US outsourcing web design to Central America?

October 24, 2011: The US companies have started to outsource functions other than call centers to Central America. Central America has become a favorite destination for web designing and development. There are local companies which operate exclusively for the foreign clients.  

Ricardo Arce, an entrepreneur from Costa Rica says that there are companies with more than 100 employees who offer software development services to the US clients. Such companies include Avantica, Isthmus and Outcoding. Ricardo runs a web designing and programming company and he says that thirty per cent of his clients are from the United States. At the time of starting his company had just two employees and now after nine years there are 32 employees.

Nearshoring to Central America give North American companies two major advantages. They are lower cost and geographic proximity. Costa Rica is the most literate country with a literacy rate of 96 per cent. Another advantage that Costa Rica enjoys is that it has a large number of English speaking web designers.

Majority of the professionals have got experience working with many of the popular companies and even with US companies. For example, a company named Eclify Software Consulting has seven partners, out of which six are Costa Ricans and one is a US citizen. These partners met while working for a US company. They serve customers in the United States and Costa Rica with software engineering services.

According to Ricardo, Costa Rica is rich with talented professionals which make it a favorite destination for the foreign clients. So companies offering services to foreign companies have been performing well and all they face is difficulty in competing for talent.  

Ricardo said that there were over one hundred web designing companies in Costa Rica with two to three staff. But as large companies came in these companies were no more as large companies started to hire hundreds of employees. As a result of this the wages in the wed designing industry had gone up. This along with the non monetary perks started to attract and retain employees.

As the market became professional, the customers started to demand more from their service providers.

In El Salvador, migration is one of the problems that the employers face. Most of the professionals are tempted to migrate to the US which leads to Brain Drain. In Panama, another Central American country, an initiative named Latamapps helps in linking clients with service providers. Nicaragua too has companies which offer web designing and software services.  Güegüe is a web designing company from Nicaragua which was established in 1996. It partnered with Xcompetence, a Danish company to start an IT Education center.

With this developments in web designing industry, there exists a situation which helps start ups to grow. In addition to generating revenue, it also helps in making the industry more professional.

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