Nearshore software development involves outsourcing software development projects to expert tech teams in nearby countries.
It lets you leverage top-tier global tech talent, faster development cycles, and improve scalability — with massive cost savings.
But how much does nearshoring software development cost?
Let’s explore the nearshore software development rates in Latin America, what factors affect these rates, and a few tips to save on outsourcing software development costs.
| Further Reading: Check out our detailed comparison between nearshore and offshore outsourcing to help you determine the right model for your business. Discover why you should hire a nearshore developer and the best nearshoring partner. |
This Article Contains:
- Average Nearshore Software Development Rates (Latin America)
- Nearshore vs Onshore vs Offshore Software Development Rates
- 9 Factors That Affect Nearshore Software Development Rates
- 7 Proven Tips to Reduce Your Software Development Costs
Average Nearshore Software Development Rates (E.g. Latin America)
Nearshore software development rates differ from country to country.
Let’s take a quick look at how much it costs in Latin American countries in 2023, for instance.
(Note: These are only approximate figures and will vary depending on the scope of the project, team experience and qualifications, and various other factors.)
| Countries | Average Monthly Salary |
|---|---|
| Argentina | 43,600 ARS ($124.57) |
| Mexico | 32,100 MXN ($1,877.73) |
| Brazil | 8,790 BRL ($1,805.08) |
| Costa Rica | 2,280,000 CRC ($4,242.19) |
| Columbia | 4,520,000 COP ($1,139.44) |
Source: SalaryExplorer
Here’s what makes each of these Latin American nearshore software development locations attractive:
1. Argentina
- Overview: Argentina is home to over 100,000 developers. The country has some of the best technical colleges in the region, like the Universidad de Buenos Aires (QS World University Rankings, 2023). The government also organizes complimentary coding boot camps aimed at cultivating specialized talent to attract nearshore companies.
- Hourly Average Wage: 250 ARS/hour ($0.72/hour)
- Monthly Average Salary Depending on Specialization:
| Specialization | Average Monthly Salary |
| Front-End Developer | 36,600 ARS ($104.58) |
| Angular Developer | 41,000 ARS ($117.15) |
| Delphi Developer | 47,800 ARS ($136.58) |
| C Developer | 49,100 ARS ($140.30) |
| Elixir Developer | 59,300 ARS ($169.44) |
Source: SalaryExplorer
2. Mexico
- Overview: According to the Coursera Global Skills Report (2023), Mexican tech talent boasts 93% computer programming and 79% mobile app development proficiency. Mexico was also ranked 13th among the Top 50 Digital Nations by Tholon in 2021 for its contributions to the software industry.
- Hourly average wage: 180 MXN per hour ($10.24)
- Monthly average salary depending on specialization:
| Specialization | Average Monthly Salary |
| Front-end Developer | 26,400 MXN ($1,544.47) |
| Angular Developer | 28,800 MXN ($1,684.87) |
| Delphi Developer | 34,700 MXN ($2,029.73) |
| C Developer | 37,900 MXN ($2,216.91) |
| Elixir Developer | 42,500 MXN ($2,486.91) |
Source: SalaryExplorer
3. Brazil
- Overview: Brazil has an impressive educational infrastructure. For example, the University of Sao Paulo was ranked second in Latin America and is among the world’s top 90 engineering and technology institutions. The General Data Protection Act helps minimize Intellectual Property (IP) and cybersecurity incidents within the country.
- Hourly average wage: 51 BRL per hour ($10/hour)
- Monthly average salary depending on specialization:
| Specialization | Average Monthly Salary |
| Front-end Developer | 6,790 BRL ($1,394.36) |
| Angular Developer | 7,770 BRL ($1,595.61) |
| Delphi Developer | 8,700 BRL ($1,786.59) |
| C Developer | 9,300 BRL ($1,909.81) |
| Elixir Developer | 10,400 BRL ($2,135.70) |
4. Costa Rica
- Overview: According to the World Bank, Costa Rica has a 98% literacy rate (2021). The country is also the top exporter of IT services in Latin America.
- Average hourly wage: 13,100 CRC per hour ($24/hour)
- Monthly average salary depending on specialization:
| Specialization | Average Monthly Salary |
| Front-end Developer | 1,990,000 CRC ($3,702.61) |
| Angular Developer | 2,120,000 CRC ($3,944.49) |
| Delphi Developer | 2,320,000 CRC ($4,316.62) |
| C Developer | 2,560,000 CRC ($4,763.16) |
| Elixir Developer | 2,950,000 CRC ($5,488.80) |
Source: SalaryExplorer
5. Columbia
- Overview: The “Silicon Valley of Latin America” has dedicated organizations like ProColumbia and Invest in Bogota to support nearshoring. The government has also invested in software training programs for skill development and has enacted the ICT Sector Modernization Law.
