Why Outsource in Latin America
Why Outsource in Latin America
Latin America is well known for its sunny weather, lively tourist destinations, and warm people, but it is much more than this. Latin American countries have thrived in the past decade and received more international attention, particularly from global businesses attracted to its millions of people and strengthening economies.
Even though Latin American countries are diverse and differ between one another, they share a common history: all countries were once European colonies. This history has had a strong impact on the collective culture, and most Latin Americans pay a lot of attention to foreign customs and consume international media such as American movies, television series, music, etc. This consideration has forged a cultural closeness between these western countries, making it easier to connect and understand each other.
Of course there are also contrasts, and we can see differentiators between countries and even within large countries like Brazil.
THE DIFFERENCES
A survey by Cultural Mixology interviewed Latin Americans to understand how they perceive themselves and how they think the world sees them, and identified several things outsiders either do not know or misunderstand about LATAM.
For example, Brazilians claim foreigners do not know they are informal, and use first names in business meetings. They also believe few outsiders realize they are skilled negotiators, or that there are many private high-tech businesses in the country.
Regarding punctuality - a delicate subject as Latinos are often thought of by foreigners as habitually late - the data shows that for social events, people are expected to arrive at least 30 minutes after the start. However, when it comes to work, most participants stated they are actually expected to arrive on time or no more than 10 minutes late.
In addition another easy difference to spot is the way people greet each other. Similar to some European countries, it is common for Latinos to greet with kisses or hugs - even in business meetings - a sharp contrast to Americans’ handshakes.
DOING BUSINESS IN LATIN AMERICA
More importantly than how people greet each other is the overall work culture western countries share. According to the book "Managing Human Resources in Latin America," by professors Anabella Dávila and Marta M. Elvira, LATAM’s culture favors teamwork, as Latinos value social relations based on communication and empathy. Both courtesy and diplomacy are also highly valuable skill sets.
For instance Latinos tend to have a strong connection with their family and friends. Rather than meet for holidays, most people in Latin American countries see their families and friends every weekend. Executives from these countries are less likely to relocate, even for good opportunities, as they prefer to stay close to their loved ones. The remote work environment, now popularized by the pandemic, has increased opportunities for companies to hire these individuals.
Moreover many people in LATAM countries learn English as a second language in school. According to Babbel, "In South America and Central America, about 14million people speak English.” Further proof of fluency, Statista published the results of the worldwide EF English proficiency test, and of the 2,2million people who have participated, many test-takers from Latin America have achieved high to moderate grades. According to Statista, “Moderate marks require an understanding of song lyrics, the ability to participate in meetings about one's area of expertise and write professional emails on familiar subjects.”
On the other hand, countries in Latin America are well known for their highly protective and complex taxation regulations and legislation. Companies that do run local subsidiaries in LATAM must have great legal and fiscal support to mitigate the risks.
OUTSOURCING IN LATAM
One option to escape the difficult bureaucracy is working with outsourcing partners, a perfectly legal way to start a business in the region without the complexity and risks. During the pandemic, countries such as Brazil revised their outsourcing regulations and made it even safer and easier to work under this model.
In conclusion, companies doing business in LATAM also benefit from the close time zones and ease of travel, with direct flights to and from main cities in the U.S. and Europe. In addition, costs are competitive, with overhead up to 30% lower than that of established legal entities. Unsurprisingly, LATAM is an attractive destination for companies seeking outsourcing services, and outsourcing is already one of the fastest-growing industries in the region.