Carnival, soccer stars Ronaldinho and Neymar, the Amazon, and Christ the Redeemer.
These are just a few things we think of when someone mentions Brazil.
But at HatchWorks, we also think of Brazil as one of our favorite outsourcing hubs. And we’re not the only ones.
Since Covid and the subsequent economic slump, the Brazilian outsourcing industry has gone from strength to strength. And as businesses focus on cutting costs, those who don’t want to compromise on quality rely on Brazil to deliver.
This is especially true for software development. Want to find out if Brazil is where you should source talent?
Read on to understand the state of the outsourcing industry, the benefits you can gain from using it, and how to overcome the most common challenges that come with outsourcing to Brazil.
Looking to Latin America: Why Businesses Outsource to Brazil and Beyond
Far off outsourcing locations like India, Eastern Europe, and Southeast Asia have long been favorites for businesses looking to reduce costs while moving forward on projects.
But more recently, Latin America (LatAm) has risen in the ranks with the IT outsourcing industry in LatAm projected by Statista to reach $15.92bn in 2024 with a further annual growth rate of 12.26% up till 2028.
What’s driving this growth?
The region’s proximity to the US, time zone alignment, and cultural similarities. Businesses find their Nearshore neighbors easier to collaborate with on projects compared to offshore partners. And the quality of work is consistently high.
Brazil, especially, is an attractive outsourcing destination thanks to its size and focus on the tech sector.
The country received over $45 billion in total IT investment as recently as 2022. That investment will contribute to the development of tech talent US-based businesses can tap into for efficient and effective outsourcing.
It also boasts a fairly stable political climate despite lingering stereotypes of crime and corruption. Stability and low geo-political risk are important because they prevent projects from being disrupted.
📚 You might also like: Top Latin American Countries for Nearshore Software Development [2024]
What Work Gets Outsourced to Brazil Most?
In Brazil, the most popular outsourcing services are related to:- IT (including software development)
- Business processes (accounting, Human Resources, etc.)
- Call center services
IT
Outsourcing to the IT market in Brazil is expected to reach a revenue of US$20.80bn in 2024.
Compare that to India which is projected to reach $10.51bn in 2024 and you can see the trust businesses are placing in Brazil’s tech sector over others.
The Brazilian government has been a huge part of this shift.
They’ve introduced the “Lei do Bem (Law of Good),” which provides tax incentives to Brazilian companies working on research and technological innovations.
This, in addition to the country attracting foreign investments from other tech companies, has boosted the amount of talent available in the IT sector.
Business Processes
It’s not just tech that’s booming either. Business processes is also an industry outsourced to Brazil at increasing rates, made clear by the Statista graph below:
Call Center Services
Call center operations is another popular job outsourced to Brazil.
This is in large part because Brazilian call center employees can work similar hours to the US. They can field calls and do outreach at suitable hours for both themselves and the people they’re calling. Call centers in the Philippines, for example, can’t boast the same convenience.
Of course, this type of work requires workers to speak English. It’s estimated that 5% of people in Brazil speak English fluently, with higher concentrations of English proficiency in cities like Rio De Janeiro and Sao Paolo.
That percentage looks small but when you consider 5% of Brazil’s population is 10 million people, you realize just how prevalent English is, second only to their national language, Portuguese.
Outsourcing Software Development to Brazil: A Cost-Effective Strategy
Companies who want to save money and guarantee quality software development work need to consider Brazilian developers.
There are plenty to choose from.
Around 133,000 people were employed in the Brazilian software market as of 2021. Most of them work in São Paulo and earn an average wage of 4,461 Brazilian reals (or roughly $863 U.S. dollars).
Their monthly salary is a fraction of what it would cost to hire a US-based developer with the same experience and credentials. For reference, the average salary of a US software developer is $8,460 per month.
It just makes sense for businesses who want to stretch or shrink their budget without sacrificing quality.
💡 Did you know, Brazilian software developers are part of our Nearshore team at HatchWorks? We work with them every day and have witnessed their talent, expertise, and hunger for development positively impacting the projects and services we deliver to clients.
Benefits of Outsourcing to Brazil
Below is a breakdown of the key advantages Brazil offers that other outsourcing options fail to deliver.Access to a Large Talent Pool at a Fraction of the Cost
There are approximately 214.3 million people in Brazil. Of that population, 1.2 million are in the Brazilian IT market.
While not all of them are available for outsourced work, a large portion of them are. In fact, 630,000 work in IT services.
American businesses who leverage that talent only stand to gain. We shared earlier that the average salary of a Brazilian developer is 10x cheaper than that of a US developer.
The costs you save by hiring Nearshore developers in Brazil can be put towards other lucrative projects.
The trick here is to have a Nearshore Software Development partner who can connect you with that talent and facilitate the working relationship on your behalf.
Improved Scalability and Flexibility for Businesses
Outsourcing work to talent in Brazil allows you to scale up or scale back operations as needed without committing to a full-time employee, taking the time to hire, and investing thousands in recruitment.
Instead, you can source the Brazilian talent you need from a Nearshore partner like HatchWorks.
This scalability ensures companies can adjust their workforce based on project demands, allowing for efficient management of resources and timelines.
You can move faster on the projects that matter.
Time Zone Alignment Enabling Collaboration and Communication
One of Brazil’s most strategic advantages is its time zone alignment with North American companies.
