Brazil has the largest economy in Latin America and is a culturally diverse country that boasts a wealth of tech talent.
Foreign investment soared in Brazil last year with a record $91 billion invested in the economy. Despite a forecast of only .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 benefits of nearshoring especially for the IT and tech industries.
We will also look at what questions you need to consider before nearshoring in Brazil, for example, do you need an employer of record in Brazil?
Table of Contents
What does nearshoring mean for business?
Let’s define what nearshoring is. Nearshoring is a business strategy where a company moves some 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 businesses improve efficiency and productivity, while also maintaining a higher level of control and oversight over their operations.
The advantages of nearshoring in Brazil:
There are several advantages for your company to explore nearshoring in Brazil. Here are five excellent benefits of nearshoring.
- Low labor costs
- Time-zone alignment
- Skilled IT workforce
- 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 businesses reduce costs and save time, ultimately leading to increased profit margins.
Developing and training an internal staff can be both expensive and time-consuming, particularly in nations with high labor and operating costs.
For example, an entry-level software developer in the US can expect to receive a salary of about $80,000 USD per year, while a Brazilian software developer doing the same job can expect to make around $60,000 Brazilian Reais per year (roughly $11,600 USD). That equals an amazing cost saving of around 85 percent!
In addition, nearshoring in Brazil offers a lower living cost compared to major cities in the United States or Europe.
2 – Time-zone alignment
Brazilian workers have similar work hours to their counterparts in the United States, Mexico, and Canada.
Since Brazil shares a timezone 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.
It makes Brazil the ideal place to set up a regional hub, so you can facilitate business operations across Latin America.
3 – Skilled IT workforce
Brazil’s IT industry is ranked number one in Latin America and thirteenth globally for outsourcing software development. 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 businesses of any size and from any sector can likely find capable assistance to meet their specific requirements.
Beyond the 400,000 developers, the estimated overall number of people working in the IT sector in the country is around 2 million, widening the scope of the workforce and attracting foreign companies to invest in Brazil.
4 – Digital infrastructure
Brazil has made great strides in enhancing its digital infrastructure, leading to a significant expansion in its IT outsourcing business.
The country has more than 35 company 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 numerous companies offering data generation services and cutting-edge virtual infrastructure, with Campinas near Sao Paulo emerging as a hub like Silicon Valley.
Brazil’s stringent 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 presents a lucrative return on investment due to significant labor savings, access to a large pool of qualified tech workers, and improved efficiency resulting from the timezone crossover.
This fantastic ROI is why the world’s leading tech giants such as Microsoft, SAP, Google, and IBM have offices there.
Is Nearshoring in Brazil right for your business?
Before proceeding with nearshoring, you must consider several factors and ask yourself some important questions:
Is it difficult to find local talent?
If finding employees in your current location is expensive or challenging, nearshoring in Brazil may be a cost-effective option. Working with a local partner can also save time and effort in recruitment.
Are you comfortable with digital remote 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?
Do you plan to hire full-time employees in Brazil, or do you need tech talent on a per-project basis? This decision will impact the local employment regulations you need to work with. For example, do you need an employer of record?
Is Brazil the right location for your business?
While Brazil is becoming a popular nearshoring destination due to its large pool of software developers and engineers, other Latin American countries also offer attractive options with growing tech talent pools and potential cost savings.
Biz Latin Hub can assist 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.
We specialize in a range of services, including nearshoring in Brazil, as well as hiring and PEO, accounting and taxation, company incorporation, and corporate legal advice.
Our offices are located in major cities across the region. In addition, we have established partnerships in numerous other markets, providing our clients with an extensive network of resources.
This extensive coverage makes us well-equipped to support market entry and cross-border operations across multiple countries.
Get in touch with us today to learn more about our services and how we can assist you with your business endeavors in Latin America and the Caribbean.