Costa Rica is offshore software development destination

6 reasons for outsourcing software development to Costa Rica in 2020

While companies may have always thought of countries in Asia as the top destinations for software development, today there are other rising players in offshore outsourcing such as Central American countries like Costa Rica. There are multiple reasons why Costa Rica makes a great outsourcing partner for US companies in particular, such as highly professional software engineers and developers, close time zone to the US, and comparatively low cost of hiring.

Advantages of nearshore software development at Costa Rica

Growing tech talent pool at Costa Rica

Known worldwide for exemplary progress in healthcare and education, the Costa Rican government, as of 2018, chose to spend 26.09% of its total expenditure on education, which is significant and boasted of a very high literacy rate of 97.92% in a population that is 15 years and older.

Education is a field Costa Ricans are deeply passionate about, as the central state-funded university, the University of Costa Rica, offers a large number of scholarships each year to encourage students to enroll, and even without the scholarship, the fees are actually very reasonable. The Costa Rican government has made many efforts to make education at all levels affordable and accessible to all.

Technology, research and development, and innovation in technical space are given much focus to, as several other universities such as the Instituto Tecnologico de Costa Rica and the Universidad Tecnica Nacional, offer fantastic technical courses that can make the stepping stones to software development for budding developers.

There are many opportunities during higher studies for Costa Rican students to engage in research and attempt innovation in their fields, particularly so for technology and the IT space. Thus, US companies considering software outsourcing from Costa Rica can be assured that the developers they hire from here have received a quality education and have stepped into the field of software development with a creative and innovation-oriented mindset.

High-quality tech infrastructure of Costa Rica

Costa Rica was already gaining attention and focus worldwide because companies like Intel, IBM, and HP had set up a development center each in the country. But now, with even more focus paid to R&D efforts in the tech space, San Jose is being heralded as the Silicon Valley of Costa Rica. With huge and continually growing technological parks such as the American Free Zone and Global Park hosting hundreds of software development companies, as well as renowned corporates from the health technology sector flocking in to develop groundbreaking medical devices.

In these tech parks which are also often free trade zones, the software development companies enjoy certain tax benefits as well, which further encourages active growth and a keen interest in the IT outsourcing field.

The infrastructural growth of the Costa Rican IT sector does not stop there. It continues with the government’s efforts to create a Tech City, expected to be completed in 2020, which will house many more tech companies, including outsourcing companies and corporates involved in R&D. With this knowledge in mind, it is not difficult to understand why Costa Rica is a fantastic outsourcing partner for US companies.

Close time zones between Costa Rica and the US

A major concern US companies have about outsourcing work to foreign software development companies is regarding time zone. If the time zone is too far apart, such as in the case of India, for example, it is less preferable for US companies as real-time communication is hardly feasible for both sides. However, with Costa Rica, this is not a concern as the United States is only two hours ahead of Costa Rica, which means that the Costa Rican developers will be working and available for contact around the same time the US company is working.

The minute difference in time zones makes Costa Rica a nearshore location for outsourcing, and nearshoring itself is highly beneficial to companies, particularly those based in the US. This real-time collaboration is highly desirable as it makes the project progress smoother and faster because queries and issues can be resolved quickly and required changes can be made timely. This makes Costa Rica, a nearshore location for the US, an ideal place for US companies to outsource software development.

Low attrition of Costa Rican developers  

Costa Rican developers are currently employed in a swiftly growing IT sector which allows them to constantly create and innovate in their jobs. Thus it can be safely said that software engineers and developers in Costa Rica are happy with their present jobs and teams and are less likely to jump from team to team or from company to company.

This low attrition of developers is very beneficial for US companies seeking to outsource software development to Costa Rica as it means that the company will most likely get to work with the same development team throughout the entire project. This is something most companies prefer because this way, there is no loss of data and information that would have otherwise occurred if the team members kept changing, and the project continues without any disruption.

