Tech companies increasingly hire in South and Central America because remote workers there often accept lower pay than in the US but have the same time zones
Pandemic-era labor shortages made it hard for Austin-based Fetch Package Inc. to fill positions in the US. Tweets: @bouazizalex and @sdonnan . Thanks: @colegarry2 Tweets: Alex Bouaziz / @bouazizalex : To be competitive, companies need to start looking outside of the US - amazing talent exists that won't stretch budgets. More and more of our customers are realizing this, even our own tech team, many of whom sit in Brazil🇧🇷 https://www.bloomberg.com/... Shawn Donnan / @sdonnan : It can occasionally feel like “nearshoring” and “friend-shoring” have become new euphemisms for outsourcing work to another country that just happens not to be China... Fascinating @BW piece by my colleagues @ethomson1 & @gutavsaraiva: https://www.bloomberg.com/... Thanks: @colegarry2
Context & Ripple Effects
The nearshoring pipeline into Latin America has been filling for over a year: US tech firms were already hiring across the region for cost and time-zone reasons in early 2022 (nearshoring coverage), and by January 2023 the shift was reaching Mexico, Peru, and Uruguay, where local startups reported losing developers to US paychecks even amid US layoffs.
This Bloomberg piece extends that arc to smaller operators — Fetch Package, an Austin company that couldn't fill US roles during pandemic labor shortages — and to Deel's Alex Bouaziz, whose customers and even his own tech team sit in Brazil. The pattern now runs beyond big tech: labor consultants describe US companies outsourcing in response to shortages and rising domestic wages, with remote-first startups leading adoption (81% of sub-5,000-employee companies offer remote work).
First-order effects
- Latin American engineers gain access to US-market pay without relocating, while regional startups — already reporting staffing shortages in 2022-2023 coverage — face steeper competition for local talent.
- US employers like Fetch Package fill roles that went vacant during pandemic-era domestic shortages, effectively importing time-zone-compatible labor at below-US rates.
Second-order effects
- Latin American startups must raise local compensation or lose engineers to US firms, compressing the very cost advantage that drew US employers south.
- Employer-of-record and payroll platforms like Deel capture the intermediation layer, monetizing the compliance and payment friction between US budgets and foreign payrolls.
Third-order effects
- If wage convergence follows the flow of remote work, Latin America risks becoming a priced-in extension of the US labor market rather than a durable cost arbitrage — echoing how pandemic remote policies first decoupled Silicon Valley workers from Silicon Valley salaries.
- The pattern points toward a globally priced, time-zone-segmented engineering labor market, where national startup ecosystems compete directly with US employers for the same developers.
The trend: Remote work is turning Latin America into a nearshore extension of the US tech labor market, with time zones replacing geography as the binding constraint on where companies hire.