Nearshore Software Development Costa Rica: What You Should Know?

If you are planning to hire software developers in Costa Rica but want to explore all the beneficial options before signing a contract with a local vendor, this article will review the current state of the Costa Rican IT market, the good and the bad of Сosta Rica nearshore software development, and if there are any beneficial alternatives to signing with a nearshoring Сosta Rica company.

The Current State of Software Development in Сosta Rica

When talking about Latin America, Costa Rica proves to be a leader in education, business innovations, IT solutions, and English proficiency among neighboring countries. According to the Global Competitiveness Report 2019 by the World Economic Forum, Costa Rica holds first place in skills of current and future workforce in Latin America. What’s more, Costa Rica is leading in digital skills of the population among Latin American countries.

The latest Global Innovation Index 2020 report ranked Costa Rica 56 among 131 world economies and 51 for innovation outputs. At the same time, these are some of the leading results for Latin American countries.

According to the Embassy of Costa Rica in Washington DC, Costa Rica’s government support of the IT market and social development resulted in building strong industry sectors, including software development, advanced manufacturing, and medical solutions. Foreign investors and US businesses, in particular, are interested in Costa Rica software services, thanks to the country’s political stability and high education levels.

The Deloitte Doing Business in Costa Rica report 2020 defines Costa Rica as one of the primary software development outsourcing destinations for the US. As per the report, Costa Rican software engineers tend to work in R&D, food-tech, and med-tech projects. More than 300 US IT businesses opened their R&D and software development outsourcing centers in Costa Rica, with 24% being among Fortune 100 companies, including IBM, HP, and Intel.

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This makes the country a popular outsourcing and nearshoring option, especially for US businesses being in geographical proximity to the country. Besides, the costs of nearshore outsourcing in Costa Rica are much lower compared to hiring IT experts locally in the US, so many US companies are highly interested in Сosta Rica software outsourcing.

Let’s take a look at the main characteristics of the Сosta Rica software development market: 

Pros and Cons of Opting for Nearshore Software Development Сosta Rica

To start with a good hand, let’s first explore the undeniable advantages of nearshore software development Сosta Rica:

  • A growing IT talent pool with strong government support for the IT field;
  • One of the most well-developed educational systems among Latin American countries;
  • A possibility to hire a professional and multilingual dedicated development team, since there are many skilled software engineers, and English is taught in schools, so most people speak English fluently;
  • High-quality tech infrastructure, with San José being the fastest-growing Costa Rican IT hub with many US companies having their R&D centers opened here;
  • Low attrition of Costa Rican coders, meaning that the employer wouldn’t have to worry much about searching for a replacement for a given IT expert in the middle of the project;
  • Software development services Сosta Rica costs are much lower than in the US;
  • A convenient time zone difference (2 hours only) allows for comfortable real-time communication between the headquarters in the US and software development in Сosta Rica, which leads to timely performance and quick issue resolution.

However, as with anything, there are some possible pitfalls and disadvantages of nearshore outsourcing Costa Rica as well:

  • Tax issues, since the Costa Rican tax system, requires every employee to contribute 10.84% of their wages for social security, according to the GPMI report, and many programmers may prefer working illegally without official employment and earn more money this way, which would complicate things for the employer; 
  • Hardships with finding IT experts with the much-needed specific technical qualifications and many years of experience;
  • Compliance difficulties when it comes to business laws for US businesses holding software development in Сosta Rica;
  • Data breach and other security risks when cooperating with a noncredible vendor;
  • High risks of natural hazards;
  • Cultural and communication difficulties with international companies.

Ukraine as a Beneficial Alternative to Costa Rica for Outsourcing Software Development Services 

Although Latin America was one of the earliest IT hubs and nearshore software development Costa Rica is a popular option for US businesses; we have been seeing a rapidly growing interest in hiring programmers offshore from other countries with tremendous potential. 

Nowadays, Eastern Europe and Ukraine, in particular, are gaining momentum as an outsourcing haven for companies with headquarters in the US and Western Europe.