It also means that you get full value for money when you outsource software development to Costa Rican developers, as your experience is hassle-free and you don’t have to worry about issues like briefing new developers on the project.

Professional and multilingual developer team from Costa Rica   

A key issue US companies often worry about when outsourcing software development projects to countries from Latin America is regarding language barriers. The concern is that the software developers might not be able to converse fluently in English, which can lead to miscommunication and serious errors in the project.

However, that is not a problem one will face with Costa Rica, since Costa Rican developers are conversant in English and can communicate in the language very well. In fact, Costa Rica ranked 2nd in all of Latin America in the English Proficiency Index with a score of 57.38, which is a definite assurance for US companies looking to outsource software development from Costa Rica.

Moreover, there is no question as to the quality of work provided by the Costa Rican software engineers and developers, as they are highly skilled in agile development practices and can deliver custom software development services with great proficiency.

The Costa Rican developers’ ability to speak English and deliver high-quality professional work is an attractive factor that makes Costa Rica a great destination for software development outsourcing. What seals the deal here is that if you choose to hire through YouTeam, you can choose the software development team yourself and get matched with the developers so you have the chance to get to know their capabilities and assess their work. This way you gain trust in the outsourced team you will be working with soon.

Reasonable hiring cost of Costa Rican engineers

US companies that choose Costa Rica for nearshoring software development services, end up saving a lot of money since the hiring cost of Costa Rican developers is a lot less than what it would be if they chose to hire in-house developers in the US itself. To elaborate, a Costa Rican software developer earns about ₡16,992,861 (USD 28,536), while a software developer in the US earns around USD 86,005, which is much higher in comparison. Thus, nearshoring software development to Costa Rica would save US companies a lot of money, even if hiring costs and bonuses were included, because hiring in-house developers is just that much more expensive.

What to watch out for working with software development companies in Coast Rica

When you are considering getting outsourced software development for your next project, there are certain things you should watch out for and keep in mind. Whether it is Costa Rica you are seeking IT outsourcing from or other countries such as Brazil, Ukraine, Argentina, etc., these are practices you should keep in mind and try to follow to get the best project experience.

  • Before you actually hire the development team, make sure that you verify and test the developers’ profiles thoroughly. This would mean going through the developers’ skill sets, asking for any reviews of previous work they have done, and testing their capabilities so that you can be sure you’ve made the right choice when you go for software outsourcing.
  • A key aspect of software development outsourcing is that you work remotely with the developers on the other side. Because of this, you need to make sure before the project starts that you brief the development team members about all the dates and timelines of the project, including completion of phases, timelines for query resolution, and delivery dates. That way the developers are clear on these details and will be able to deliver the project on time.      
  • Just like you might be having people on your team who take care of business processes, you should also have a technical person on hand. This person can oversee the development work and ensure that the developers are delivering accurate work, which will save you time, effort and even costs in the long run.

While these points were important to remember before proceeding with software development outsourcing, there are also a few things you should ensure during and throughout the project.  

  • Throughout the development process, it is important that the technical person mentioned before should be a part of the entire project and should continually check the developer’s work. It is not to say that the developers don’t know how to do their work, but they might have confusion regarding exactly what the project needs and your technical expert will be able to resolve those queries timely and accurately. Do not make the mistake of assigning this role to a non-technical person because by doing that, many errors may be overlooked or missed, and you might not know about the same until the last phases of the project, resulting in loss of time and effort.    
  • Do make sure to communicate regularly with the outsourced team throughout the project. Regular and open communication, apart from being one of the best business practices, is also important when offshoring software development as that way there are no knowledge gaps and both sides can remain updated about the project’s progress from the other end. Staying in touch with the developer team also enables them to reach out to you and your team for additional help they require, and likewise, your team can tell them openly what you need from them.
  • Since timelines and delivery dates are so important when you outsource software projects, it is a good practice to let the development team know that these timelines must be adhered to very closely. During the development process, if there is any unforeseen delay or an issue crops up that interferes with the pre-decided timeline, this must be communicated to the other side immediately by the respective team. This will ensure that there is no miscommunication and that both the teams can work in tandem to complete the project.

