5 ms·

U.S. tech firms are replacing workers with cheaper talent in Latin America

42 points by impish9208 4y ago

sposeray 4y ago
[dead]
chiefalchemist 4y ago
> Rest of World spoke to 18 entrepreneurs, recruiters, and developers in Mexico, Peru, and Uruguay, all of whom acknowledged that the recent layoffs across the tech sector globally haven’t freed up experienced developers for hire by regional companies. Tech companies don't hire and layoff exclusively tech workers. It takes more than engineers to run and grow a company. That is, when we hear X is laying off 15%...that's 15% of all bodies (e.g., marketing, HR, etc.) not all 15% is engineering. Once you start dismissing engineers, you suffer a brain drain. I've seen nothing to indicate that's happening in general). Of course there might be a couple with no choice.
- Tanjreeve 4y ago
  I do find it funny that the article basically arrives at "it's hard to find people to do this stuff" when the headline would imply the opposite.
okokwhatever 4y ago
Take it or leave it. US got too expensive to produce and cannot compete with a growing number of correctly prepared engineers willing to work hard and cheaper abroad. To close frontiers and creating new taxes won't be a solution this time. It's just a matter of time for a huge crisis in the industry.
- mbustamanter 4y ago
  While agreeing on the cost of living, I have to say that the number of engineers will not be growing too much (I say this as a latin american engineer): Most latin american countries are below the replacement level fertility of 2.1, especially the ones who provide the best quality engineers (Brazil, Argentina, Chile and Uruguay) and the ones who aren't such as Bolivia or Ecuador, are barely above replacement. Already college cohorts are 25% smaller than their historic maximum in Chile, and Chile together with Uruguay are facing a dramatic threat of decline since their total fertility rates are lower than 1.3 for 2022 and falling (for Argentina and Brazil it's no more than 1.65 for the same year, just below the TFR of the United States at 1.66). As a result of all this, the economic structure of these aging countries is changing and the decreasing cohorts of engineers will be even more compelled to settle in Europe or the US, the taxes to support non-working parts of the population are leaving less margin for starting businesses and families. So american companies won't be outsourcing for much less for same quality, at least from latin america. I think that the US won't need to be too stringent on foreign remote workers: third-world politicians will push workers out in their thirst for taxing income (and the rationale will be: "They have to pay their fair share!").
- alephnerd 4y ago
  Depends on the role and the sector in tech you work in. IMO, most HN commentators seem to be generic frontend/backend/fullstack devs working on generic CRUD apps at a handful of FAANGs. With the right domain knowledge, you could earn way more in other sectors or niches within tech even with those skills themself.
  - horns4lyfe 4y ago
    Do you have any examples of the type of niches those skills would transfer to?
blahblah1234567 4y ago
Don't count on it. The premise is very incorrect. Latin America has a dearth of educated workers. It's why their societies' infrastructure is barely functional. I've spent 1.5 years living in Mexico. During that time, I met one electrical engineer, one software engineer, and one digital marketer (Mexican citizens). I am sure I would meet more if I spent more time in Guadalajara or Mexico City. But, I wouldn't expect to replace a labor force in any useful amount. 95% of people I met didn't seem to be very skilled at reading or writing, as though they barely had middle-school level education. I expect the same is true for most Latin American countries except Chile & Costa Rica, which have higher rates of human development. Notice there is not much data in this article. It's just a qualitative description of one person's experiences in hiring. And discusses a survey of 18 companies trying to hire in Latin America.
- cheeselip420 4y ago
  Uhhh - I think you're overgeneralizing here in a big way.
- kranke155 4y ago
  I’ve never been to Mexico, but on the topic of some other countries in Latin America I believe this to be widely inaccurate. Also going like “lack of educated people is why their society doesn’t function” is pretty crazy. Institutions are the reasons societies work or not.
  - blahblah1234567 4y ago
    Let's follow your logic. Let's assume Well Functioning institutions are in place. Let's take it one step back, and one step forward from there: - one step back: What enables Functioning Institutions? The institutions are composed of people. Good institutions require educated, skilled professionals. - one step forward: Once we have Well functioning institutions... Well, what do they exist for? To support a functioning society, perhaps? Which is dependent on what? (Institutions, yes, we just covered that-- What next? .....oh that's right.... educated, skilled professionals) To say "institutions are the reason <thing> functions" is quite a myopic perspective. Did an institution install the plumbing in your house? Did an institution grow the food you eat? :) I only ask that you step through your own logic.
officialjunk 4y ago
so, ceo's are trying to end remote tech workers domestically, but for less cost, are open to workers even farther away.
alephnerd 4y ago
