75% Upped Outsourcing in Latin America During Pandemic: Survey

Three out of four respondents to the latest Biz Latin Hub survey on business trends in the Americas reported that they had either begun outsourcing in Latin America during the pandemic or had increased the amount of work they were outsourcing in the face of the global health emergency.

When asked which statement best describes their company’s outsourcing habits during the pandemic, 56% of respondents said “we outsource more work,” while 19% stated “we began outsourcing,” in a sign of how the shift to more remote working has affected organizations, while also highlighting how a growing number are aware of the opportunities and talent that can be found overseas.

SEE ALSO: Need Assistance? Outsource Back Office Services in Chile

Biz Latin Hub provides market entry and back office support throughout Latin America and the Caribbean, and periodically runs surveys related to trends and habits in the region’s business and investment worlds. During January 2022, we ran a survey on outsourcing habits during the pandemic, seeking out feedback from investors and company representatives who are either based in Latin America and the Caribbean or have business interests in the region.

The survey included questions on workforces based in Latin America and the Caribbean, how the pandemic had affected outsourcing habits, what type of work respondents tended to outsource, and awareness of professional employer organization (PEO) services as an outsourcing option.

Below, insight is offered into the results of some of the questions. In total we asked four questions, which were not all answered by each respondent. The highest number of respondents any given question received was 72.

If you need assistance with market entry or ongoing operations in Latin America and the Caribbean, contact us today to find out more about how we can assist you.

Most respondents have staff in Latin America and the Caribbean

The first question we asked was whether respondents currently have staff in Latin America and the Caribbean, to which 65% responded to say they did, while a further 21% said they currently do not, but would consider it.

While that means the vast majority of respondents either have staff in the region or would consider hiring them, what was not made clear is whether those staff are directly hired by the company, or if they are outsourced in some way, such as via a PEO arrangement.

However, as the next question demonstrated, awareness of PEO services was surprisingly low among respondents, even as we have been seeing a growing interest in PEO in Guatemala and other markets in the region.

56% of people ‘unfamiliar’ with PEO services

Perhaps surprisingly, while 75% of respondents reported either increasing or starting to use outsourcing in Latin America, more than half stated that they are unfamiliar with PEO services.

PEO can also be known as employer of record (EOR) services and is a type of outsourcing that involves the provider (commonly referred to as a PEO firm) hiring staff on behalf of the client.

In practice, that means the employees report directly to the client of the PEO firm, which controls their schedules, duties, and workloads, while the PEO provider handles their payroll, onboarding, and offboarding, as well as being able to assist with the recruitment process. In return, the provider generally charges the client on a per-employee basis.

Such an arrangement is particularly popular when it comes to hiring a small team for a specific project, such as software developers, or for hiring staff to represent the company, such as a regional or local sales rep.

At Biz Latin Hub, as highlighted above, a lot of the growing interest in outsourcing in Latin America has been for PEO services, given the convenience, cost savings compared to going through company formation and liquidation, and the rapidity with which it allows a market entry and exit.

However, as the survey demonstrated, awareness of PEO continues to be an obstacle to its uptake as an outsourcing solution.

Legal services most popular for outsourcing in Latin America

Prior to closing the survey with the question about ourtsourcing habits, we asked respondents which type of work they or their company is most likely to outsource and the most popular response was legal services, which was chosen by 36% of people. Not far behind was accounting and taxation, which was selected by 29% of respondents.

It is worth noting that, with integrated work covering mutliple services being the third-most popular choice, selected by 19% of respondents, the figures for both legal and accounting are actually likely higher, given that in many cases an integrated services package would include at least one of those.

It is perhaps unsurprising that legal and accounting work figure highly as preferences for outsourcing in Latin America, given the difficulty involved in getting to grips with and negotiating the regulatory regime in a new or unfamiliar market.

Because, while many countries in Latin America and the Caribbean are known to be pro-business and encouraging of foreign investment, the red tape and conventions that newcomers find can be confusing and at times convoluted, meaning that it makes sense to partner up with someone who can guide you through legal processes in the quickest and most efficient manner possible.

Biz Latin Hub can assist you in Latin America and the Caribbean

Biz Latin Hub is a professional services company offering integrated market entry and back office services throughout Latin America and the Caribbean.

We have offices in 16 major cities around the region, staffed by multilingual teams of local professionals with a long history of assiting foreign investors, meaning we are ideally placed to support multi-jurisdiction market entries and cross border operations. We also have a presence in Australia and New Zealand.

Since being founded in 2014, we have risen to become one of the most well-known providers of outsourcing in Latin America. Our portfolio of services includes accounting & taxation, company formation, corporate legal services, and hiring & PEO, among others.

Contact us today to find out more about how we can help you reach your commercial goals.

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