Nearshoring software in Latin America Series: 3. Peru
Following up on our previous two articles about nearshoring in Latin America that focused on Ecuador and Colombia, we’re diving a little more south to Peru. Our main objective is to reflect on the nearshoring software potential of Latin American countries for North American clients.
Our expertise as a development company gives us a unique perspective that helps you make educated decisions about your outsourcing partners. Not all countries are alike, and our focus on each, will help you understand the differences.
Peru holds an important place in both Latin American history and in its modern trajectory. It is the country most associated with the Inca Empire and was the seat of the main administrative capital for most of South America during the Spanish colonial period.
In terms of area, Peru is almost the size of Alaska. It is located on the west coast of South America, and shares a border with five countries; Ecuador, Colombia, Brazil, Bolivia, and Chile. Its coastline is a stark desert landscape, while it’s interior is lush and mountainous.
The population of Peru is about 32.5 million which makes it the 42nd most populous country in the world. It has exceptional diversity owing to many years of migration into Peru from other countries including China, Japan, Europe and around Latin America.
It’s the largest urban center is by far the city of Lima, its capital, with about 7.8 million people. It’s next largest city, Arequipa, has about 700,000 people, about 1/10th of the population.
Peru is a republic with a president, a single legislative chamber, or the Congress, and an independent judiciary. The country had been considered authoritarian for many of the past 70 years. It had a reputation for committing a host of civil and human rights abuses from which it is still recovering. Their newest president, Martin Vizcarra, has promised to create more transparency in the government and introduce more democratic reforms.
Advantages of Nearshoring software in Peru
As with many countries in Latin America, low cost makes Peru an attractive place to do business. The dollar is worth about 3 times as much as the Sol, Peru’s currency, which is relatively stable. IT specialists, on average, have relatively low salaries, which makes it an attractive place to outsource.
The country has made strides in getting people connected to the internet in the past decades. At this point, almost half the country has some form of internet connection which is a vast improvement over its previous statistic.
As with both Ecuador and Colombia, Peru’s time zones are the same as the East Coast of the US. This makes communication with the countries of North America easier to coordinate.
Disadvantages of Nearshoring in Peru
The country as a whole has low levels of education meaning that it could be difficult to find trained IT staff. You may encounter nearshoring operations that have staff that are simply unfamiliar with the technology that you utilize in your operation. While this situation is starting to improve, it is still a major hurdle to Peru’s prevalence as a center for software development.
Peru has a problem with English. While it’s not personal–they are already juggling several official languages–it does affect the levels of interaction with North American clients. Traditionally, Peru has been a useful call center location for Spanish speakers in the US because their Spanish accent is relatively neutral.
As mentioned before, Peru has a history of authoritarian regimes that committed atrocities against its people, including exploitation and even murder of dissidents and is currently labeled a “flawed democracy.” There had also been an anti-government insurgency for many years that were quite violent relative to the rest of Latin America. Despite that, the government has made strides in developing their democracy and is currently trying to reform what many consider to be a corrupt judiciary branch.
While the costs in Peru are low, it seems to have lost steam in the nearshoring software sector. About 10 years ago, it was the darling of the nearshoring world, but it’s problems with education, English, and political instability may have had an effect on companies that chose to open operations there. While it’s economy struggles to pick itself back up, this may be a place to look to in the future.