I've been on sales calls and in PoCs with a couple major Mexican conglomerates (think Cemex, Pemex, or Azteca level or the MX operations for BBVA or Santander) so I've had the chance to interact with a number of Mexican software engineers, plus I have a couple Mexican diaspora SWE friends and honestly the talent is there, but it won't really be the next "Poland" or "India" like how the article portraies it. The issue I've seen is you're going to be paying Austin in the 2010s level salaries ($60-70k base plus stock) for competitive talent due to remote work or Central Europe salaries at the lower end ($30-40k base), plus the added salary pressure of MX nationals being able to move to the Bay Area, Austin, NYC, or Seattle via the TN visa (most undocumented immigration coming from MX are not MX nationals - they're primarily Honduran, El Salvadoran, Nicaraguan, or Guatemalan nationals). With that level of salaries, you aren't getting a significant discount compared to other locations nor the ability to run 24 hour operations. American companies are fine paying MX level salaries if not higher when you factor in equity in India, Romania, and Poland or pay US level salaries in Israel because it gives them the ability to have continuous 24/7 operations and a level of redundancy from a risk planning standpoint. None of this is to say MX ain't a bad spot to develop talent - anything but given the free trade agreements with the US, South America, and the EU and the very American-esque regulatory system making it a great hub for American companies to expand within the Hispanoblante world - but the scene is similar to Germany or France's in the sense that the dev industry seems heavily Finance, Manufacturing, Defense, or Conglomerate driven and treats it as a cost center.
- Kon-Peki 4y ago
  > MX nationals being able to move to the Bay Area, Austin, NYC, or Seattle via the TN visa TN visa requires candidates have the "correct" university education (self-taught and music majors need not apply). Aside from that, you're absolutely correct. I'm sure that the government is keeping track of how many people are getting TN visas per year, but otherwise these people just blend in and become part of the normal workforce. Eventually many of them get a green card or US citizenship.
  - alephnerd 4y ago
    They def can, though one of my diaspora buddies is seriously considering returning to CDMX even though he's making good money in SV, graduated from a top CS program in the US, and already got his GC. To him the QoL in CDMX was better than other cities in the US (but homesickness is also playing a part)
908B64B197 4y ago
Completely anecdotal, but about 8 years ago we had a pretty well scoped out web dev project. We didn't want to go with FTEs because the roadmap for that feature wasn't obvious after initial release (something bespoke for a large customer). Someone at the company referred his "friends and college acquaintances" who ran a small consulting firm in Mexico. The project lasted around 6 months, they delivered a little ahead of schedule and were quite nice to work with. A team of 5 devs. Looking at their LinkedIn profiles, two of them are now in the Bay Area for sure, one I'm not completely sure because I think his wife and him lived in California for a while since she did a postdoc there but I don't know if they stayed. One is in Seattle and the last is in NYC. Every time someone tells me they found "cheap, local talent" in LATAM for "much less than American developers" I always wonder how long it will be until that talent becomes itself... an American developer! Especially since, unlike a decade ago, people are now incorporating in LATAM and hiring FTEs, not contractors. This makes them eligible to get an L-1 visa to transfer to the parent company in the United-States after ~1 year at the company.
awesomegoat_com 4y ago
Pardon me, but after 13 years in business I have to ask, why are we calling cheaper workers "talent" ?
- alephnerd 4y ago
  The same way we call SWEs in Cary, NC talent even though they earn half of what they would for equivalent roles in the Bay Area (compare RTP salaries for the exact same roles and levels at Cisco, Netapp, etc). The value of labor is always an arbitrage between talent, location, supply, and demand.
- thinking4real 4y ago
  Because when corporations want to work in unison to scare the workforce into believing they’re worth less so you can pay them less, it’s important to use words that build the brand you’re going for. For example, if you said “companies are looking to countries without the mental workforce to do their jobs in a bid to save money”, your argument would be weak. People would see your propaganda, laugh, and then look for a new job at another company to jump ship and get a big pay increase. If instead you refer to those people as “talent”, there’s a small but non negligible percentage of the population who is sheepish enough to become afraid and form some kind of stockholm syndrome to endear them to you as their employer. For a similar exercise, note how onlyfans doesn’t refer to its workers as “sex workers”, “whores”, or “prostitutes”, but rather as “content creators”.
- vsskanth 4y ago
  As long as they can do the job, they are talent. What it costs to hire them is an orthogonal issue.
Mountain_Skies 4y ago
At my last job we switched from contractors in India to a group in Peru. I wasn't around long enough to determine if there was a quality difference but being in the same time zone improved communications dramatically. PMs in India were constantly trying to reverse the relationship and have us work in the middle of the night if there was a need for a conference call. Our Peruvian colleagues started their days at the same time we did, so there was never an issue over which group should lose sleep for a conference call.
0xmarcin 4y ago
I am from Poland and to be honest I always wondered why US startup outsource their "R&D" to central europe instead of latin america. The time zone difference just makes this unpleasant to both sides. I come to the conclusion that it must be the EU membership that provides some guarantees around intellectual property and private property rights, while at the same time the EU countries are safe to stay and offer at least a second world life for higher ups that need to bootstrap the local subsidiary. In India we have a lot of cheap labor, but the air pollution (Bangalore anyone?) and often poor service quality (hotels? credit card scams?) makes it difficult for managers to feel at home. I haven't been in Latin America yet so I cannot say how it compares to poorer EU countries but I can see that it has a lot of potential. Probably the biggest problems are political instability (populism; money printism and occasional bankruptcy) and crime. I think that Latin America could create something similar to EU, it would even more suite them as the language barrier would not be that big (2 major languages only). With shared laws and maybe a currency they could become a significant player on the world stage, but I am not sure if they have politicians that would pursue that vision. Anyway, I wasn't there so it is only a prediction from antipodes...