It is certain that the above pointers will help you have a smoother experience when you decide to go for offshoring development. However, no matter how careful you are and which country you hire from, remote outsourcing does have its distinct disadvantages as well. These differ from country to country. Knowing what difficulties you may face with your outsourcing partner will prepare you better for it, and may also help you find workarounds on those issues. Let’s see what possible difficulties and/or drawbacks a company can face when seeking software outsourcing from Costa Rica.

Disadvantages of outsourcing software development to Cost Rica.

It is well known that Asian countries like India and China had paramount popularity as great outsourcing destinations in the late 90s and early 2000s, and while these are still fairly sought after, several factors such as massive time zone difference and unreliable quality of work have undermined their status.

Today, countries from Latin America and Eastern Europe are gaining popularity, but while Costa Rica is a great option for US companies to seek nearshoring software development from, there are certain disadvantages you may face when working with them.

To begin with, the Costa Rican tax system mandates that every employee must contribute a portion of their wages for social security, currently at 10.84%, and while a greater amount of contribution is requested from the employer’s side, many software engineers are reluctant to shell out such a large sum and can be known to ask for below-the-table payments in return for their acceptance of the job. This can present difficulties for US companies looking to outsource software development from Costa Rica, as many developers may refuse to work unless given that pay.

That brings forth another drawback of outsourcing software development to Costa Rica — compliance and understanding of business laws. Business laws in Costa Rica are increasingly complicated, which many US companies might find frustrating and hard to understand, and they might need to seek separate legal counsel for this, which is an extra expense and hassle some companies might not be willing to take up. Moreover, seemingly simple processes are impeded by the labyrinthian Costa Rican laws, which demand a lot of paperwork and may get expensive.

Another problem US companies might face is regarding the technical qualifications and experience of the developers they wish to hire. Although most of the Costa Rican developers are dedicated, talented professionals, there are only a few large software development companies that hire within Costa Rica and thus, many of the developers you encounter might not have experience working with those. However, companies can always test the developers well before committing to hire them, to assess their true skill levels, so that should not be a major issue.

Luckily, most of these disadvantages can be overcome. For instance, when you hire Costa Rican engineers with YouTeam, you work only with our trusted partners who are the top agencies of the country. Each partner was qualified based on our vetting process.

Also, when you build your dev team with YouTeam, you don’t pay anything extra but the developer’s rate. Even YouTeam’s services are free of charge for the client.

Key takeaways 

Although there are many choices globally to seek software outsourcing from, Costa Rica is one of the best options a US company can go for. Here are some key takeaways as to why Costa Rica is a phenomenal destination for outsourcing software development-                                    

    • Growing talent pool. Costa Rica has paved the way for education in Latin America, with a constant focus on all levels of learning, and top universities that produce highly skilled software developers among professionals in various other fields.
    • High-quality tech infrastructure. San Jose, the capital of Costa Rica, is a fast-growing IT hub filled with tech companies as well as outsourcing companies that are all continually working to innovate in the tech space.
    • Close time zones. Being only two hours behind the US, Costa Rica offers real-time collaboration opportunities to US companies that approach it for nearshoring. This quick communication maintains the speed of the project and ensures queries are resolved quickly.
    • Low attrition of developers. Costa Rican developers are less likely to jump to another team in the middle of a project, so US companies will get the pleasure of working with the same team members throughout the project.
    • Professional and multilingual developer team. Costa Rican software engineers and developers are highly talented professionals, and as a major advantage, are fluent in English, which eliminates language barriers and ensures smooth communication.
    • Reasonable hiring cost. The hiring cost of Costa Rican developers is much lower than that of hiring in-house US-based developers, which provides a significant cost saving for US companies.  
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Written by
Svetlana Shevchuk

Digital Marketing Specialist at YouTeam, a Y Combinator-backed marketplace for building remote dev teams.

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