Covid-19 accelerated investment in the technology industry, especially in the VC and Private Equity sectors, which led to VCs surpassing the $100 billion thresholds in fundraising during 2021, with average fund sizes higher than ever before at close to $195 million. The pandemic also opened the eyes of many companies to the remote world: they realized that their sudden shortage of qualified developers, engineers, designers, and other technical talents could very well be supplied by nearby countries. And we’re talking about top-tier engineering jobs, not just repetitive low-complexity roles. This trend has allowed companies to fulfill their technical talent needs even faster than in a pre-pandemic world. However, because of the general surge in demand for tech talent worldwide, and specifically in the US, companies have had to switch up their hiring strategies.
Latin America offers largely untapped markets of culturally diverse and English-speaking talent with general knowledge of American culture. Like US talent, these professionals bring industry expertise and know-how while also offering fresh perspectives and out-of-the-box thinking. LatAm has opened up a pipeline to a sizable talent pool with equal or fairly similar time zones perks, which quickly led to a gap between supply and demand for tech talent. Companies can still attract top-tier talent with the proper benefits and compensation.
Nearshoring to a different country requires understanding different peculiarities your company may face throughout the process. This entails everything from cultural differences to payment processes and interviewing processes, which all depend on the countries you’re looking to hire in.
So, here’s a list of things to keep in mind if you choose to outsource developers from LatAm.
To attract and hire technical talent in Latin America, it is essential to accommodate your hiring strategies to the cultural differences in the region. Here are the key differences when hiring locally in the US versus hiring remotely in LatAm:
Knowledge about local companies and universities
The tech landscape isn’t an easy one to navigate with limited familiarity with the region. As a foreign company, having knowledge of and understanding which schools have the best engineering programs can be tough. Contrary-wise, when looking for talent in the US, you probably find it easy and simple to understand the landscape.
According to QS’ Univeristy Rankings, the best Latin American tech schools include Universidade de São Paulo, Universidad Nacional Autónoma de México, Universidad Estadual de Campinas, Pontificia Universidad Católica de Chile, Universidad de Chile, Universidad Tecnológica Nacional, Instituto Politécnico Nacional, Instituto Tecnológico y de Estudios Superiores de Monterrey, and Universidad Nacional de Colombia. But these are just the most prominent ones, there are many other excellent institutes and universities out there in Latin America. Nevertheless, if you find a candidate among graduates from these universities, you can be ensured that they have a great technical education.
Differences in engineering backgrounds
As different opportunities are available and accessible to engineers from both regions, the career path of a LatAm engineer is quite different from that taken by tech talent in the US. Latin America’s talent pool comprises formal university degrees, boot camps, and coding academies, followed by a mix of corporate jobs in outsourcing and tech firms, as well as many varied experiences acquired by freelance work. This non-traditional path typically generates an entrepreneurial mindset in the talent, which is ultimately beneficial to the company they end up working for.
Differences in resumes
Whether interviewing in LatAm or the US, you should always bear in mind a few best practices that will help you run an efficient and smooth hiring process. Since you are hiring a team member, a rigorous interview process must be carried out. When interviewing talent from Latin America, you should go through resumes thoroughly. Latin resumes are usually very modest: as a culture, they tend to lean towards teamwork and collectivism, so the candidate’s resumes won’t necessarily feature or highlight personal achievements. Another factor to keep in mind is that the term used to refer to a resume is a CV, not a resume. Moreover, LatAm developers’ resumes tend to include personal photographs and a lot of personal information. They also tend to be much longer than the common single-page resume in the US.
It is important to take the time to design a process that accommodates cultural differences since interviewing styles tend to vary between regions. Here are a few tips to consider before beginning your interviewing process with a developer from Latin America:
Be upfront and transparent about the process
When interviewing, it’s key to be completely clear on what you’re looking to hire. You should give the interviewee details about your recruiting process and its assessment stages. Even though interviewing styles vary in each company, most Latin American workers aren’t used to the typical multiple-stage interview process from most US companies, which consists of an initial screening, role-specific assignments, followed by one or two more interviews. In contrast, LatAm interviews tend to include an initial, long-format interview, which can last anywhere between half an hour to an hour and a half, followed by one more interview, or two more interviews at the very most. However, common practices vary a lot depending on the country.
In short, letting the candidate know what your process is like will give them a clear view of what to expect from interviewing at your company.
Begin your interview by breaking the ice
Questions that are typically asked in US interviews, such as “which projects are you most proud of?” and “tell me a little about yourself,” are less common in Latina America, so they might make the candidate feel self-conscious. To relieve the stress of the candidate, it is crucial to think of ways that can make the environment during the interviews a relaxed and open space. Plus, interviews are a two-way street: you need to sell your company to the candidate as much as they need to be selected for the job.
