. You get what you pay for—if you start on the lower end, it will take longer to hire and you’ll miss out on top talent.

If you are making a few hires, benchmarks won’t be very helpful—do price discovery. Interview candidates at different price ranges to see what the market has to offer.

For advisory services from Silver.dev and access to private salary benchmarks compiled by our firm, contact us here.

Why Benchmarking in LatAm is Hard

LatAm as a region is not like the United States or even Europe. It’s fragmented by country, with different legal systems, cultures, talent pools, and sometimes languages. A benchmark that encompasses the entire region would need to be too abstract.

Because of this, you usually look at talent per country in LatAm, and the talent pool is simply not that deep. Argentina has 60k developers, while the US has 4.4 million. This makes salary benchmarks not as statistically significant.

Furthermore, the region has extreme salary dispersion by US standards. While geography is the leading indicator of wages in the US, with a cost-of-living floor putting most salaries within a certain range, in LatAm, the floor might be as low as $25k/year. This allows the talent market to price itself freely, so you can find developers making $25k/year and $150k/year, depending on their value to employers.

This dispersion is challenging because employers often believe they can find cheap talent without having to pay much. But the market is not that inefficient. You get what you pay for. If you underpay, you’ll eventually lose your talent to competition.

Comparing US vs LatAm Compensation

Salary compensation is often viewed as a vanity metric by both companies and talent. I’ve seen talent reject offers with much higher benefits, like paid vacations and equity because they decided salary was the most important metric.

Employers often think this way too, trying to ensure that remote salaries in LatAm do not approach US salaries.

Employers can be smarter and more sophisticated by considering more metrics for budget comparison.

?? Equity vs Cash

Most LatAm talent is highly averse to equity. They will not only prefer cash over equity, but they will rarely ask for equity compensation at all. I want to change this culturally, but it is market reality, and you shouldn’t fight it. It is a lever of negotiation with only a fraction of talent.

This significantly reduces the cost of talent in the long term. If the company grows to a Series A/B, then cash will be plentiful, and remote talent will be among the most affordable employees long term.

?? Health Insurance

Compared to the US, health care is cheap in LatAm and is not expected to be provided by the employer for remote contracting positions. In the US, it is often not considered during the negotiation process, but it impacts the bottom line. Insurance for a family of four can cost $17k/year.

?? Payroll Taxes

Payroll taxes amount to 15.3%, with employers covering half (7.65%). There are no payroll taxes for remote contractors. Some states can include additional payroll taxes like unemployment taxes.

?? HR Cost per Employee

There is a substantial difference in maintenance and operating costs for employees and remote contractors.

US employees require tax forms, filings, and other legal commitments that require management and focus. An average PEO service can cost upwards of $1200 per year.

Handling contractors through a platform costs around $50 per month.

[1]: 1% equity in a $15 million seed round (150k) over four years is about $37,500.

Benchmarking Providers

With all that covered, you might still want to look at benchmarks and compiled information about salaries. The most common trusted providers are Pave (YC) and Deel (YC); however, Pave does not provide benchmarks for remote employees and Deel’s data is skewed for regional hiring, so their data is not ideal for compensation benchmarking.

Another option is to look for large recruiting firms that compile this data, although beware of asking the barber if you need a haircut!

Recruiting firms have the advantage of being in the trenches, knowing what actual interviewing candidates are making and what kind of offers they are getting.

We provide benchmarks and data based on our portfolio and research to clients looking to make their first hires. You send your request here.

Benchmarks ??; Price Discovery ??

If you are a small startup, you can research benchmarks all you want, but you need to hire in the next 3 months and your candidate pool is what it is. You need to decide on the ground what is a good deal and evaluate each candidate as they come along.

If candidates are not coming, or the quality is below par, or you are losing them at the offer stage, you need to increase compensation. If you find yourself interviewing lots of candidates easily, you might be over-market.

This is a process of discovery that is realistic—you are shopping around for good deals.

You can make job postings at different salary bands to see what they bring in relatively, and if the talent adjusts to your expectations.

A note on price discovery is that LatAm talent tends to be single-offer. Culturally, candidates tend to accept the first offer they receive, so they are price-sensitive in job postings and the interview process, and will simply reject to interview if the offer is below their expectations.

I hope you enjoyed this article.

About the Author

Gabriel Benmergui is the solo Founder of Silver.dev and an ex-founding engineer at YC startups, a Staff Engineer at Robinhood and OpenSea, as well as a founder of digital products and an angel investor in startups. Gabriel is an experienced interviewer and has run interview processes at various companies, making him a skilled Engineer-Recruiter.