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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