- Hourly average wage: 26,100 COP ($0.0065/hour)
- Monthly average salary depending on specialization:
| Specialization | Average Monthly Salary |
| Front-end Developer | 1,990,000 COP ($501.44) |
| Angular Developer | 2,120,000 COP ($534.20) |
| Delphi Developer | 2,320,000 COP ($584.59) |
| C Developer | 2,560,000 COP ($645.06) |
| Elixir Developer | 2,950,000 COP ($743.15) |
Source: SalaryExplorer
Next, let’s explore how these rates play out in different software outsourcing models.
Nearshore vs Onshore vs Offshore Software Development Rates (2023)
Let’s pick China as an offshore software development destination benchmark, and then see what percentage of it are the Argentina (nearshore) and the United States (onshore) rates.
| Specialization | Monthly Offshore Development Rates ‘23 (China) | Monthly Nearshore Development Rates ‘23 (Argentina) | Monthly Onshore Development Rates ‘23(US) |
| Web Development | $3,502 | 3.2% of the offshore salary | 196% of the offshore salary |
| Mobile App Development | $4,013 | 3.1% of the offshore salary | 192% of the offshore salary |
| Front-end Development | $3,401 | 3.08% of the offshore salary | 186% of the offshore salary |
| Software Engineer | $4,009 | 3.2% of the offshore salary | 191% of the offshore salary |
| UX Designers | $2,825 | 3.2% of the offshore salary | 242% of the offshore salary |
| QA Engineer | $3,665 | 3.2% of the offshore salary | 187% of the offshore salary |
Source: SalaryExplorer
It’s clear that nearshore is more cost-effective when compared to the onshore and offshore software development costs.
But what influences these nearshore software development rates?
Let’s find out.
9 Factors That Affect Nearshore Software Development Rates
From the complexity of projects to the availability of skilled tech talent, the aspects that influence nearshore software development costs are many.
1. Project Size and Complexity
Generally, the larger the project, the more complex it tends to be.
Such projects may need more hands on the deck and advanced technologies.
For example, a comprehensive enterprise resource planning system may need a large team consisting of software engineers, database administrators, UX designers, and more.
It may also require advanced technologies like cloud computing, artificial intelligence, and sophisticated security measures.
But that’s not all.
These projects take more time to test, find, and fix bugs as well as deploy. All these factors collectively contribute to higher development costs.
2. Team Size and Composition
A larger team typically leads to higher development rates as you’ll have to pay more salaries, benefits, and overhead costs.
Likewise, your software development team composition, like having more senior developers than juniors or technical support, might result in higher hourly rates.
Based on their years of experience, a software developer can usually fall into the following categories:
- Junior software developer: 0-2 years
- Mid-level software developer: 3-5 years
- Senior software developer: 5-10 years
- Software architect: 10+ years
3. Cost of Living
Nearshore countries with lower costs of living typically have reduced labor costs.
For example, living in Washington, DC, is 291.6% more expensive than in Buenos Aires, Argentina.
This is one of the reasons why you can hire developers at a lesser cost in Argentina. You can just pay around 43,600 ARS ($124.57) monthly for a developer in Argentina, while it may cost you nearly $7,460 in the US.
4. Exchange Rates
Exchange rate fluctuations like currency devaluation or appreciation can make software development services cheaper or more expensive for clients in other countries.
For instance, with 1 Mexican Peso equating to just $0.057 and 1 Chinese Yuan at $0.14, Mexico is a more cost-effective choice than China for a US-based company.
5. Engagement Models
Your choice of nearshore outsourcing model and pricing structures can make or break your software development budget.
For instance, having a non-fixed price model for a long-term software development project might result in unexpected budget overruns.
Depending on your project type, some nearshore outsourcing models you can opt for are:
- Dedicated teams: This model lets you hire a dedicated team of software developers, designers, and other specialists to work exclusively on your project. A dedicated nearshore team can be costly compared to other models, as you’ll pay for an entire team.
- Fixed-price model: In this model, you agree on a fixed project cost upfront. Any changes in the project scope can result in additional project costs.
- Time and materials model: Here, you pay for the actual hours worked and the resources used. Although this model offers flexibility, you may face budget uncertainty and overruns if you don’t manage your project scope effectively.
6. Availability of Skilled Labor
If a country has a limited supply of labor and a massive demand for tech talent, companies are likely to compete to hire the best talent. This increases the hiring costs and vice versa.
For instance, the high labor costs in the United States can be attributed to its enormous demand for tech talent and its low availability, among other reasons like high living costs.
Meanwhile, nearshore countries like Mexico invest heavily in shaping tech talents and their infrastructure to meet the software development outsourcing demand.
Mexico’s the second-largest IT market in Latin America, with 225,000 tech professionals. These developers are also ranked the second-best in the world.
