The Best Nearshore Locations to Build a LATAM CoE

If you’re looking to scale operations or tap into top-tier tech talent, establishing a nearshore acceleration center can be a fantastic long-term strategy. Latin America is quickly becoming the go-to region for building Centers of Excellence (COEs), especially for companies seeking nearshore advantages without sacrificing quality.

This article breaks down what a LATAM COE is, why it matters, and what to consider when building one. You’ll get a look at the best countries and cities for setting up a nearshore COE, learn which teams thrive in these hubs, and uncover the real-world challenges to watch out for. Whether you’re building a product team, a data science unit, or a full-blown engineering operation, this guide walks you through your best options in Latin America. Keep reading to learn more!

The Key Criteria for Choosing Nearshore CoE LATAM Locations

There are a few crucial criteria that make a real difference in long-term success when evaluating where to build a nearshore Center of Excellence in Latin America. It’s not just about cost, it’s about building a location strategy that supports scale, quality, and seamless collaboration.

Talent availability.

Countries like Brazil and Mexico produce tens of thousands of STEM graduates each year. Brazil alone graduates over 100,000 tech professionals annually, according to the Brazilian Ministry of Education. Look for markets with strong technical universities, bootcamp ecosystems, and evidence of developer communities. These signals point to sustainable talent pipelines… At a much lower cost!

High English proficiency.

Plays a major role in minimizing friction. Argentina, Chile, and Costa Rica consistently score highest in the EF English Proficiency Index in LATAM. Better English doesn’t just improve communication, it reduces the need for layers of management or translation, which can slow down agile processes.

Time zone alignment.

With North American teams is another major advantage. Nearshore LATAM locations typically operate within one to three hours of US Eastern or Central time. This makes synchronous collaboration possible without forcing teams into late-night or early-morning meetings.

Cost structure.

Average developer salaries in Colombia or Peru can be 30–50% lower than US equivalents, according to Accelerance. However, extremely low costs can correlate with high turnover or skills mismatches. Balance affordability with reliability and depth of experience.

Political and legal stability.

Countries with predictable regulatory frameworks, favorable tax policies for foreign investment, and reliable IP protection, like Chile and Uruguay, are safer bets for establishing long-term operations. Always check for ease of doing business rankings.

Infrastructure matters more than you’d expect.

Reliable broadband, access to coworking hubs, proximity to international airports, and modern office space availability affect both day-to-day efficiency and talent retention. Cities like Bogotá, Guadalajara, and São Paulo have rapidly scaled up infrastructure to meet global demand.

Best Potential Cities to Launch a Nearshore COE in Latin America

1. São Paulo, Brazil:

São Paulo is Brazil’s financial and tech powerhouse. It's home to the largest concentration of software developers in the country, with over 200,000 IT professionals based in the metro area, according to Brasscom. The city boasts modern infrastructure, a dense network of coworking spaces, and proximity to leading universities, making it a logical hub for a Center of Excellence.

What sets São Paulo apart is its enterprise ecosystem. Multinationals like IBM and Google already operate large development and R&D teams here. That makes hiring and retaining experienced professionals easier, especially in areas like cloud engineering, AI, and cybersecurity. The downside? Costs are higher than in secondary cities, but the talent depth justifies the investment for many firms.

2. Guadalajara, Mexico:

Often referred to as “Mexico’s Silicon Valley,” Guadalajara has matured into a key tech hub in Latin America. With over 120,000 tech workers and a strong base of engineering graduates from Universidad de Guadalajara and Tec de Monterrey, the city offers an ideal mix of talent, affordability, and government support for innovation.

Guadalajara also has a long history of nearshoring. HP, Oracle, and Intel have operated centers here for over a decade. According to Mexico’s Ministry of Economy, the city has attracted more than $1.3 billion in tech-related foreign direct investment since 2020. Combined with time zone alignment and low attrition rates, it’s a strong choice for companies looking to build resilient product teams.

3. Bogotá, Colombia:

Bogotá stands out for its deep technical talent and cost efficiency. The city has over 95,000 professionals working in the software and IT sector, as reported by Colombia’s Ministry of ICT. It also benefits from a young workforce and a growing number of bilingual graduates, thanks to public-private education initiatives.

Connectivity is a plus,  El Dorado International Airport is one of the busiest in the region, and the city’s fiber infrastructure supports remote and hybrid setups. Bogotá’s large pool of full-stack and mobile developers makes it especially well-suited for product development and testing COEs. Labor laws are business-friendly, though payroll tax complexity can be a challenge for foreign entities.

4. Buenos Aires, Argentina:

Buenos Aires remains a high-value location despite Argentina’s economic volatility. The city produces some of the best software engineering talent in the region, with a strong emphasis on math, logic, and computer science. According to Stack Overflow’s 2023 Developer Survey, Argentine developers rank among the most active contributors in LATAM.

High inflation has led to a dollarized freelance economy, which can reduce costs for foreign companies paying in USD. However, it also means hiring and contracts require careful structuring. Buenos Aires is particularly strong in data science, machine learning, and UI/UX design. It’s also the headquarters of several successful startups, including Mercado Libre and Globant.

5. Santiago, Chile:

Santiago offers legal predictability, excellent infrastructure, and a stable economy. Chile ranks #1 in Latin America on the World Bank’s Ease of Doing Business Index. Internet speeds are among the highest in the region, and Santiago’s cost of living is more manageable than São Paulo's or Buenos Aires's.

The city has an emerging developer scene supported by the government’s “Start-Up Chile” initiative. With over 60,000 tech professionals and consistent investment in digital skills training, Santiago is increasingly favored for COEs focused on innovation, fintech, and cloud transformation. Local hiring processes are straightforward, but the tech talent pool can be more limited compared to Brazil or Mexico.

