Brazil has the largest economy in Latin America and is a culturally diverse country that has a wealth of technological talent.
Foreign investment soared in Brazil last year with a record $91 billion invested in the economy. Despite a forecast of only 0.3 percent growth for 2022, Brazil's GDP actually grew by nearly three percent last year.
These factors make nearshoring in Brazil an attractive option for companies in 2023. In this article, we will highlight the many advantages of nearshoring especially for the IT and technology industry.
We will also look at the issues you need to consider before nearshoring in Brazil, for example, do you need a employer of record in Brazil?
What does nearshoring mean for companies?
Let's define what nearshoring is. Nearshoring is a business strategy where a company moves part of its operations or processes to a nearby country, usually within the same region.
This approach is often used as an alternative to offshoring, where operations are moved to a more distant country. Nearshoring can help companies improve efficiency and productivity, while maintaining a higher level of control and visibility over their operations.
The advantages of nearshoring in Brazil:
There are several benefits for your company to explore nearshoring in Brazil. Here are five excellent benefits of nearshoring.
- Low labor costs
- Time zone adjustment
- Skilled IT staff
- Digital infrastructure
- Excellent return on investment
Below we will examine each of these Brazilian nearshoring benefits in more detail.
1 – Low labor costs
Outsourcing can help companies reduce costs and save time, ultimately leading to increased profit margins.
Developing and training an in-house staff can be both expensive and time-consuming, especially in countries with high labor and operating costs.
For example, an entry-level software developer in the United States can expect to earn around $80,000 per year, while a Brazilian software developer doing the same job can expect to earn about $60,000 Brazilian Real per year (approximately $11,600). This corresponds to a fantastic cost saving of around 85 percent!
In addition, nearshoring in Brazil offers a lower cost of living compared to larger cities in the US or Europe.
2 – Time zone adjustment
Brazilian workers have similar working hours to their counterparts in the US, Mexico and Canada.
Because Brazil shares a time zone overlap with North America, there is a potential for up to eight hours of synchronous work. This enables seamless team collaboration and eliminates any delays in project completion.
That makes Brazil the ideal place to create a regional hub, so you can facilitate business across Latin America.
3 – Skilled IT staff
Brazil's IT industry is ranked number one in Latin America and thirteenth globally in software development outsourcing. This makes it an ideal location for nearshoring.
With its extensive connectivity, including direct flights to the US, nearshoring becomes not only convenient but necessary.
Brazil has over 400,000 software developers, indicating that companies of all sizes and from any sector can find competent help to meet their specific requirements.
In addition to the 400,000 developers, the total number of people working in the IT sector in the country is estimated at around 2 million, broadening the scope of the workforce and attracting foreign companies to invest in Brazil.
4 – Digital infrastructure
Brazil has made great strides in improving its digital infrastructure, which has led to a significant expansion of its IT outsourcing business.
The country has more than 35 business accelerators and over 90 manufacturing parks, with Science and Technology Parks (STPs) driving innovation and research while supporting both social and economic development.
These STPs are home to many companies offering data generation services and advanced virtual infrastructure, with Campinas close by Sao Paulo is emerging as a hub like Silicon Valley.
Brazil's strict intellectual property laws have resulted in minimal mentions of the country in relation to cybersecurity and IP.
5 – Excellent return on investment
Nearshoring in Brazil provides a lucrative return on investment thanks to significant labor savings, access to a large pool of skilled technical workers and improved efficiency due to the time zone transition.
This amazing ROI is why the world's leading technology giants such as Microsoft, SAP, Googleand IBM has offices there.
Is Nearshoring in Brazil right for your business?
Before proceeding with nearshoring, you need to consider several factors and ask yourself some important questions:
Is it hard to find local talent?
If it is expensive or challenging to find employees in your current location, nearshoring in Brazil can be a cost-effective option. Working with a local partner can also save time and effort when recruiting.
Are you comfortable with remote digital project management?
Nearshoring relies heavily on digital connectivity, which may require a cultural shift in your organization if your business typically relies on in-person communication.
What is your overall goal?
Are you planning to hire full-time employees in Brazil, or do you need technical talent per project? This decision will affect the local employment regulations you must work with. For example, do you need a registered employer?
Is Brazil the right place for your business?
While Brazil is becoming a popular destination for nearshoring due to its large pool of software developers and engineers, other Latin American countries also offer attractive options with growing technical talent pools and potential cost savings.
Biz Latin Hub can help you with nearshoring in Brazil
At Biz Latin Hub, we offer comprehensive market entry and back-office solutions in Brazil, the rest of Latin America and the Caribbean.
Our offices are located in major cities in the region. In addition, we have established partnerships in many other markets, providing our customers with an extensive network of resources.
This extensive coverage makes us well equipped to support market entry and cross-border operations in multiple countries.
Contact us today to learn more about our services and how we can help you with your business endeavors in Latin America and the Caribbean.
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