If you're a Startup Founder looking to scale your business but want to avoid paying the high salary costs for US talent, then this guide is going to be for you.

Latin America has emerged as the premier destination for tech talent, with Colombia ranking in the top 5% globally for general software development skills and countries like Mexico producing 25,000-30,000 new engineers annually. For companies facing endless job vacancies and blown budgets, nearshoring to this rich talent pool isn't just an option—it's a competitive necessity.

This guide cuts through the complexity, delivering four proven strategies to tap into Latin America's technical expertise at up to 70% lower costs than US equivalents. Each approach is broken down into actionable steps, clear benefits, and honest risks. Let's dive in.

Want to see how you can cut hiring costs by up to 70% with Latin American talent? Click here to find out more.

Strategy 1: Employer of Record (EOR)

What It Is

An Employer of Record (EOR) is a third-party service that acts as the legal employer for workers you hire in Latin America. You don't need to set up a local entity. The EOR handle contracts, payroll, taxes, benefits, and compliance with local laws. You direct the work; they manage the admin. For instance, hire a senior developer in Mexico, and the EOR ensures they're paid, insured, and compliant with Mexican regulations while you onboard them into your projects.

How to Do It

1. Select an EOR: Choose one experienced in Latin America (e.g., Viva Global).
2. Specify Needs: Define the role, skills, budget (e.g., $40K/year for a mid-level dev).
3. Hire: Some EORs have you recruit yourself and just handle the paperwork. At Viva Global, we do the recruiting and vetting, as well as provide access to our existing database of vetted talent.
4. Get Started: They handle onboarding; your hire's ready in weeks. (We say weeks depending on if there will be a background check, and in some cases, the country may require a medical check.)

Benefits

• Speed: Hires in 1-4 weeks vs. 60-90 days in the US.
• Compliance: No legal risks or fines.
• Cost-Effective: Avoid $50K+ entity setup fees.
• Flexible: Scale up or down easily.
• Time Zone Alignment: Real-time collaboration with your US team.
• Data Point: 68% of startups use EORs for their initial LATAM hires, with hiring timelines cut by 50% compared to domestic recruiting.

Risks

• Less direct control over employment terms.
• Fees may stack up for big teams. Though the ROI comes from not having to spend hours every month handling paperwork and verifying compliance. 

The EOR is a plug-and-play solution: fast, compliant, and light on setup. If you need talent quickly without legal headaches, it's hard to beat.

Strategy 2: Independent Contractors

What It Is

Independent contractors are self-employed pros you hire for specific tasks or projects with no long-term commitment. Think a Brazilian QA engineer testing your app for two months. You set the scope and pay them directly (e.g., $4K for a gig), skipping employer duties like taxes or benefits. It's great for short-term or specialized work, but you must avoid treating them like employees to dodge legal trouble.

How to Do It

1. Source Talent: Use platforms like Upwork or Fiverr.
2. Define Terms: Agree on deliverables, timeline, pay.
3. Vet Them: Review skills, experience, availability.
4. Kick Off: Pay via invoice or platform; they start fast.

Benefits

• Rapid: Onboard in days.
• Adaptable: Hire only what you need.
• Specialized: Tap experts for unique tasks.
• Data Point: 25% of startups begin with contractors for cost flexibility, with average costs of $29/month per contractor vs. $599/month for EOR employees.

Risks

• Misclassification Penalties: 34% of LATAM contractors have been reclassified as employees by local courts, triggering back taxes and fines.
• Limited Control: Contractors cannot be managed like employees without violating labor laws (e.g., set schedules in Argentina imply employment status).
• Taxes: In some countries, working as an independent contractor and filing your own taxes can be complicated. Therefore, you'll have a smaller talent pool available for a contractor only option. 
• Limited loyalty: Typically, I have found that many workers want to have benefits such as retirement contribution and insurance, as well as long-term stability. Contractor only option doesn't offer this. 

Contractors are a nimble, low-commitment option for quick wins or project work. Keep the boundaries clear, and it's a smart play.

