The information technology (IT) market has never been so heated in Latin America. In addition to a surplus of vacancies in countries like Brazil, there is a new trend favoring these professionals: foreign companies seeking professionals for working from home in the region by paying salaries in dollars or euros.
Latin Americans earn on average 2.2 times more by working for foreign companies than for companies in their own countries – $26,400 against $12,000, respectively.
In some scenarios, the difference is even greater, depending on the country in which the employee is based, his or her experience and the country of the employer. In US companies, for example, the average difference is 3.3 times for local salaries. And in countries that suffer from the devaluation of their currencies, such as Guatemala, Brazil, and Argentina, the jumps are greater – 3.4, 3, and 2.8 times, respectively.
These results appear in a survey of 1,354 professionals in Latin America, almost half of them (46.5%) employed in foreign companies, conducted by Arc, a remote developer hiring platform.
To LABS, JC Alarcon, marketing manager at Arc, explained the reasons for the salary disparity: “With funding fueling startups in the US and UK, the demand for developers has skyrocketed. However, talent remains in short supply. Naturally, tech companies have started looking for talent no matter where they live, including Latin America.”
Contrary to what it may seem at first glance, supposedly lower costs are not the main motivator for outside companies to turn to Latin America. “We have found that most companies hiring through our platform value work experience as a priority factor when recruiting talent,” said Alarcon. “With working from home model accelerating during the pandemic, companies are increasingly open to hiring great developers from anywhere to stem the talent shortage.”
Nevertheless, the salary paid in local currency, usually lower than those paid in dollars or euros and converted to be spent in Latin America, does have a relevant weight in this dispute for scarce talent in the market.
Intera, a Brazilian digital recruitment startup, asked back-end engineers of different experience levels the main factors that would lead them to give up on a job opening. The disparity between salary and salary expectations was one of the most cited factors (13.75% of the cases), and the disparity between expectations and reality reached 90.7% – the case of full candidates, who want to earn up to BRL 11,000, but are faced with vacancies that pay an average of BRL 8,300.
READ ALSO: SoftBank’s bet to take the weight off developers’ shoulders: Abstra
There is one last aspect to be considered, the broader one, which is the effects of this “brain drain” – a term that fits this situation better than migration, since the “bodies” of the professionals remain in their countries of origin -, which is the impact on companies, both local companies (facing competitors with more money to invest in salaries) and foreign companies (expanding the range of potential hires).
Alarcon recognizes that “the effects of outsourcing work abroad are complex and its impact on a large scale is not yet fully known”, but he stresses that geographic expansion is beneficial to both companies and professionals.
And for Latin American companies, often unable to match the salary offered by foreign ones, the way out is to bet on benefits to win and retain local talent. “[Salaries] are not everything; they [professionals] also consider other factors, such as the culture of the company, its mission, and benefits.”
Flexible hours and health insurance, for example, are benefits that companies often offer to workers, according to another Arc survey. So “they should be considered the basics by 2022,” he advises local companies.
READ ALSO: Trybe, the school for devs, raises $27 million to expand training portfolio
The other side: the developers
LABS talked to four Brazilian devs who work for foreign companies, to try to understand what motivated them to seek this type of job.
Matheus Fantinel, 26, from Caxias do Sul (RS), has worked for four foreign companies since July 2019. Currently, he provides services for two – for contractual reasons, he cannot say which ones, but swears they are legal. He receives four times more than what he received when he worked for a Brazilian company, but he remembers that it wasn’t always like this and that seniority counts a lot for this difference to be relevant: “At first the difference was not that big, because I was a contractual employee before, and abroad I work always as a freelancer. In net salary, the difference between my senior salary in Brazil and that of a remote junior was about 50%.”
For Henrique Bispo, 26, from Belo Horizonte (MG), the salary jump was similar, almost four times (285%). Since May 2021, he has been working for BairesDev, an Argentine IT outsourcing company, and through it he was allocated to Refersion, a North American affiliate marketing management software company.
Henrique recognizes that the salary is a decisive factor, but also the hiring model: “The salary is certainly what weighs the most, but also the hiring model is contractual. If I have to work as a freelancer, I prefer to do that for foreign companies.”
Although it is a trend, the outsourcing movement is not exactly new. Igor Santos, 31, from Rio de Janeiro (RJ), has been working this way since 2015. Since then, his salary grew 561% – in the same period, inflation in Brazil was 41%.
Igor got into this market through Toptal, a freelancing company, and is still at it. For four years he has been with eHungry, a restaurant e-commerce platform based in Raleigh, North Carolina.
Like Henrique, Igor also considers the paycheck and working from home a big issue, but not only. For him, the flexible working hours, limited to 30 hours a week, the healthy environment, without excessive pressure, and the challenges, always new, make working at eHungry “an incomparable comfort”.
“If a Brazilian company comes along, with a working from home position, offering me more than I get now, maybe I would accept,” he says. He doesn’t believe this will happen, however, and has even deactivated his LinkedIn to get rid of the harassment of recruiters, national and international, who always offer him positions with salaries well below what he receives. “The project may be the most revolutionary in the world, there is no way it can compete with the financial comfort I currently have.”
READ ALSO: Goodbye piggy banks, hello digital wallets: fintechs target children and teenagers
Rafael Goulart, 49, from Santa Maria (RS), began the transition to work from home for foreign companies in 2012, from volunteer collaborations for an open-source software project. Currently, he works in the internal team at ScalablePath, a development outsourcing company based in San Francisco, California.
For Rafael, there is an element that is missing in the salary comparisons usually made, but that is of paramount importance: “It is practically impossible to make an income in Brazil like the one I have now as a programmer. I would have to rise to a coordination/leadership position. The level of stress and responsibility would not compensate.”
He encourages Latin American developers to try working for outside companies. “We are ‘cheap’, while our income is well above average,” he justifies. “I live in a medium-sized city, short distances, reasonable cost of living. Anyway, it’s a good career prospect.”
Rafael points out two caveats: the retirement plan, which is non-existent and becomes up to the professional himself, and the chances of unexpected events occurring. “There is always the possibility that a war could ruin everything.
READ ALSO: Digital banks focused on minority groups are emerging in Brazil with customized offers
Planning is a must because the professional who works abroad needs to deal with bureaucracies and arrangements that are usually handled by specific departments in local companies. Besides, of course, the volatility of the exchange rate.
“I started the year smiling, with [the dollar at] BRL 5.70, and currently I have already lost almost 20% of my pay with the devaluation,” says Igor. “If you are ‘afraid’ of financial instability and lack organizational basics, better to negotiate a salary in real with your gringo boss or remain in the domestic market.”
There is also a concern shared by professionals related to the impacts of their jobs on the ecosystem of the country where they live. If on the one hand hiring by foreign companies injects foreign money into the local economy and generates tax collection, on the other hand, it exacerbates a peculiar kind of “brain drain”.
“I would really like my labor to generate something good for the country where I live, and not somewhere else,” says Matheus. “If the difference wasn’t so big (and it was up to about 20%, I imagine), I think I would prefer to work for companies here (but still working from home, though).”