All these factors let you hire highly skilled developers at an average monthly salary of approximately 32,100 MXN ($1,836), while you may have to pay around $7,620 in the US.
7. Infrastructure and Technology
The type of hardware and software you choose, like high-performance servers or operating systems, can add to your development costs.
Additionally, ongoing maintenance can also eat into your software development project budget. This includes regular updates, bug fixes, or security patches.
You can reduce development costs by buying already established development frameworks and libraries. This allows developers to leverage pre-built solutions instead of building something from scratch.
8. English Proficiency
An English-proficient development team can help bridge language barriers through effective communication and collaboration.
They can also help you understand and document your software development project progress better. This helps reduce miscommunication and errors regarding the project scope.
These advantages may increase the demand for English-proficient developers, driving up developer hiring costs.
9. Hidden Costs
Hidden costs include overhead or indirect costs that might be necessary for your project development but may not be included in your project’s contract or initial budget. This can be in the form of additional testing, licensing fees, compliance fees, and more.
Next, here’s help if you’re wondering how to bring down nearshore software outsourcing costs.
7 Proven Tips to Reduce Nearshore Software Development Rates
Adopting the following nearshoring practices may help keep your budget in check:
1. Select a Credible Nearshoring Partner
This might be your best option because reliable nearshore partners like Distillery will only employ top-notch developers who are selected via rigorous screening processes.
Plus, they have the right project management systems in place to prevent scope creep, reduce delays, and ensure that resources are used optimally.
When choosing a nearshore software development company, you should do your due diligence and consider the company’s client testimonials, portfolio, and ability to meet your specific project requirements.
2. Adopt Agile Methodologies
Agile methodologies promote shorter development cycles (sprints) with frequent feedback from stakeholders. This proactive approach helps teams spot and address issues early before they become pricey fixes.
Plus, it supports leaner project management practices compared to other traditional methods.
How does this help you?
You can reduce overhead costs associated with project management and reporting, as Agile methodologies have fewer processes and documentation requirements.
3. Select the Appropriate Tech Stack
Choosing a tech stack that aligns with your project’s requirements can lead to faster development.
For instance, using Angular for building a web application may streamline development, resulting in shorter time-to-market and lower development costs.
For better cost-effectiveness, consider investing in a scalable stack with ongoing support and updates.
4. Embrace a Test-Driven Development Approach
A test-driven development (TTD) approach is where you create tests for the codes before you write the final code.
It encourages developers to write clean, high-quality codes to pass the tests. Developers can also find bugs and defects early in the development process.
What’s more?
TDD also shortens the feedback loop between development and testing. A nearshore team can receive feedback on their work swiftly, reducing the cost of rework or late-stage changes.
5. Use Pre-Built Product Features
Developing complex features from scratch can be expensive in terms of both time and resources.
Meanwhile, pre-built features are already developed, tested, and ready to use. As a result, your software development team can integrate them quickly, leading to shorter development cycles and reduced development costs.
6. Leverage Automation
Automation can speed up software development processes. For example, automated code generation tools can streamline the process, reducing the time required for repetitive coding tasks.
Likewise, automated error handling and logging can provide real-time insights into application issues. It helps developers respond quickly to errors, reducing downtime and the related costs of resolving problems.
7. Opt for Flexible Contracts
Flexible contracts allow you to scale your resources up or down based on your project needs.
It also lets you alter your project scope and adapt to sudden market changes without significant additional costs.
Looking for a reliable nearshore software outsourcing partner?
Well, you’re at the right place.
Fire Up Your Project with Nearshore Developers from Distillery
Distillery is a highly acclaimed nearshore software development company. It offers top-notch, cost-effective software development services for your project needs.
How do we do that?
We offer:
- Complete visibility: We have full access and visibility over the team, development processes, and the technology used.
- Tailored expertise: We offer full-cycle software outsourcing with an expert team, handpicked according to your project needs.
- The best tech stack: We have extensive software design and development experience in most tech stacks like Angular, Cypress, Chef, and more.
- Better user experiences: We provide purposeful, research-based recommendations to create elegant user interfaces and experiences.
- Efficient project management: We help reduce costs and manage fluctuations through effective project management.
- Thorough QA and software testing: We believe in proactive planning, early testing, and risk management throughout the development process.
Access Cost-Effective Nearshore Development Services from Distillery
Nearshore software development rates depend on various factors like your project complexity, the type of developers you need, and the nearshore destination you choose.
However, keeping track of these aspects on your own can be difficult.
That’s why you need to hire a credible nearshore partner like Distillery to help you nearshore software development cost-effectively. We’ll help you hire top-notch developers from Latin America, access high-quality tech, and speed up your software development processes.
Contact us to unlock the power of nearshore development while keeping your budget in check.