42 points by impish9208 4y ago

[dead]

> Rest of World spoke to 18 entrepreneurs, recruiters, and developers in Mexico, Peru, and Uruguay, all of whom acknowledged that the recent layoffs across the tech sector globally haven’t freed up experienced developers for hire by regional companies. Tech companies don't hire and layoff exclusively tech workers. It takes more than engineers to run and grow a company. That is, when we hear X is laying off 15%...that's 15% of all bodies (e.g., marketing, HR, etc.) not all 15% is engineering. Once you start dismissing engineers, you suffer a brain drain. I've seen nothing to indicate that's happening in general). Of course there might be a couple with no choice.

Tanjreeve 4y ago
I do find it funny that the article basically arrives at "it's hard to find people to do this stuff" when the headline would imply the opposite.

okokwhatever 4y ago

Take it or leave it. US got too expensive to produce and cannot compete with a growing number of correctly prepared engineers willing to work hard and cheaper abroad. To close frontiers and creating new taxes won't be a solution this time. It's just a matter of time for a huge crisis in the industry.

mbustamanter 4y ago
While agreeing on the cost of living, I have to say that the number of engineers will not be growing too much (I say this as a latin american engineer): Most latin american countries are below the replacement level fertility of 2.1, especially the ones who provide the best quality engineers (Brazil, Argentina, Chile and Uruguay) and the ones who aren't such as Bolivia or Ecuador, are barely above replacement. Already college cohorts are 25% smaller than their historic maximum in Chile, and Chile together with Uruguay are facing a dramatic threat of decline since their total fertility rates are lower than 1.3 for 2022 and falling (for Argentina and Brazil it's no more than 1.65 for the same year, just below the TFR of the United States at 1.66). As a result of all this, the economic structure of these aging countries is changing and the decreasing cohorts of engineers will be even more compelled to settle in Europe or the US, the taxes to support non-working parts of the population are leaving less margin for starting businesses and families. So american companies won't be outsourcing for much less for same quality, at least from latin america. I think that the US won't need to be too stringent on foreign remote workers: third-world politicians will push workers out in their thirst for taxing income (and the rationale will be: "They have to pay their fair share!").
alephnerd 4y ago
Depends on the role and the sector in tech you work in. IMO, most HN commentators seem to be generic frontend/backend/fullstack devs working on generic CRUD apps at a handful of FAANGs. With the right domain knowledge, you could earn way more in other sectors or niches within tech even with those skills themself.
- horns4lyfe 4y ago
  Do you have any examples of the type of niches those skills would transfer to?

