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After two engineers from Buenos Aires founded the BairesDev software outsourcing company in 2009, they relied on word of mouth to gain clients and their business grew steadily.
Then, the Covid-19 pandemic hit and revenue shot up — from $36mn in 2019 to $314mn in 2022. Companies, everywhere, had begun to realise that they did not need to have all their staff on site.
“[It] was completely insane, and then we kept growing and growing,” says co-founder Nacho De Marco. As one of his spokespeople puts it: “Geography wasn’t a barrier any more — it didn’t matter if talent was located in the US or Latin America, as everyone was working remotely.”
BairesDev now has 4,000 workers across Latin America, based in places ranging from small towns to big cities, working on projects for about 500 active clients, mostly in the US.
The pandemic transformed the software outsourcing industry, with companies and employees suddenly becoming much more open to remote work. It also helped to push three software outsourcing companies — BairesDev, Zipdev and Adeva — into the FT-Statista list of the fastest-growing companies in the Americas, based on revenue growth between 2019 and 2022.
The industry model is based on finding and keeping talented software developers in emerging markets to serve mainly US-based companies, either on projects or for ongoing work. They are cheaper than their US counterparts and can be hired more flexibly as contractors.
Katerina Trajchevska, co-founder of Delaware-based Adeva, says the pandemic showed potential clients that remote work can be productive. She adds that Adeva’s own management team is also based all over the world — demonstrating how the company has developed processes for maintaining standards.
“Remote work is . . . about everyone being able to dictate their own day,” she says. “For every challenge we encountered, it was like: ‘We need to solve this for us to be able to give the same value to our customers’.”
Examples of outsourced software development projects include a digital pharmacy wanting a system to track prescription transactions, and a tech company looking to build new features, Trajchevska says.
The pitch to clients is that they will have no labour law liabilities for workers but will have access to a wider pool of talent in regions where they might not normally recruit. Good English is usually compulsory, meaning that most workers on agencies’ books are graduates.
For the workers themselves, benefits include much higher salaries than they might otherwise earn. BairesDev says 80 per cent of its contractors earn between $30,000 and $80,000 a year.
That is lower than the $130,000 median salary for software developers in the US, according to the Bureau of Labor Statistics, but would still put BairesDev’s workers in the top 5 per cent of earners in their home country, the company says. Adeva says hourly rates range from $40 to $70 but can go much higher for specialists in artificial intelligence or senior managers.
Zipdev started in San Diego near the Mexican border, hiring engineers in Tijuana, then branching out to other cities in Mexico and beyond. “Developers are basically saying, ‘could you find us a job with a cool hip start-up?’,” says Daniel Altenburg, Zipdev co-founder. “It’s almost like having that little taste of an American dream from the comfort of your own home.”
This growth for outsourcing agencies also comes as US tech companies make big job cuts, following an exuberant period of overinvestment during the pandemic. Some 263,000 jobs were cut in the tech sector worldwide in 2023, according to Layoffs.fyi, a tracking website. “We’re starting to see clients understand they get a lot more bang for their buck when they nearshore,” Altenburg says.
That evolution in big groups’ attitudes to outsourcing also presents a challenge, though. As the software outsourcing market becomes more competitive, some potential clients are setting up in-house remote teams in Latin America and elsewhere.
“We need to do something to differentiate our value from what [tech clients] can do themselves,” says Trajchevska. “It’s kind of like disrupting yourself over and over again if you want to stay competitive.” Initiatives include matching workers to clients within 24 hours and offering a two-week trial period, she explains.
Altenburg says local knowledge is part of Zipdev’s edge — for example, knowing where to look for data science and machine-learning experts in Mexico City’s banking sector.
De Marco says the industry is still quite fragmented in the Americas, and BairesDev, because it cannot compete with big Indian outsourcing groups, has to focus on its advantages of time-zone and cultural similarity. But he feels the appeal is clear. “There’s definitely a lot that has to do with getting access to the best people, no matter where they are.”
Source: Economy - ft.com
