Latin America is becoming an increasingly attractive software development outsourcing destination, with more than 100 multinational companies in its 21 countries. The region provides many advantages, including a large pool of highly skilled IT professionals, competitive cost structures, and proximity to North America.
According to InvestmentMonitor, Costa Rica is the preferred software development location in Latin America for numerous Fortune 500 enterprises and multinational corporations, such as Amazon, Intel, Dole, P&G, Hewlett Packard Enterprise, IBM, and others. With its stable business environment, favorable government incentives, and advanced IT infrastructure, Costa Rica offers a compelling proposition for companies seeking reliable and cost-effective outsourcing options.
Choosing excellence: how Costa Rica became a top destination for software development outsourcing
Costa Rica has indeed established itself as one of the best outsourcing destinations in Latin America, primarily due to its:
Highly skilled workforce
One key factor differentiating Costa Rica from other Latin American countries is its outstanding digital skills. The country ranks first in terms of digital literacy among the population in Latin America, according to the World Economic Forum's 2019 report. According to Gartner, Costa Rica has a well-educated and highly skilled workforce, particularly in technology, with over 45,000 software developers as of 2022. Furthermore, the country's digital tech labor force is experiencing robust growth, expanding at an impressive rate of 7.6% annually, according to CINDE.
Costa Rica's commitment to education and training is evident with its second-place ranking in programming skills in Latin America and 27th globally, as reported by Coursera in 2019. Costa Rica produced approximately 2,400 university graduates in IT fields in 2020, according to CONARE. This steady supply of highly educated professionals ensures a continuous stream of talent for the tech industry.
Stable political and economic environment
With a stable political environment and a robust economy, predicted to grow by 2.8% in 2023 and 3% in 2024–while the US economy is expected to grow by 0.5% in 2023 and 1.0% in 2024–Costa Rica provides a reliable and secure business environment. The country has a solid legal framework that protects intellectual property rights and encourages foreign investment. This stability and business-friendly atmosphere contribute to the success of outsourcing ventures. ICT has been a significant contributor to Costa Rica's economic development. Since the country made substantial investments in ICT infrastructure, the sector has significantly contributed to economic growth.
Regarding exports, Costa Rica has emerged as a leader in knowledge-intensive services. According to the Central Bank of Costa Rica and the World Economic Forum, with $5.7B in exports, it claims the title of the number one exporter of IT services per capita in Latin America. In 2016-2020, ICT products represented, on average, up to 41% of total service exports. Over the same period, exports of goods via ICT networks accounted for, on average, 6% of GDP. This achievement reflects the country's prowess in delivering high-quality IT offerings to clients worldwide.
Favorable business climate
Costa Rica offers a favorable business climate with various incentives and benefits for companies looking to outsource their software development projects. These include tax incentives, government support, and streamlined processes for setting up operations. The Costa Rican Coalition for Development Initiatives (CINDE) works closely with the government to promote foreign direct investment and job creation, providing support and resources to companies interested in establishing their presence in the country.
Although Costa Rica slid from 67th in 2018 to 74th in 2019 in the Ease of Doing Business ranking because of bureaucratic red tape and infrastructure deficiencies. However, the country has improved its electricity infrastructure and made contract enforcement more straightforward. Moreover, Costa Rica ranks third on the Global Innovation Index among the 18 economies in Latin America and the Caribbean. At the same time, for companies looking for cost-effective outsourcing solutions, Costa Rica offers lower living costs than the United States. As a result, Costa Rica's labor costs and office space, transportation, and utilities will also be lower.
Advanced IT infrastructure and tech industry
The government in San Jose has made significant investments in developing the country's digital infrastructure, boasting the second-highest mobile penetration and broadband services in Latin America. This advanced connectivity provides a solid foundation for companies to operate efficiently and effectively in a digital-driven world. Thus, it is unsurprising that Costa Rica has more than 137 software development companies. Although, it is important to keep in mind that a lot of global companies, like N-iX, can help you find and hire the best talent even without having a physical office in the country.