blahblah1234567 4y ago

Don't count on it. The premise is very incorrect. Latin America has a dearth of educated workers. It's why their societies' infrastructure is barely functional. I've spent 1.5 years living in Mexico. During that time, I met one electrical engineer, one software engineer, and one digital marketer (Mexican citizens). I am sure I would meet more if I spent more time in Guadalajara or Mexico City. But, I wouldn't expect to replace a labor force in any useful amount. 95% of people I met didn't seem to be very skilled at reading or writing, as though they barely had middle-school level education. I expect the same is true for most Latin American countries except Chile & Costa Rica, which have higher rates of human development. Notice there is not much data in this article. It's just a qualitative description of one person's experiences in hiring. And discusses a survey of 18 companies trying to hire in Latin America.

cheeselip420 4y ago
Uhhh - I think you're overgeneralizing here in a big way.
kranke155 4y ago
I’ve never been to Mexico, but on the topic of some other countries in Latin America I believe this to be widely inaccurate. Also going like “lack of educated people is why their society doesn’t function” is pretty crazy. Institutions are the reasons societies work or not.
- blahblah1234567 4y ago
  Let's follow your logic. Let's assume Well Functioning institutions are in place. Let's take it one step back, and one step forward from there: - one step back: What enables Functioning Institutions? The institutions are composed of people. Good institutions require educated, skilled professionals. - one step forward: Once we have Well functioning institutions... Well, what do they exist for? To support a functioning society, perhaps? Which is dependent on what? (Institutions, yes, we just covered that-- What next? .....oh that's right.... educated, skilled professionals) To say "institutions are the reason <thing> functions" is quite a myopic perspective. Did an institution install the plumbing in your house? Did an institution grow the food you eat? :) I only ask that you step through your own logic.

officialjunk 4y ago

so, ceo's are trying to end remote tech workers domestically, but for less cost, are open to workers even farther away.

alephnerd 4y ago

I've been on sales calls and in PoCs with a couple major Mexican conglomerates (think Cemex, Pemex, or Azteca level or the MX operations for BBVA or Santander) so I've had the chance to interact with a number of Mexican software engineers, plus I have a couple Mexican diaspora SWE friends and honestly the talent is there, but it won't really be the next "Poland" or "India" like how the article portraies it. The issue I've seen is you're going to be paying Austin in the 2010s level salaries ($60-70k base plus stock) for competitive talent due to remote work or Central Europe salaries at the lower end ($30-40k base), plus the added salary pressure of MX nationals being able to move to the Bay Area, Austin, NYC, or Seattle via the TN visa (most undocumented immigration coming from MX are not MX nationals - they're primarily Honduran, El Salvadoran, Nicaraguan, or Guatemalan nationals). With that level of salaries, you aren't getting a significant discount compared to other locations nor the ability to run 24 hour operations. American companies are fine paying MX level salaries if not higher when you factor in equity in India, Romania, and Poland or pay US level salaries in Israel because it gives them the ability to have continuous 24/7 operations and a level of redundancy from a risk planning standpoint. None of this is to say MX ain't a bad spot to develop talent - anything but given the free trade agreements with the US, South America, and the EU and the very American-esque regulatory system making it a great hub for American companies to expand within the Hispanoblante world - but the scene is similar to Germany or France's in the sense that the dev industry seems heavily Finance, Manufacturing, Defense, or Conglomerate driven and treats it as a cost center.

