The small Central American country of Costa Rica has transformed from just a tourist hotspot into a destination for foreign investment. Not surprisingly, Nearshoring is on the rise in Costa Rica.
In 2022, Costa Rica topped Investment Monitor’s Inward FDI Performance ranking, ahead of Croatia, Singapore and the United Arab Emirates (UAE).
This growing wave of FDI helped create 22,000 new jobs in Costa Rica in the tourism, life sciences and manufacturing sectors.
The government’s focus on education and development has contributed to this growth, with 7.4 percent of the country’s GDP being spent on education.
Costa Rica’s rapidly growing talent pool now ranks among the best in Latin America in the tech industry, making it an attractive destination for a beach vacation.
This article will outline the many benefits of offshoring in Costa Rica, especially for the IT and technology industry.
We’ll also cover things to consider before landing in Costa Rica, such as what back office services you might require in Costa Rica.
Advantages of shortshoring in Costa Rica
Exploring the offshore sector in Costa Rica can provide many benefits to your company. Below are five unique benefits of nearshoring to consider.
- Excellent return on investment
- Skilled IT workforce
- Time zone alignment
- Low labor costs
Let’s take a closer look at each of these advantages of approaching Costa Rica.
1 – Excellent return on investment
The Costa Rica convergence offers a profitable return on investment due to significant labor cost savings, availability of a large pool of skilled technologists, and increased efficiency resulting from time zone overlap.
Costa Rica also offers a wide variety of industrial parks and office centers with special tax breaks and incentives for foreign companies.
2- Skilled technological workforce
Costa Rica has a pool of over 22,000 highly skilled software developers. It is the number one exporter of IT per capita in Latin America, making it an ideal location for offshore locations.
Several global software companies such as Microsoft, Oracle, Dell and Hewlett Packard Enterprise have established a presence in the country.
Costa Rica also recently ranked fifth in the world in the World Economic Forum’s Human Capital Rankings.
3 – Focused on education
The country has a literacy rate of 98 percent thanks to its free and compulsory primary and secondary education. Its universities are well funded and professors from different parts of the world share their knowledge there.
Each year, more than 4,000 people graduate from engineering programs at various universities across the country.
4 – Time zone alignment
Workers in Costa Rica work in the same or similar time zone as their counterparts in the United States, Mexico and Canada.
From mid-March to October, it is in the same time zone as Mountain Standard Time (MST) in the United States. From November to mid-March, local time is equivalent to Central Standard Time (CST).
The alignment of this time zone with North America allows for up to eight hours of simultaneous work. This facilitates smooth team collaboration and eliminates project completion delays.
5 – Low labor costs
Converging in Costa Rica can help your business reduce costs and save time, resulting in improved profits.
Developing and training an in-house team can be costly and time-consuming, especially in countries where labor and operational costs are high.
For example, an entry-level software developer in the United States can expect to earn about $80,000 USD per year, while a Costa Rican software developer doing the same job can expect to earn about $20,400,000 Colon (about $39,000 USD) per year. That’s an annual salary savings of more than 50 percent.
Nearshoring in Costa Rica also offers a lower cost of living compared to major cities in the United States, Canada, or Europe.
Is Nearshoring in Costa Rica Right for Your Business?
Before you make your move to Costa Rica, it’s important to consider various factors and ask yourself these important questions:
Is it hard to find local talent?
If finding employees in your current location is expensive or difficult, offshoring in Costa Rica can be cost-effective. Working with a local partner can also save time and effort in recruiting.
Do you have the ability to manage large projects remotely?
Nearshoring relies heavily on digital communication, which may require a culture change within your company if you’re used to relying on face-to-face communication.
What is the main purpose of your company?
Looking to recruit permanent staff in Costa Rica or require technical expertise for specific projects? Your selection will have implications for compliance with local employment regulations. For example, will you require the services of local lawyers or accountants?
Is Costa Rica the right talent market for your business?
While Costa Rica is becoming a popular offshoring destination due to its large pool of software developers and engineers, other Latin American countries also offer attractive options with growing tech talent pools and potential cost savings.
Biz Latin Hub can assist you with short-shoring in Costa Rica
At Biz Latin Hub, we offer a comprehensive range of market access and back office solutions in Costa Rica, Latin America and the Caribbean.
Our expertise includes incorporation, recruitment and PEO, accounting and taxation, company formation and corporate legal advice in Costa Rica.
With offices in major cities across the region and established partnerships in many other markets, we have a vast network of resources ideally placed to support cross-border operations and market access in multiple countries.
Contact us today! to learn more about our services and how we can help you achieve your business goals in Latin America and the Caribbean.