Here’s why Ukraine can be a beneficial alternative to software development Сosta Rica:

  • High level of IT skills and remarkable reputation of Ukrainian developers on the global market;
  • High education level (14M+ with higher education, as per the latest KPMG report);
  • The biggest IT talent pool in Europe (200,000 IT experts, as mentioned by TechUkraine);
  • This IT talent pool continues to grow rapidly (400,000+ graduates annually, as per the KPMG report);
  • A significant number of Senior programmers has experience working with the US and European companies;
  • 160+ R&D centers already opened in Ukraine (including Microsoft, IBM, Apple, Samsung Electronics, as highlighted in the latest Deloitte report);
  • The vast majority of Ukrainian IT experts is fluent in English;
  • Ukraine has a business culture and values similar to Europe;
  • Ukrainian IT companies can comply with global data protection requirements (GDPR and more);
  • The time zone difference is not critical for successful cooperation;
  • Convenient location in the center of Europe with well-developed transport infrastructure;
  • Several times lower rates than the US coders and approximately the same costs as Costa Rican programmers.

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Hire Software Developers in Costa Rica vs. Ukraine: Summing up

To sum up the specifics of the nearshore software development Сosta Rica and Ukrainian services as an alternative option, we created the table below. The average monthly rate mentioned in the table is based on Payscale data and Mobilunity’s Recruitment Team research on the local job markets.

Costa RicaUkraine
Time zonesGMT-6GMT+2
Size of a tech talent pool46,400200,000 
English proficiencyHighHigh
Education levelGoodGood
Talent availabilityEasy to find Junior programmers and hard to find Senior onesHigh both for Junior and Senior experts
Risks related to natural hazardsHighExtremely low
Average monthly rate for middle developers₡1,004,728 ($1,640)$2,000
Data safety and insuranceModerate level (#53 in global NCSI)High level (#25 in global NCSI)
Quality to price correspondenceGood (good quality for low cost)High (high quality for affordable cost)
Ease of doing businessModerateEasy

As you can see, both Costa Rica and Ukraine have their advantages and disadvantages. It’s essential to understand your project specifics and work with a reliable vendor when choosing the nearshoring/outsourcing country. 

For example, if you are on a tight budget and prefer working in the same time zone, Costa Rica may be your best bet. However, if you need highly experienced programmers with solid knowledge of a specific field (fintech, edutech, etc.), it may be more beneficial to work with Ukrainian developers known for their exceptional IT expertise and coding skills than choosing a software development company in Costa Rica.

Whether you are opting for Costa Rica, Ukraine, or Colombia software development, it’s important to pay attention to the following points:

  • Do research over the vendor in question: how long has it been on the market, what services it mainly provides, their successful projects, case studies, online presence, and so on;
  • It would be extremely useful to check clients’ feedback, online reviews, and mentions on social media. You may even get in touch with previous clients to find out how the cooperation with the given vendor went;
  • Before starting a project, see who will be working on it from the vendor’s side, check their tech skills, qualifications, experience, etc.;
  • Before signing a contract, make sure to define the responsibilities, reporting format, communication means, progress tracking, timeframes, etc.;
  • Make sure to respond to your dedicated team reports and requests, communicate frequently, and monitor the performance to make sure everyone is on the same wavelength.

Mobilunity as Your Reliable Ukrainian Vendor

If you are considering turning to offshore software development Сosta Rica and would like to explore all the viable alternatives, Ukraine proves to be an outsourcing haven with highly skilled IT experts available at affordable costs. You can hire a dream team if you work with a reliable IT services provider, and Mobilunity is a renowned Ukrainian vendor you can trust your software development.

For more than 10 years, Mobilunity has been operating on the global IT market, helping SMBs and large-scale corporations find the best programmers with the relevant expertise and advanced skills. 

As you can see, Ukraine is indeed a great outsourcing destination that can easily compete with nearshoring Сosta Rica and outdo it in many ways. You are welcome to get in touch with Mobilunity experts, see how we work, what our clients say, and let us find the right developers for your project.

Thinking about nearshore software development Сosta Rica? Contact Mobilunity and learn why Ukraine may be a better option!

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