Been looking into opening a Center of Excellence in Latin America? You’re definitely onto something! As more global businesses look to expand operations efficiently, LATAM has emerged as a strategic location for building high-performing COEs under the Build-Operate-Transfer model.

This article breaks down exactly what a LATAM Center of Excellence is, why it's becoming a go-to model, and how it differs from traditional outsourcing. You'll also get insights on the benefits, setup process, common challenges, and future trends shaping COEs across Latin America. Whether you're exploring new markets or scaling an existing team, this guide will give you the clarity to make informed decisions. Ready to dive into the newest nearshoring strategy?

What Exactly Is a LATAM Center of Excellence?

A LATAM Center of Excellence (COE) is a centralized team or facility based in Latin America that’s built to deliver specialized capabilities, drive innovation, and support global operations. These centers often focus on areas like software development, data analytics, finance, or customer support. But unlike traditional outsourcing, a COE is fully integrated into a company’s core operations, typically owned and managed in-house.

What sets a LATAM COE apart is its strategic location. Latin America offers access to a deep, bilingual talent pool and favorable time zones for U. and Canadian companies. For example, Brazil, Mexico, and Colombia are increasingly hosting COEs for Fortune 500 firms looking to balance quality and cost without offshoring to faraway time zones.

The goal of a COE is to ensure consistency and expertise when outsourcing a core part of your company operations. You centralize high-impact functions in one place, train teams to operate under unified standards, and replicate best practices across the business. This creates long-term value, not just short-term savings. In a LATAM setting, this might mean a marketing COE in Bogotá driving better results through AI-powered SEO or a finance COE in San José standardizing global reporting frameworks.

According to Deloitte’s Global Shared Services Survey, over 43% of organizations are either operating or planning to open COEs in nearshore regions like LATAM. This shift reflects not just labor arbitrage but also a demand for strategic, high-value delivery close to headquarters. Keep in mind that a LATAM COE is not the same as staff augmentation or direct placement solutions. It’s not a contractor model. It’s an owned asset that brings together domain expertise, localized leadership, and regional talent to enhance global performance.

What Sets a LATAM COE Apart from Other Global COEs?

1. Geographic Proximity to North America:

One of the biggest advantages of a LATAM COE is location. Countries like Mexico, Colombia, and Costa Rica operate in U.S.-aligned time zones. This makes real-time collaboration with North American teams significantly easier than with Indian or Eastern European teams. According to McKinsey, nearshore COEs reduce project cycle times by 20% to 30% compared to offshore models due to better overlap in working hours.

2. Strong Cultural and Communication Alignment:

LATAM professionals often have high English proficiency, especially in urban tech hubs. Costa Rica ranks #1 in Central America and #2 in Latin America for English fluency, while Buenos Aires outperforms global hubs like Madrid or Seoul, according to the EF English Proficiency Index. This minimizes communication friction, speeds up onboarding, and improves alignment with North American business expectations. You get smoother integration without the steep cultural learning curve seen in many offshore regions.

3. Talent Depth in Niche Areas:

Latin America has seen rapid growth in STEM education. Brazil alone graduates over 100,000 engineering students per year, according to the UNESCO Institute for Statistics. The region is now producing top-tier talent in AI, cloud computing, cybersecurity, and DevOps. Companies aren’t just filling headcount or outsourcing busy work. Instead, they’re building nearshore acceleration centers that can lead innovation across their business.

4. Government Incentives and Infrastructure Readiness:

Many LATAM countries offer tax breaks, free trade zones, and startup-friendly policies to attract foreign investment in tech and innovation. For example, Colombia’s Zonas Francas (Free Trade Zones) offer up to 50% tax exemptions for qualified COEs. Additionally, cities like Guadalajara, São Paulo, and Buenos Aires now rank among the top LATAM tech ecosystems with world-class internet, coworking spaces, and access to venture capital.

5. Long-Term Workforce Stability:

Turnover rates in key LATAM tech markets are significantly lower than in the Asia-Pacific regions. According to Mercer’s 2023 Talent Trends, average tech attrition in LATAM is around 12%, compared to 18-22% in India and Southeast Asia. Lower churn means more continuity, stronger domain expertise, and less ramp-up time for critical projects.

6. Competitive Cost-to-Quality Ratio:

While LATAM wages are higher than some Asian markets, the region offers a better cost-to-quality balance. You avoid the high salary inflation of top-tier US cities and the time zone issues of low-cost offshore hubs. A senior software developer in Argentina or Peru may earn 40% of what the same role commands in California, but without sacrificing code quality or delivery speed.

7. Strategic Expansion Gateway:

Establishing a COE in Latin America serves more than just North America. It also creates a launchpad for broader regional expansion. Many companies use their LATAM COEs as hubs to scale operations into emerging markets like Chile, Panama, and Ecuador. With stable economies and rising tech ecosystems, LATAM is uniquely positioned to support northbound and southbound growth strategies.