Strategy 3: Building a Subsidiary

What It Is

Building a subsidiary means establishing your own legal entity in Latin America, like opening a branch in Santiago or Medellín. You're the employer, controlling hiring, culture, and compliance. It's a big move: $100K+ and 3-6 months to launch, navigating local registration and laws. Every country will have slightly different laws to navigate and a slightly different procedure for getting your entity processed and established.

How to Do It

1. Choose a Spot: Focus on one country to begin with.
2. Get Help: Hire local legal and HR experts.
3. Recruit: Tap job boards or local talent pools.
4. Set Up: Invest time and money to go live.

Benefits

• Total Control: Your team, your way.
• Longevity: Build a stable base.
• Growth: Scales with your vision.
• Data Point: Only 5% of companies begin with this approach, but those that do report 20% higher team retention and better cultural integration.

Risks

• High Investment: $15,000-$50,000 for incorporation in countries like Mexico or Colombia, plus 6-12 months for legal registration.
• Ongoing Overhead: $2,000+/month for local HR, payroll, and compliance staff.
• Compliance errors hit your wallet. This is why you have HR members staffed, to make sure you are consistently in compliance. 

A subsidiary is a bold, long-term bet. If you've got the resources and patience, it's a foundation for big growth.

Strategy 4: Local Partnerships

What It Is

Local partnerships mean collaborating with an established Latin American company to access their talent and infrastructure. You're not hiring solo or building your own entity; you're teaming up with a firm that's already set up, like a staffing agency or tech provider. It could be a Mexican company supplying you with devs or managing a chunk of your ops. This takes time and effort: you need connections to find a reliable partner, and vetting them thoroughly is a must, checking references, track records, and alignment with your goals. One client partnered with a Brazilian firm and had a team running in six weeks, but only after weeks of due diligence.

How to Do It

1. Identify Partners: Seek firms with proven expertise (dig into refs).
2. Negotiate Terms: Agree on responsibilities, costs, timelines.
3. Launch: Leverage their setup, though expect the process of finding the right partnership and completing the paperwork to take many weeks or possibly several months. 

Benefits

• Faster Than Solo: Quicker than building your own entity.
• Shared Load: They manage ops; you guide.
• Data Point: Only 2% of LATAM hiring begins this way, but partnerships can lower entry costs by 35% compared to subsidiaries.

Risks

• Time Sink: Finding and vetting a partner drags on without connections.
• Trust Issues: A weak partner can derail quality or timelines, with 20% of partnerships faltering due to poor coordination.
• Reduced Control: You're tied to their processes.

Partnerships can accelerate your entry, but they're not a shortcut. You'll need to invest serious time upfront, scouting, vetting, building trust, to make it work. Choose wisely, and it's a viable path.

Which Strategy Fits You?

There you have it, four nearshoring strategies, fully unpacked. You've got the steps, pros, cons, and stats to pick what works. The EOR stands out for speed and simplicity, while partnerships demand more legwork to get right. 

The Viva Global Advantage

At Viva Global, we've transformed the remote hiring process through our proprietary Smart Matching System™. We don't just connect you with Latin American talent; we find the perfect match for your specific needs while handling all the complex compliance and administrative aspects.

Our system evaluates not only technical skills but also communication styles, cultural compatibility, and remote work aptitude to ensure seamless integration with your existing team. With access to 10,000+ pre-screened candidates and a streamlined process that delivers top candidates in just 7-10 days, we've eliminated the guesswork from remote hiring.

Ready to transform your team with remote talent from LATAM? Book a free consultation call today!

About the Author

The author is Co-Founder and VP of Sales at Viva Global, a leading remote staffing agency and employer of record specializing in connecting US companies with the top 1% of Latin American talent under the motto "Talent Without Borders." With extensive experience across Fortune 500 companies, top-rated tech firms, and early-stage startups in sales and customer success roles, the author has witnessed firsthand how recruitment processes evolve as companies scale. This diverse background has shaped a unique perspective on talent acquisition that now drives Viva Global's approach to placing remote employees across various industries, helping businesses overcome hiring challenges and build thriving distributed workforces.