The remote work revolution has led some US tech companies, from start-ups to Coinbase and Shopify, to look for new hires in Latin America – where they can find qualified people in roughly the same time zone who will work for a much lower salary.
This is a logical extension of the pandemic work-from-home drift away from hubs such as San Francisco and New York to cheaper locations, including across national borders. And the way currencies have changed during the pandemic only reinforces the trend.
Brazil, in particular, has become increasingly attractive to those with money to spend. The Brazilian real has lost more than a quarter of its value since the start of the pandemic. Other Latin American currencies, including the Argentine peso and the Colombian peso, are also among the big underperformers over the past two years.
That’s why when someone like Alexandre Rocco is hired by a Silicon Valley start-up, the deal seems attractive to both parties.
The Sao Paulo resident received a LinkedIn message from Brazilian headhunter Revelo in May asking if he had ever considered working for an American company. The 41-year-old said he had always been curious about the idea, but thought there would be complex hurdles to overcome. That turned out not to be the case, and a few months later he was working from home as director of engineering for San Francisco-based startup Walrus Health.
Rocco says he is aware that he is likely to be paid less in dollars than a hire in the United States. But it’s still a good deal for him. He says his salary increased by around 40% when he changed jobs, while refusing to disclose his salary.
At the other end of the market, Walrus benefits from a pool of cheaper labor overseas, at a time when American companies are forced to raise wages due to inflationary pressures at home. “The Bay Area has gotten so, so, so hot,” said Walrus general manager Kimball Thomas.
Thomas had lived in Brazil in the 2010s and knows that, despite additional bureaucracy, “salaries there are considerably lower.” He ended up hiring a handful of Brazil-based programmers, including Rocco, who now makes up half of his development team. “It’s not an ad hoc solution,” Thomas said. “We really want this to work long term and we want to invest in it.”
The idea could prove attractive for a US tech industry that could face a shortage of at least 1.2 million tech workers by 2030, according to a report by consultancy Korn Ferry.
In recent months, the number of foreign companies hiring in Latin America has increased by 156%, the most of any region in the world, with software engineers leading the recruitment, according to a report by the global recruitment company Del.
Cultural similarities and a qualified talent pool also contribute to making Latin America a tempting market. This allows employers to “connect immediately” with local workers, said Pepe Villatoro, regional expansion manager at Deel. “They hit the ground running.”
The average tech salary fell 1.1% in major U.S. hubs in 2021, the first drop in five years, according to a report from technology market Hired. Meanwhile, the rest of the world was catching up, with a 6.2% increase in global tech wages.
Salaries for Latin American-based junior positions posted on Revelo’s platform have increased nearly 50% to around $89,000 since the pandemic began. If more jobs are subject to international competition, the gap could continue to narrow.
“If I hire someone in Cleveland, why not just hire someone in Bogota? Hired CEO Josh Brenner said in an interview. “They’re both far apart, they’re both in the same time zone. And I can do that much more profitably right now.”
From the beach town of Florianopolis in southern Brazil, Janaina Coelho earns between $3,000 and $5,000 a month as a quality assurance developer for Los Angeles-based hotel startup AvantStay.
Before the 32-year-old developer quit her job at a Brazilian information technology company last year, Coelho said she had no plans to move to a foreign company. But then she started getting offers — and the promise of a dollar salary and the option of working remotely sounded appealing.
“Why did I go looking for a job abroad? Because foreign companies started reaching out,” Coelho said. “Every week I started getting new proposals.”
Pia Orrenius, vice president of the Federal Reserve Bank of Dallas, said offshoring tech positions may not be as simple as it seems. Decades ago, the overseas business outsourcing boom relied heavily on cheaper English-speaking labor like India. It will be more difficult to replicate this with tech workers in large-scale Spanish- and Portuguese-speaking Latin America.
“Good luck finding people who are fluent in English,” said Orrenius, a labor economist. “There are a lot of limits to the extent to which employers can do this.”
But for Lucas Mendes, co-founder of Revelo, these companies looking for talent abroad are now getting ahead of what will soon become a necessity.
Mendes says the pandemic-driven remote boom has led the Sao Paulo-based staffing firm to grow five-fold, attracting clients ranging from promising start-ups to big-name clients including Goldman Sachs and GitHub.
“The pandemic has turned a local market into a global market,” Mendes said. “The genie came out of the bottle.”