6. Montevideo, Uruguay:

Montevideo is small but strategic. Uruguay has been recognized by the IDB and OECD for its transparent digital policies and advanced regulatory environment. The city has a high percentage of English-speaking tech workers, and its legal frameworks make it easy for foreign companies to establish and operate local entities.

Montevideo’s talent pool is deep relative to its size. More than 70% of Uruguay’s IT professionals are concentrated here, and the local universities produce strong software engineering and data analytics graduates. For companies prioritizing stability, IP protection, and high-quality work over large-scale hiring, Montevideo is a strong contender.

7. San José, Costa Rica:

San José combines political stability with a well-developed BPO and tech services sector. According to CINDE, Costa Rica’s investment promotion agency, over 350 multinational companies run shared services and tech operations in the country, many of them based in or around San José.

The city offers solid infrastructure, strong English proficiency, and a tech-savvy workforce. It’s particularly attractive for building COEs focused on DevOps, cybersecurity, and customer-facing engineering. Labor costs are higher than in Colombia or Peru, but Costa Rica offsets that with low corruption, robust legal protections, and government incentives for foreign investors.

How To Choose The Right Location For Your Company

Define Your CoE Objectives Clearly:

Start by identifying the core functions your Center of Excellence will support. Are you building an R&D hub, scaling a product engineering team, or centralizing DevOps? Each use case has different talent, infrastructure, and regulatory needs.

If your goal is rapid prototyping, prioritize cities with strong startup ecosystems. For enterprise-grade operations, look for markets with experienced talent and long-term stability. Clear goals will guide every other decision.

Match Skill Sets to Local Talent Pools:

Talent availability isn’t uniform across Latin America. For example, if your team needs AI and data science capabilities, Buenos Aires and São Paulo offer deeper expertise in those areas. For customer-facing roles, San José or Bogotá, known for high English proficiency, might be a better fit.

According to Stack Overflow and Coursera's 2023 Global Skills Report, tech professionals in Argentina and Brazil rank highest in software development and machine learning in the region. Use real hiring data and local developer surveys to validate assumptions before committing.

Evaluate Time Zone Compatibility:

One of the biggest advantages of nearshoring to Latin America is the ability to align working hours with North America. But not all cities offer the same overlap.

For teams based in the U.S. Eastern or Central time zones, consider Bogotá, Mexico City, or San José for full-day collaboration. Santiago or Buenos Aires may have a 1–2 hour difference, which can still work for hybrid workflows but may require some schedule adjustments.

Assess Legal and Tax Implications:

Regulatory complexity can kill speed. Countries like Chile and Uruguay offer streamlined incorporation and favorable tax policies for foreign investors. Others, like Brazil, have more intricate tax systems and labor laws that require strong local legal guidance.

The World Bank’s Doing Business Index and the OECD’s tax competitiveness rankings are solid starting points. Focus on IP protection laws, employee contract flexibility, and repatriation rules to avoid roadblocks after launch.

Weigh Infrastructure and Operational Risk:

Don’t overlook basics like broadband reliability, office space availability, and airport access. Bogotá, Guadalajara, and São Paulo score high in digital infrastructure rankings, according to Ookla.

Operational resilience also matters. Are there backup power systems? How reliable are municipal services? Disruptions in connectivity or transportation can directly affect your output. Perform due diligence through local partners or advisory networks.

Run a 3–5 Year Cost Projection:

Short-term labor savings can be wiped out by turnover, poor productivity, or high compliance costs. Instead, model out the total cost of ownership for three to five years, factoring in wages, benefits, local taxes, recruiting costs, legal fees, and potential currency volatility.

Data from Accelerance shows that while Peru offers lower salaries, attrition rates in Bogotá and Montevideo are significantly more stable, impacting long-term ROI. Always weigh cost efficiency against retention and quality benchmarks.

Pilot Before You Scale:

Launching a smaller pilot team in one or two locations can reveal a lot about hiring friction, onboarding processes, and team cohesion. The best way to go about this is to resort to traditional outsourcing models like staff augmentation or direct placements. You should also leverage this test period to benchmark KPIs like sprint velocity, code quality, and cross-border communication.

If performance metrics hit targets and local conditions support growth, scaling becomes a calculated move instead of a leap of faith. Many successful nearshore COEs started with fewer than 10 engineers before expanding.

Factor in Cultural Fit and Management Style:

Every region has its own work norms and communication preferences. Mexico and Colombia, for example, lean toward more hierarchical business cultures, while Argentina and Uruguay are known for flatter team dynamics.

Cultural alignment affects everything from how teams give feedback to how they handle ambiguity. Ensure your leadership approach fits the local context, or invest in cross-cultural training to bridge the gap. This becomes critical as your COE scales and gains autonomy.

Build Your Dream Latin American CoE with BOT LATAM!

Establishing a nearshore Center of Excellence in Latin America is more than a smart cost decision, it’s a strategic move that can increase development capacity, improve delivery speed, and give your team real-time alignment with US and Canadian operations. But choosing the right city, hiring model, and structure is where many companies lose time, money, or momentum.

At BOT LATAM, we help organizations launch and scale through the BOT model with precision. Our team has supported several US-based firms in building high-performing teams in top LATAM markets. From location analysis to compliant hiring structures, we bring on-the-ground expertise, multilingual talent pipelines, and operational guidance that accelerates time-to-value. If you're considering a LATAM COE, the BOT model, or other nearshore outsourcing solutions, we can help you move fast and save money on staffing costs. Contact us to schedule a call to learn more about our services!