Costa Rica has emerged as a powerhouse in the global tech industry, attracting 16 of the top 100 global tech leaders to establish their operations in the country. Many international software companies, including Microsoft, Intel, Oracle, Dell, and Hewlett Packard Enterprise, have chosen to establish a presence here. The presence of companies associated with the Fourth Industrial Revolution, offering services such as cloud computing, Industry 4.0 integration, the Internet of Things, and Big Data, further highlights Costa Rica's technological advancements.
Costa Rica's ICT service exports comprised 16.49% of its service exports in 2021. The United States is the top destination for Costa Rica's services exports via ICT networks, accounting for 65% of the total. Europe is the second-largest destination, with 11% of the exports. Panama is the third-largest destination, with 8% of the exports. The rest of the world makes up the remaining 16% of the exports.
Costa Rica takes pride in being the #1 OECD country in openness to digital trade, as recognized by the OECD in 2020. This distinction showcases Costa Rica's dedication to creating a business-friendly environment that encourages and supports digital trade. As a result, it is an attractive destination for global businesses seeking opportunities for nearshore software development outsourcing in Costa Rica. The country's influence extends beyond traditional IT services. The country has attracted 12 of the top 30 global medtech OEM companies, establishing manufacturing operations in 18 subsectors.
Proximity to North America
Costa Rica's geographic proximity to North America benefits companies based in the United States and Canada. The relatively short travel distances and compatible time zones–Costa Rica is in the same time zone as Denver and Salt Lake City–make collaborating with developers in Costa Rica easy. The two international airports in San Jose and Liberia offer flights to most major US cities. British Airways have also launched London Gatwick to San Jose flights. As a company that helps North American clients (including Fortune 500 companies and other industry leaders, we understand how important it can be for some businesses to be able to meet with their teams onsite.
Strong English proficiency
As rated by the EF English Proficiency Index 2022, which measures English language proficiency in non-native English-speaking countries, Costa Rica ranks 2nd out of 19 countries in Latin America. Most of the population, especially those in the IT industry, have a good command of the English language. This linguistic ability facilitates smooth communication and minimizes language barriers between outsourcing teams and clients; as a result, 85% of exportable services are in English.
A trusted partner – key to your successful Costa Rica software development outsourcing
Outsourcing to Latin America might seem daunting for companies unfamiliar with the region. Language barriers, time zone differences, cultural differences, and security considerations are all valid concerns newcomers must grapple with. You can mitigate these issues by partnering with a reliable, experienced vendor like N-iX. Our comprehensive services offer a range of advantages for your project. With more than 60+ recruiters and a proven recruitment strategy, we will find the best candidates for your specific needs. We possess cutting-edge tech expertise in Cloud, DevOps, AI and ML, Data Science, BI, embedded systems, and IoT. Our industry expertise spans finance, manufacturing, supply chain, retail, e-commerce, healthcare, and more. We understand the importance of effective development methodologies and are well-versed in Agile methodologies.
Looking for a reliable software development outsourcing company in Costa Rica?
- In its 20+ year history, N-iX has expanded across Europe, including Poland, Bulgaria, Sweden, Malta, and Latin America. We are now focusing on our growth in the region to better cater to the needs of our clients and can hire top talent throughout the region.
- As a global engineering vendor, N-iX has proven expertise in manufacturing, logistics, healthcare, agriculture, fintech, telecommunications, and other industries.
- A broad range of engineering expertise is available at our company, including cloud solutions development, Business Intelligence, Big Data, Internet of Things, embedded systems implementation, and more.
- Our clients include multinational companies like Fluke, Gogo, TuneIn, Questrade, and Fortune 500 companies.
- As part of its commitment to cybersecurity, the company adheres to international standards, such as PCI DSS, GDPR, ISO 27001:2013, and ISO 9001:2015.
- We take pride in being recognized as one of the best engineering providers in the world on the CRN Fast Growth 150 List, the IAOP Global Outsourcing 100 List, and other notable awards.
If you would like to discuss outsourcing opportunities to Latin America, contact us!