This geographical proximity allows for real-time collaboration, making communication between teams more straightforward and efficient.
The ability to work synchronously can accelerate project timelines, facilitate same-day responses, and ensure that projects move forward smoothly, without the delays often associated with outsourcing to far-off locations.
Challenges Outsourcing to Brazil & How to Overcome Them
Every business choice, no matter how advantageous, comes with challenges. We’re calling out what we see go wrong when outsourcing to Brazil and sharing how to overcome them.
Legal and Compliance Issues
The Challenge:
Navigating Brazil’s complex legal and regulatory framework, especially concerning labor laws, taxes, and data protection, can be daunting for foreign companies.
Our Solution:
Partnering with a Nearshore provider like HatchWorks, which is well-versed in both Brazilian and U.S. legal environments, ensures compliance and protects your interests. Clear contracts, regular legal updates, and compliance checks are part of our strategy to minimize legal risks.
Language Barriers
The Challenge:
Despite a high level of English proficiency among Brazilian IT professionals, language barriers can still pose a challenge, potentially affecting project clarity and execution. Even fluent foreign speakers may miss cultural nuances.
Our Solution:
Selecting teams with strong English skills is essential. But you should also use communication tools that facilitate clarity, such as translation software. You may want someone in-house who speaks both Portuguese and English to ensure miscommunication is clarified before it interrupts project delivery.
Cultural Differences
The Challenge:
Brazil’s vibrant culture is one of its greatest assets, yet it can lead to differences in business practices and communication styles.
Brazilian professionals may prioritize personal relationships and have a different approach to time management and deadlines compared to the more direct and time-sensitive American business culture.
Our Solution:
Building a strong cultural bridge is essential. Engaging in cultural exchange programs and training can help both parties understand and respect each other’s working styles.
HatchWorks has experience in managing cross-cultural teams. We make sure there’s cohesion in cultures by having a base in the US that works with both our American clients and our LatAm-based talent, being the go between and mitigator that keeps projects on track.
Quality Control
The Challenge:
Ensuring the high quality of deliverables, from software coding to final product functionality, is critical and can be challenging when working with remote teams.
Our Solution:
Establishing clear, measurable quality benchmarks and conducting regular project reviews can help maintain high standards.
HatchWorks addresses quality control with a rigorous, standards-based approach, incorporating the Built Right Methodology.
This includes specialized frameworks, AI-enhanced development, and continuous value delivery through hyper-enabled teams. Regular quality checks and adherence to Agile methodologies ensure that every project meets the highest standards.
You may want to integrate a similar methodology for your project needs or hire a partner like HatchWorks who already has the process in place.
Time Zone Differences
The Challenge:
Despite the relatively minor time zone differences between Brazil and North America, ensuring synchronized work schedules for real-time collaboration can still be a challenge.
Our Solution:
Leveraging project management tools that provide visibility into team schedules and tasks can help. Planning for overlapping work hours and making the most of this time for real-time collaboration and meetings ensures that projects stay on track.
Practical Steps to Outsource Software Development to Brazil
Before you go down the path of outsourcing to Brazil, make sure you know how to make it a success.
The following practical steps will guide you through the process:
Figure Out What You Should Outsource
Not every project is fit for outsourcing.
It may be that your team has specific knowledge needed to complete the project or that you know you want to hire someone full-time.
But there’s almost always some aspect or project that can be outsourced.
You can judge this by outlining the projects you currently have on or are planning. Audit them to see if there are areas where you need outside expertise your team doesn’t have or if there are parts of the project that don’t require too much internal knowledge and are taking up too much of your team’s time.
Those are great indicators of work that can be outsourced.
Find a Nearshore Partner You Can Trust
Conduct thorough research to identify potential Nearshore partners in Brazil. Look for companies with strong industry reputations, relevant technical expertise, and a track record of successful projects similar to yours.
Beyond technical capabilities, assess the cultural fit of potential partners. Consider their communication style, work ethic, and understanding of your business environment to ensure a harmonious collaboration.
Foster a Collaborative Partnership
It’s important to make sure the outsourced team and your own team work well together. This means everyone needs to understand each other’s roles and how to communicate effectively.
Regular check-ins can help solve problems quickly and make sure everyone is always improving. It’s also a good idea to celebrate when big steps are completed.
This not only shows appreciation for hard work but also helps everyone feel more connected and committed to the project’s success.
Grow Your Business with Nearshore Software Development in Brazil & Beyond
HatchWorks is a US-based Nearshore software development partner that combines local, high-touch service with the affordability and scale of Nearshore outsourcing.
We connect businesses to the best software talent across LatAm so that business lucrative software projects can be completed within budget, to high standards, and at pace.
We’ve even introduced Generative AI to our processes to enhance the skills of our team and accelerate development.
After a 5-step screening process, we’ll fit you with the right talent for the job and build your digital products one of three ways: through Staff Augmentation, Dedicated Agile Teams, or Outcome-Based Projects (a full service software development solution).
Start your project in as little as two weeks and cut your software development costs in half.
Further Reading
Tech Talent Report 2024
Get key insights into LatAm’s tech environment, highlighting how its political, economic, and technological aspects can propel your business growth. Navigate LatAm’s software development industry confidently with HatchWorks as your guide.