The 6 Key Functions of a LATAM COE

A LATAM Center of Excellence typically houses high-impact, knowledge-driven functions that support global operations. These aren’t just back-office tasks or small-scale IT operations, they’re core capabilities that drive strategic value across business units. Here’s a quick overview into each of them!

Software Development and Engineering.

Many LATAM COEs are built around software engineering teams. These centers handle full-stack development, product lifecycle management, DevOps, and QA automation. According to Stack Overflow’s 2023 Developer Survey, Brazil, Mexico, and Argentina now rank among the top 20 countries for active developers contributing to open-source projects. LATAM developers are increasingly involved in innovation, not just maintenance.

Data Analytics and Business Intelligence.

LATAM COEs often serve as analytics hubs. They aggregate global data sets, create dashboards, and support predictive modeling. With universities in Colombia and Chile offering advanced programs in data science, companies are finding the technical talent to build out robust BI functions. These teams support enterprise decision-making and generate insights that improve operational efficiency.

Finance and Accounting Operations.

Shared service models in LATAM commonly include finance. Teams handle accounts payable, accounts receivable, payroll, compliance, and reporting. Costa Rica, in particular, has positioned itself as a finance COE destination, with over 150 multinational shared services centers operating in the country as of 2023. These finance functions follow global standards while reducing operating costs.

Cybersecurity and IT Governance.

Security is no longer a secondary concern, it’s a central function in many COEs. LATAM COEs support vulnerability testing, compliance audits, incident response, and governance protocols. Countries like Mexico and Brazil have launched national cybersecurity strategies that align with global frameworks, creating a more secure environment for hosting sensitive operations.

Product Management and R&D.

Some organizations use LATAM COEs for product strategy, user research, and prototyping. These teams collaborate with engineering and design to test features and iterate quickly. Cities like Buenos Aires and Medellín are emerging R&D hubs due to strong design talent and startup ecosystems, offering the creative and technical mix needed for product innovation.

Customer Support and Success.

Multilingual support teams are another common function. COEs in countries like Panama and Peru provide Tier 1 and Tier 2 customer service across the Americas. With high English and Spanish fluency rates, these teams ensure brand consistency while addressing a broader audience. Gartner reports that nearshore customer support can reduce complaint resolution time by up to 35% compared to offshore centers.

Here Are the Main Benefits of Establishing a Center of Excellence in Latin America

Better Time Zone Alignment for Agile Delivery:

One of the most practical benefits is real-time collaboration. LATAM’s time zones align closely with US working hours, enabling same-day communication across departments. This alignment is especially useful for Agile sprints, daily standups, and rapid iteration cycles. Nearshore teams in Latin America can respond in real time, something offshore COEs in Asia struggle to match due to the 10–12 hour time difference.

Access to Untapped Innovation Ecosystems:

LATAM cities like São Paulo, Bogotá, and Santiago have become startup hubs backed by both government and private capital. These environments foster creativity, experimentation, and tech fluency. Embedding your COE in one of these ecosystems connects you to accelerators, tech clusters, and research partnerships, allowing for faster adoption of new tools and methodologies.

Multilingual Capabilities for Global Reach:

English proficiency in key LATAM markets is rising fast. The 2024 EF English Proficiency Index ranks Argentina and Costa Rica in the top 30 globally, ahead of major Asian outsourcing destinations. You also gain access to fluent Spanish and Portuguese speakers, opening doors to broader customer support, localization, and regional market expansion.

Legal and IP Protections That Support Growth:

LATAM countries with mature COE environments, like Chile, Uruguay, and Costa Rica, have strong legal protections for intellectual property and data privacy. Many of these nations also have free trade agreements with the U.S. and the EU, simplifying compliance and import/export operations. These legal frameworks reduce the risk that often accompanies expansion into emerging markets.

Faster Ramp-Up and Market Familiarity:

The cultural affinity between LATAM and North America makes onboarding smoother and faster. Communication styles, work habits, and business expectations tend to align, reducing friction during the ramp-up phase. A recent report from Everest Group found that companies launching new COEs in LATAM reached full productivity 22% faster than in other emerging markets.

Conclusion

We hope this article helped you see why LATAM Centers of Excellence are reshaping how global companies build, scale, and retain high-performing teams. From cost efficiency and time zone alignment to access to multilingual talent and mature legal frameworks, the region offers a compelling business case that extends far beyond traditional outsourcing.

At Hire South, we help organizations establish and scale nearshore operations in Latin America with precision and speed. Our experienced team works across all of LATAM and beyond to connect you with vetted talent, localized compliance support, and strategic workforce planning. Whether you’re looking for a specific role or expanding through a nearshore operation, we provide the structure and expertise to do it right from the very beginning. If you want to learn more about COEs or nearshore outsourcing, we’re ready to help you scale smarter. Get in touch today to book a free discovery call!