If you are a proponent of constant innovation, you know how important it is to keep creativity flowing. That’s where research and development centers in LATAM come into the spotlight. They play a great role in bringing together technology, science, and talent to make innovation happen. You may wonder: Why LATAM? Thanks to its attractive software development pricing and a wealth of tech-savvy talent, the region has become a hotspot for R&D activity. In this post, we’ll take a closer look at R&D in LATAM, including such players as Mexico, Brazil, Argentina, Chile, and Colombia. We’ll also dive into the benefits and shortcomings of building your R&D branch in this part of the world. Let’s begin!
Mexico is the fastest-growing and most innovative tech ecosystem in LATAM. Recently, the country has stepped up its game as a research and development hub – last year its IT market reached $54.34 billion. R&D centers in Mexico are a mixed bag, including fields like automotive tech, aerospace, and electronics. For instance, major automakers like Ford and General Motors run their R&D units in Mexico.
Many North American businesses aim to get access to a skilled workforce at competitive prices and are in the same time zone, so Mexico is an ideal solution. Mexican universities are constantly increasing their focus on technical education programs, so the number of skilled technology professionals is going to grow in the country in the near future. It means that cross-border technology collaboration has already become strategic for Mexico.
Argentina is another country making its mark in the realm of research and development centers in LATAM. Often underestimated by investors, the country has been putting its IT sector in the spotlight in the last decades. Currently, Argentina puts a strong emphasis on scientific research with several renowned universities and research institutions. Moreover, Argentina has seen a surge in technology-focused R&D centers, catering to various industries, including biotechnology and agriculture. The country’s universities churn out thousands of tech experts every year.
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Brazil, the largest economy in the region, is at the forefront of research and development centers in LATAM. The most popular sectors among the country’s tech professionals are IT, energy, and pharmaceuticals. São Paulo and Campinas are known for their technology parks and research institutions. São Paulo has become one of the biggest tech hubs in LATAM. The local authorities have also come up with incentives to attract foreign investment in R&D in Brazil. Such measures have been instrumental in boosting the nation’s innovation ecosystem.
Chile is one of the most popular destinations in LATAM for research and development. The country is known for its political stability and high levels of transparency and predictability when it comes to a business environment. Besides, Chile is ranked 27th least corrupt country in the world, being one of the region’s ‘cleanest’ investment destinations. In addition, governmental investments in education have paved Chile’s way for a growing number of R&D centers. Santiago, the capital, is home to many centers that enhance academic and industry collaboration. They are mainly focused on renewable energy, mining technology, and healthcare.
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Colombia is widely considered to be a rising star in the research and development centers landscape in LATAM. The country’s R&D centers focus on diverse areas, including IT, biotechnology, and agribusiness. In spite of the challenges Colombia has faced in recent decades, investments in technologies are promising. Local authorities have launched initiatives and programs aimed at promoting innovation. As a result of this, R&D in Colombia has become a recognized option globally.
Now that we have looked at the key hotspots of R&D in LATAM, let’s review the strengths and downsides of the region when it comes to establishing R&D branches.
Fair pricing: An R&D strategy for businesses at its best assumes finding a cost-effective solution with rates lower than in their location. That’s why LATAM is a prime choice for research and development. The rates for software development in LATAM, according to the Accelerance report, is 2 times lower – just compare $41–$175 in the US and $21–$93 in Latin America. So, such cost savings make the region a strategic R&D option for North American businesses.
Overlapping time zones: Another reason to choose LATAM as an R&D destination is its proximity to North America when it comes to time zones. Tech hubs like Argentina, Chile, Brazil, and Mexico are only 1-2 hours ahead of Eastern Standard Time. So, building your R&D center in Mexico or another country means seamless communication and better alignment with your R&D branch.
A large and diverse pool of tech talent: LATAM boasts nearly 2M software developers, including an abundance of every tech role, including full stack developers, back-end developers, front-end developers, and more. The most popular technologies are JavaScript, Python, HTML, and C++. Additionally, tech professionals have experience in healthcare, telecom, logistics and supply chain, energy, and manufacturing as well as emerging in areas such as fintech, edtech, and healthtech.
Government support: Research and development centers in LATAM wouldn’t happen if it wasn’t for the government support to bring in investments from abroad. With that in mind, the IT sector in the region receives initiatives for tech education, job opportunities, and a better business environment that creates closer ties with North American businesses.
Solid legal foundation: You should be sure that your intellectual property assets are safe when you build your research and development centers in LATAM. Most Latin American countries, for instance, Mexico, have strong legislation protecting IP rights. Moreover, governments also maintain reasonable taxes for foreign enterprises, providing a secure legal foundation for R&D operations. When you build your R&D in Brazil, it’s a common practice to sign NDAs that protect your research. To meet the demands of the clients, vendors tend to follow compliance standards for IT businesses or organizations in the USA and EU, including HIPAA, GDPR, PCI DSS, and more.
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Corruption: Although the boom in the IT sector has made corruption less acceptable than before, it still remains a problem across the continent. It can affect business operations and require an adequate local vendor to navigate through these challenges.
Bureaucratism: Setting up your research and development center in LATAM can involve a great deal of paperwork and handling bureaucratic procedures. Without the help of a vendor, it may potentially lead to delays with the launch of your R&D. Navigating regulatory requirements may be time-consuming.
Potential cultural and language barriers: When setting up R&D in Colombia, Brazil, or other parts of LATAM, you will inevitably come across cultural differences. So, if you have no prior experience managing cross-cultural teams, finding common ground with remote workers may be difficult. The good news is that English is a standard for the IT industry, and finding software developers with solid language proficiency won’t be challenging.
Security concerns: While many LATAM countries have taken steps to boost security, some regions may appear less stable than others when it comes to crime. This may not impact your R&D efforts in this region directly, but it is still worth considering in the context of doing business in this region.
READ ALSO: Nearshore Software Development in Latin America: Top Trends
Innovation knows no boundaries, and the example of Latin America proves this. The emergence of R&D centers in Mexico, Argentina, Brazil, Chile, and Colombia are just a few examples of a promising tech landscape in this region.
If your company is seeking to harness the region’s R&D capabilities, rely on nCube as your reliable provider of tech teams. Our team has the expertise required to set up your own research and development center in LATAM, including 15 years of experience and an in-depth understanding of the local tech talent market. Having a partner like us who will walk you through the local business practices, labor laws, and tax regulations does make the process easier. Let’s connect.
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