The landscape of work is transforming globally, with freelancing at the forefront of this change. Latin America (LatAm), a region historically overlooked, is now emerging as a hotbed for freelance talent, especially in the aftermath of the pandemic. This article explores the up and coming freelance Latin America, comparing it with the US market, and provides insights into leveraging this opportunity.
In this article
The Current State of Freelancing in LatAm
The US Freelance Market: A Comparative Perspective
Opportunities for LatAm Freelancers
Success Strategies for Integrating LatAm Freelancers
Recognizing LatAm’s Future of Work Potential
The Current State of Freelancing in LatAm
LatAm is witnessing a surge in freelance opportunities, driven by an increasing number of companies recognizing the region's untapped talent. In fact, LatAm saw a 286% growth in hiring during the pandemic.
The arrival of remote work has opened doors for LatAm professionals in fields like software development and AI engineering, previously inaccessible.
This shift is marked by a significant rise in companies hiring directly from LatAm, establishing nearshore teams, and engaging in Employer of Record (EOR) operations. There are now many organizations popping allowing for the contracting and employment of developers in LatAm. Along with this the onset of multiple payment providers allows more companies the flexibility to hire anywhere.
Also, with firms in the US laying more people off, nearshoring gets to be more attractive. This might be a little controversial but it’s simple math with developers costing around ½ the price of a US developer and working in the same time zone the LatAm region is booming with contractors.
A significant driver behind the freelance boom in LatAm is the workforce's growing preference for flexible work arrangements. This desire is particularly strong among Latin American millennials (31% belonging to South America and 39% to Central America) and Gen Z (33% belonging to South America and 28% to Central America) who value work-life balance and are adept at remote working technologies.
This is once again proved when these people were asked if they were forced to work onsite. 75% said they would look for a new job if they had to go in person full time.
In my experience working with developers and getting to know them, they are often siloed anyway so working from home or in an office isn’t going to matter. The data proves that they are fine and prefer working at home more than spending the time to go into an office.
The US Freelance Market: A Comparative Perspective
In the US, freelancing is a significant contributor to the labor market, with freelancers adding $1.27 trillion to the economy in 2023.
With 64 million Americans freelancing, especially in professional and knowledge services, the trend towards freelance work is evident. However, the impending shortage of developers by 2025 and the increasing preference for contract work during economic uncertainties highlight a growing demand for freelance talent, a demand that LatAm is well-positioned to meet.
When you look at the LatAm region of developers from two sites, Upwork and Freelancer you see that many are already freelancers.
| |
Freelance supply grouped by region according to Upwork |
Freelance supply grouped by region according to Freelancer |
| Central America |
49% |
51% |
| South America |
34% |
36% |
| Andean community |
31% |
69% |
Opportunities for LatAm Freelancers
The post-pandemic era has shown that LatAm is a welcoming region for freelancing.
The region offers a cost-effective, skilled, and diverse talent pool for companies looking to innovate and expand.
The sectors in the LatAm freelance market that are most common are technology (web and software development), marketing (social media, content marketing, and SEO), writing and editing, translation, and customer service. These areas have seen substantial growth, reflecting global market demands.
Where a huge opportunity lies and most people will overlook it is in AI. AI is becoming more and more part of our daily lives. The supply of talent is way underdeveloped at this point.
In LatAm, you will see it start to take over and while it is a laggard, which you can see in our report, it will become as common for a developer to know as much as any hard skill. When this happens, you will start to see a wave of AI hiring in LatAm. The engineers are starting to make the shift and with AI becoming standardized with many aspects of our lives.
Challenges and Misconceptions
Despite the opportunities, misconceptions about freelancing's viability and cultural compatibility persist, potentially hindering the growth of LatAm's freelance market.
A challenge that many startups face when working with freelance developers is getting them to provide a different point of view.
A common challenge for startups is getting their devs in LatAm to express their opinions. Sometimes it’s a language issue and sometimes it’s a cultural misunderstanding.
In LatAm, you see people in meetings mostly just listen and they would never disagree with the boss, however in startups in the US it is encouraged to disagree with the boss. The reason for this is for people in LatAm it is sign of disrespect and it is a barrier that must be overcome if companies in the US are to work with people in LatAm.
When working with freelancers there are obvious benefits but the challenges should be acknowledged for founders as they build out their freelancer workforce. Some of these reduced job security, lack of traditional employment benefits, risk of isolation, and the possibility of exploitation by clients. Addressing these concerns is crucial for sustainable growth in the freelance sector.
The freelance workforce in LatAm is not as diverse as we would hope. As freelancing and remote work become a larger role I would assume that more women will stay in their roles in tech. As you can see from the Mckinsey report that 61% of women do prefer to work from home compared to only 50%.
Success Strategies for Integrating LatAm Freelancers
Effective integration of LatAm freelancers into global workflows requires strategic planning. This includes clear communication channels, cultural sensitivity training, and a structured management approach. For example, at a company we developed a team for, they were able to quickly onboard and get started due to their ability to have clear guidance from the CTO and operational leadership from the Lead engineer on the project.
When companies incorporate leadership with a freelancer mentality it really makes a difference when hiring freelancers. Companies that have succeeded in this realm often appoint leaders experienced in managing diverse, remote teams, underscoring the importance of strategic freelance management.
Insights from the Deel study, highlighting LatAm as the fastest-growing region for freelancing with a 30% increase in freelancers, offer valuable context for companies looking to engage with this market.
The study's findings on average hourly rates, the demographic composition of the freelance workforce, and the prevalence of millennials and women in freelancing can inform targeted strategies for collaboration and support. Specifically women are growing by 57% in this field in just the last decade.
Legal and Regulatory Considerations
Navigating the legal landscape of freelance engagements is crucial to avoid misclassification risks and ensure compliance.
Companies must be diligent in defining the contractor relationship, understanding local regulations, and ensuring clear contractual agreements that respect both parties' rights and obligations.
Recognizing LatAm’s Future of Work Potential
The trajectory of freelancing in LatAm is on an upward trend, fueled by a global shift towards flexible, remote work and the region's growing reputation for quality and innovation.
Companies looking to stay competitive should consider the strategic inclusion of LatAm freelancers in their talent acquisition plans. If you look at how the hourly rates on average were $23 USD, where when you look at averages it gets outweighed by North America. The lowest rates were in Central America.
As the freelance market in LatAm continues to expand, both freelancers and companies must be proactive in addressing the challenges identified. This includes fostering a supportive community for freelancers, ensuring fair and timely compensation, and providing resources for professional development and networking.
The rise of freelancing in LatAm presents a valuable opportunity for companies worldwide. By understanding the region's market dynamics, addressing challenges, and adopting best practices for integration, businesses can tap into a rich vein of talent and innovation. As the freelance market continues to evolve, LatAm stands out as a region not to be overlooked.
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