Latin American Tech Firms See Salary Raises Ongoing Amid Stiff Competition

Tech companies in the region foresee salaries continuing to rise, as well as a globalization of remuneration irrespective of location, but also advise caution amid times of lower investment

Photo: Daniel Acker/Bloomberg
July 22, 2022 | 08:24 AM

Montevideo — Fears of recession in the United States and the fall in the share prices of the big technology companies have flooded the markets with uncertainty, and begun to paint a picture of lower venture capital activity, with layoffs as a consequence.

At this juncture, what can we expect to see happen to salaries in Latin America’s technology sector?

Three technology companies in the region, Globant (GLOB), dLocal (DLO) and Ripio, predict that salaries will continue to rise as the tension between supply and demand remains. They also expect that the amounts requested by employees will tend to even out globally, regardless of the regions in which workers live.

PUBLICIDAD

And these companies are confident of continuing their growth, but remain cautious in pointing out that 2022 will be a key year to move strategically.

This was expressed by Bernardo Manzella, recruitment director at Globant, and Estefanía Tejo, head of human resources at dLocal, during an event in Montevideo organized by Deel, a global recruitment platform, as well as by Lucía Mauritzen, Ripio’s human resources director, in a conversation with Bloomberg Línea.

Manzella said that, from her point of view, “the talent shortage leads to the normalization” of salaries globally, regardless of the cost of living. “I think supply and demand can lead to normalization. With the demand that there is, if it is maintained and sustained, I believe that in some areas we will normalize in global wages”.

Salaries without borders

Tejo stated that, as he sees it, employees require the same salary level in different countries, regardless of their cost of living. “Before, the cost of living was analyzed more, and $1,000 in Argentina is not the same as $1,000 in Uruguay. But the reality is that today that is no longer important, and they demand the same as in a country where the cost of living is more expensive,” he said.

PUBLICIDAD

Mauritzen, on the other hand, pointed out that through remote work, which has become more common since the pandemic, “competitiveness began to globalize”. She says that, “beyond the contexts of each country, today the proposals take into account the demand and supply of [employee] profiles”.

She added that, both in fintechs and in the crypto world, salaries are “much more competitive” than those offered by software companies or service consulting firms.

Salaries in fintechs tend to be more aggressive, and in crypto more so. You have to be constantly reviewing not only currencies and forms of payment, but a comprehensive proposal that contemplates flexibility, welfare and recreational activities,” she explained.

She added that, although 2021 was “super competitive” and “aggressive” in terms of companies contracting, that is going to remain beyond the changes in the market context.

“I do not think that this moment will cause a drop in terms of salary offerings, because they are still specialist profiles, cutting-edge technology, and then the compensation proposals seek to be as competitive as possible to continue attracting talent,” she said.

More competition, higher salaries

Globant’s Manzella said that increased competition among companies, with global companies looking to South America, began to push up wages in the region. “There are a lot of new competitors in the market, and I think they are causing that price inflation, as they still pay cheaper salaries here than in the US or Europe.

PUBLICIDAD

Natalia Jiménez, Deel’s director for South America, said that Latin America is at a point where it must compete globally, as companies in other countries are looking to the talent in the region. She says that the level of salaries “is due to supply and demand”, and in view of this, due to their scarcity, technological roles will demand higher average salaries than other positions.

“There are roles that are extremely in-demand, and that makes salaries go up and up. But the same supply and demand, and the investment crisis, may mean that some salaries that were at absurd levels in the technology sector will no longer be seen,” she added.

Salary ranges for a software engineer vary, she said, but can be between $1,500 to $10,000. Volatility, she argued, will lead to a balance.

‘Tidying up the house’

Asked about the strategy that should be applied at a time of market contraction, Tejo said that dLocal seeks to “sustain itself and grow”, especially in Latin America, but also be “very careful”.

PUBLICIDAD

“This global crisis generates uncertainty as a consequence, and obviously that makes investments more careful or slower. It is very important to take care of costs, to keep moving forward, but to be very careful in the investments we are generating. The context is not helping because you are not sure what is going to happen”, she said.

PUBLICIDAD

Manzella also echoed the need to be careful. “We have to be optimistic, realistic, and it may be a good time to check our strategy: in this new context: do we keep the long-term strategy we were following? Or is it time to rethink the course a little bit?”

Ripio’s Mauritzen told Bloomberg Línea that the current moment, in the absence of such accelerated growth, should be used to “generate new products, add value and tidy up the house a bit.”

“Last year the focus was on accelerated growth. Today the focus is still on growth, not as accelerated as last year, but much more focused on working on new products,” she said.