Consider beginning your interviews with personal questions so the candidate can warm up and you can start getting a sense of how they communicate. Some personal questions you could ask include:
- What are your hobbies and what do you enjoy doing in your free time?
- How do you handle being under pressure?
- What type of remote working environment are you looking for?
- Tell me about a time when you made a mistake and how you resolved it.
- What was your favorite project you’ve worked on so far?
- What type of technical challenges have you faced, and how did you manage to overcome them?
- Finally, after you’ve run through each of the applicant’s information and held all the interviews, decide how to strategically present your job offer, keeping in mind the benefits and salary expectations of the interviewee.
Invoicing and payments
Compensating remote LatAm contractors consists of two processes: invoicing and payment. Every month, the independent contractor or a company they work for sends you an invoice detailing the type of work they did and the number of hours they spent working. As the employer, you have to check that all the information is correct and then make the payment.
Independent contractors tend to be tasked to keep a detailed account of their work hours. Every month, you should receive an invoice that goes into detail about the hours they spent working, the type of work they’ve done, and the amount of money they will get paid. They should add as many details as possible. There are many tools with which the talent can make and send the invoice reports, such as:
- Zoho Books
Once you receive their invoice reports, you should check that all the details are correct and that there isn’t any missing data.
The payment method that is the most popular is bank transfers. However, you should keep in mind that this method may not be the most beneficial for the recipient if they don’t have a bank account in the US. But don’t worry, there are many alternatives you can offer the workers that allow money transfer overseas, including:
- Paypal: This is the most popular payment platform. Creating and maintaining an account is very simple, which is why it’s the usual go-to platform. Among its advantages, it allows contractors to generate their invoices and send them over to the employer within the platform. Once the employer reviews the invoice, they can send the payment, and the contractor will receive it almost instantly.
- Payoneer: This platform is very similar to PayPal and is widely used. It’s used in over 200 countries. Additionally, it offers lower transaction fees than PayPal, and it has fewer operational costs.
- Wise: This platform offers low transfer costs, convenient conversion fees, low rates, and, in many countries, instant transfers. Wise has many different useful tools, such as allowing you to pay contractors in different currencies.
- Cryptocurrency: While crypto isn’t currently the most used currency to pay contractors, many prefer this payment method. Some of the preferred coins are Bitcoin, USDT, and Ethereum. They are easy to use, fast, secure, and allow the contractors to easily access their money.
If you don’t want to deal with the fuss of the invoices and the payments, another alternative is hiring an Employer of Record, which is a third-party company that will take care of all the employment tasks, including payroll, benefits, taxes, and the legal aspects of hiring remotely form the US.
Remote work contracts
You’re probably going to have to create a work contract agreement for the people that you hire. Even though these contracts tend to vary in each company, they should at least contain the following information:
- Work arrangement: The type of work that is going to get done, deliverables, key metrics with which you will measure the employee’s performance, the arranged work hours, etc.
- The compensation and benefits package that both parties already agreed upon beforehand.
- The equipment and services that the remote worker will need to fulfill their job, such as a high functioning computer, internet connection, and access (this point mostly refer to inhouse-hiring).
- Duration of the contract: while some companies choose to hire long-term, some still prefer hiring on a per-project basis with contracts that end when the project is successfully completed. So each contract should specify whether it is long-term or short-term.
- Exit plan: you should discuss this stage at the beginning to avoid any issues when finishing the project. How will the developers transfer their code and knowledge when your collaboration is over or when you want to change the development team.
Another important aspect of expanding your engineering teams to Latin America is to make sure your independent contractors file all the right tax documentation that applies to the local laws of your company through forms such as W-8BEN or W-8BEN-E. These are used to inform the US government about the work that independent contractors are doing outside of the country.
Moreover, you should know that each country in the region has its own visa and tax regulations. Even though filing their own taxes and the correct local government forms is the responsibility of each worker, you should do a little bit of research to know what these regulations are in each of the countries in which you’re looking to hire, just to keep yourself informed.
The tech talent demand in Latin America keeps growing at a fast and steady pace, which is evident in the number of companies and organizations that are investing in the region. Now, with remote and hybrid teams being the new normal, a lot of companies are unveiling the true potential of hiring remotely, and LatAm countries with their pool of quality software developers are a great opportunity for all the US companies that face the developer shortage now.
Learn about the peculiarities of interviewing and hiring process we’ve mentioned in this article, and hire the top-level software engineers from LatAm.