The small Central American country of Costa Rica has transformed itself from simply a tourist hotspot to a foreign investment destination. It’s no wonder Nearshoring in Costa Rica is on the rise.
In 2022, Costa Rica topped the Investment Monitor´s Inward FDI Performance ranking, ahead of Croatia, Singapore, and the United Arab Emirates (UAE.)
This growing wave of FDI helped generate 22,000 new jobs in Costa Rica across the tourism, life sciences, and manufacturing sectors.
The government’s focus on learning and development has fueled this growth with 7.4 percent of the country’s GDP spent on the education industry.
Costa Rica´s rapidly growing talent pool is now rated amongst Latin America’s finest in the tech industry, making it an attractive location for nearshoring.
This article will outline the numerous advantages of nearshoring in Costa Rica, particularly for the IT and tech industries.
We will also look at what questions you need to consider before nearshoring in Costa Rica, for example, what back office services in Costa Rica you may require.
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The benefits of nearshoring in Costa Rica
Exploring nearshoring in Costa Rica can offer numerous advantages to your company. Below are five exceptional benefits of nearshoring to consider.
- Excellent return on investment
- Skilled IT workforce
- Time-zone alignment
- Low labor costs
Let’s look at each of these Costa Rican nearshoring benefits in more detail.
1 – Excellent return on investment
Nearshoring to Costa Rica offers a profitable return on investment thanks to substantial labor cost savings, the availability of a vast pool of skilled technology professionals, and increased efficiency arising from the timezone overlap.
Costa Rica also offers a wide variety of industrial parks and office centers with special tax exemptions and benefits for foreign companies.
2- Skilled tech workforce
Costa Rica has a pool of over 22,000 highly skilled software developers. It is the number one IT per capita exporter in Latin America, making it the ideal location for nearshoring.
Several global software companies, such as Microsoft, Oracle, Dell, and Hewlett Packard Enterprise, have established their presence in the country.
Costa Rica also recently ranked fifth in the world on the World Economic Forum’s Human Capital Score.
3 – Education focused
The country has a literacy rate of 98 percent thanks to its free and mandatory primary and secondary education. Its universities are well-financed, and professors from various parts of the globe share their knowledge there.
Each year, over 4000 people graduate from the country’s different university’s engineering programs.
4 – Time zone alignment
Workers in Costa Rica operate in similar or the same timezone as their counterparts in the United States, Mexico, and Canada.
From mid-March to October, it is in the same timezone as Mountain Standard Time (MST) in the United States. From November to mid-March, the local time is the equivalent of Central Standard Time (CST.)
This timezone alignment with North America allows for the possibility of achieving up to eight hours of simultaneous work. This facilitates smooth team collaboration and eradicates any project completion delays.
5 – Low labor costs
Nearshoring in Costa Rica can help your businesses lower costs and save time, resulting in improved profit margins.
Developing and training an in-house team can be costly and time-intensive, particularly in countries where labor and operational expenses are high.
For example, an entry-level software developer in the US can expect to receive a salary of about USD 80,000 per year, while a Costa Rican software developer doing the same job can expect to make around $20,400,000 Colon per year (roughly USD 39,000). That is a saving in an annual salary of over 50 percent.
Nearshoring in Costa Rica also offers a lower living cost compared to major cities in the United States, Canada, or Europe.
Is Nearshoring in Costa Rica the right fit for your business?
Before you commit to nearshoring in Costa Rica, it’s crucial to take into account various factors and ask yourself these important questions:
Is it challenging to find local talent?
If finding employees in your current location is expensive or challenging, nearshoring in Costa Rica may be cost-effective. Working with a local partner can also save time and effort in recruitment.
Do you have the ability to manage large projects remotely?
Nearshoring heavily relies on digital connectivity, which could necessitate a cultural change within your company if you are accustomed to relying on face-to-face communication.
What is your company’s key nearshoring goal?
Are you intending to recruit permanent staff in Costa Rica or require technical expertise for specific projects? Your choice will have implications for complying with local employment regulations. For instance, would you require the services of local lawyers or accountants?
Is Costa Rica the right talent market for your business?
While Costa Rica 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 support you with nearshoring in Costa Rica
At Biz Latin Hub, we offer a comprehensive range of market entry and back-office solutions in Costa Rica, Latin America, and the Caribbean.
Our expertise encompasses nearshoring in Costa Rica, hiring and PEO, accounting and taxation, company incorporation, and corporate legal advice.
With offices in major cities across the region and partnerships established in numerous other markets, we possess a vast network of resources, ideally positioned to support cross-border operations and market entry across multiple countries.
Contact us today to find out more about our services and how we can help you achieve your business goals in Latin America and the Caribbean.