Accelerance client ChemSW and Costa Rica partner IsthmusIT are profiled in the Business Week article Costa Rica: Cultural Similarities Make It An Outsourcing Favorite. ChemSW used the Accelerance Rapid Ramp-Up service to select IsthmusIT. The article emphasizes many of the benefits of outsourcing your software development to Costa Rica.

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An article in the Wall Street Journal realistically describes the state of affairs in Latin America. It describes Latin America’s quiet revolution this way:

Most of Latin America is, however, undergoing a period of unprecedented political and economic transformation. In Chile, Brazil, Peru, Uruguay, Costa Rica, El Salvador, Panama, the Dominican Republic and, yes, Mexico … there has been a quiet but substantial movement toward the creation of societies that are characterized by increased economic opportunity, social mobility and political democracy.

Noticeably missing is a discussion of Columbia which is becoming another outsourcing destination for American companies in Latin America.

Clients are expressing continued interest in developing their software in Latin American countries because of the closeness in time zone and distance. This article gives a good sense of how close the various countries are to the U.S. politically and culturally too.

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I was interviewed for an article in Business Week about outsourcing to Latin America but the author didn’t use any quotes from me. I guess I need to speak in more sound bites!

A more likely reason is because the examples in the article are for big companies doing outsourcing of all kinds.  All my examples were for clients using smaller software development teams.

But I agreed with the author’s premise that there is an increasing trend of outsourcing to Latin America instead of India. A major reason for it is the decline of the dollar compared to the Indian rupee.

The article also includes a link to a slide show of information about outsourcing “hubs” in Latin America. There are just a few statistics on each slide.  The most interesting are the change in the dollar and local currency exchange rate and the annual salary range for “skilled programmers” in seven Latin American countries.  I’ve summarized these numbers in the table below.

Country	Dollar Value over past 5 years		Annual Salary Range	Hourly Rate 2000 hrs/yr
Argentina		Up 10%	$16K to $19K	$8 to $9.50
Brazil		Down 49%	$25K to $27K	$12.50 to $13.50
Chile		Down 41%	$25K to $27K	$12.50 to $13.50
Colombia		Down 39%	$18K to $20K	$9 to $10
Costa Rica		Down 25%	$19K to $21K	$9.50 to $10.50
Mexico		Up 0.4%	$25K to $27K	$12.50 to $13.50
Uruguay		Down 28%	$15K to $18K	$7.50 to $9

You can see that the dollar has really taken a hit over the last five years in all but two of the seven countries. The dollar has held steady or increased in value compared to the Argentine and Mexican peso.

I divided the annual salary numbers by 2,000 hours per year to come up with an approximate hourly rate in the last column.  These rates are about what you would pay if you set up your own captive operation in these countries. Hourly rates for contract programmers will be 2 to 2.5 times these rates. The higher amount covers office, equipment and profit for the Latin American partner.

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I delivered my talk yesterday to about 30 companies here in Queretaro Mexico and made many new friends and contacts.

One of my slides contains a Mexican saying that I also included in Chapter 2 of Software without Borders, in the section that discusses outsourcing to Mexico:

“Pobrecito Mexico—tan lejos de Dios y tan cercas de los Estados Unidos!”

“Poor little Mexico—so far from God and so near to the United States!”

I first heard this expression from a Mexican speaker at a conference in Costa Rica a few years ago. Everyone in the audience laughed, especially us Americans. Later, I found this exact expression in Spanish online and I included it in the book.

So I asked the audience if they know this saying.  They all laughed and then they started commenting amongst themselves. Finally, one of them smiles and says, “Yes, this is our saying, but you have one of the words wrong.  The word ‘cerca’ means near. Not ‘cercas’, that means fence or wall. You know, like the wall the United States wants to build at the border.”

More laughter.

Ay Caramba!  The devil is in the details!

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Indian IT Outsourcing giant Tata Consultancy Service TCS has announced a decrease in salaries as reported in a recent article in the Economic Times of India.

It’s not clear if this is just an issue with the business performance of TCS or is a general economic trend, influenced by rise of the rupee compared to the dollar and talk of a recession in the U.S.

Clearly rising salaries and value of the rupee have hurt the profits of Indian companies in general. American companies are proceeding carefully when outsourcing software development to India these days .