Kon-Peki 4y ago
> MX nationals being able to move to the Bay Area, Austin, NYC, or Seattle via the TN visa TN visa requires candidates have the "correct" university education (self-taught and music majors need not apply). Aside from that, you're absolutely correct. I'm sure that the government is keeping track of how many people are getting TN visas per year, but otherwise these people just blend in and become part of the normal workforce. Eventually many of them get a green card or US citizenship.
- alephnerd 4y ago
  They def can, though one of my diaspora buddies is seriously considering returning to CDMX even though he's making good money in SV, graduated from a top CS program in the US, and already got his GC. To him the QoL in CDMX was better than other cities in the US (but homesickness is also playing a part)

908B64B197 4y ago

Completely anecdotal, but about 8 years ago we had a pretty well scoped out web dev project. We didn't want to go with FTEs because the roadmap for that feature wasn't obvious after initial release (something bespoke for a large customer). Someone at the company referred his "friends and college acquaintances" who ran a small consulting firm in Mexico. The project lasted around 6 months, they delivered a little ahead of schedule and were quite nice to work with. A team of 5 devs. Looking at their LinkedIn profiles, two of them are now in the Bay Area for sure, one I'm not completely sure because I think his wife and him lived in California for a while since she did a postdoc there but I don't know if they stayed. One is in Seattle and the last is in NYC. Every time someone tells me they found "cheap, local talent" in LATAM for "much less than American developers" I always wonder how long it will be until that talent becomes itself... an American developer! Especially since, unlike a decade ago, people are now incorporating in LATAM and hiring FTEs, not contractors. This makes them eligible to get an L-1 visa to transfer to the parent company in the United-States after ~1 year at the company.

awesomegoat_com 4y ago

Pardon me, but after 13 years in business I have to ask, why are we calling cheaper workers "talent" ?

alephnerd 4y ago
The same way we call SWEs in Cary, NC talent even though they earn half of what they would for equivalent roles in the Bay Area (compare RTP salaries for the exact same roles and levels at Cisco, Netapp, etc). The value of labor is always an arbitrage between talent, location, supply, and demand.
thinking4real 4y ago
Because when corporations want to work in unison to scare the workforce into believing they’re worth less so you can pay them less, it’s important to use words that build the brand you’re going for. For example, if you said “companies are looking to countries without the mental workforce to do their jobs in a bid to save money”, your argument would be weak. People would see your propaganda, laugh, and then look for a new job at another company to jump ship and get a big pay increase. If instead you refer to those people as “talent”, there’s a small but non negligible percentage of the population who is sheepish enough to become afraid and form some kind of stockholm syndrome to endear them to you as their employer. For a similar exercise, note how onlyfans doesn’t refer to its workers as “sex workers”, “whores”, or “prostitutes”, but rather as “content creators”.
vsskanth 4y ago
As long as they can do the job, they are talent. What it costs to hire them is an orthogonal issue.

Mountain_Skies 4y ago

At my last job we switched from contractors in India to a group in Peru. I wasn't around long enough to determine if there was a quality difference but being in the same time zone improved communications dramatically. PMs in India were constantly trying to reverse the relationship and have us work in the middle of the night if there was a need for a conference call. Our Peruvian colleagues started their days at the same time we did, so there was never an issue over which group should lose sleep for a conference call.

0xmarcin 4y ago

I am from Poland and to be honest I always wondered why US startup outsource their "R&D" to central europe instead of latin america. The time zone difference just makes this unpleasant to both sides. I come to the conclusion that it must be the EU membership that provides some guarantees around intellectual property and private property rights, while at the same time the EU countries are safe to stay and offer at least a second world life for higher ups that need to bootstrap the local subsidiary. In India we have a lot of cheap labor, but the air pollution (Bangalore anyone?) and often poor service quality (hotels? credit card scams?) makes it difficult for managers to feel at home. I haven't been in Latin America yet so I cannot say how it compares to poorer EU countries but I can see that it has a lot of potential. Probably the biggest problems are political instability (populism; money printism and occasional bankruptcy) and crime. I think that Latin America could create something similar to EU, it would even more suite them as the language barrier would not be that big (2 major languages only). With shared laws and maybe a currency they could become a significant player on the world stage, but I am not sure if they have politicians that would pursue that vision. Anyway, I wasn't there so it is only a prediction from antipodes...