Brendan Quirk, founder of Latin America Accounting Consultancy, comments on the benefits of the region for outsourcing services.

In recent years, accounting firms seeking to address talent shortages have increasingly turned to outsourcing as a solution, and while India and the Philippines have dominated the market, Latin America is emerging as a compelling alternative.

“We started noticing in 2020 the shortage of accountants here in the U.S. We had a need to communicate in the same time zone to solve day-to-day issues,” explains Danay Ramirez of H&CO, a Miami-based accounting firm with operations in both Colombia and India.

This dual-location approach has allowed H&CO to benefit from both regions while recognising Latin America’s unique advantages. “It’s different when at 4 p.m. you have a question and you can just call someone. And you’re not waking them up,” notes Ramirez.

The movement has gained substantial momentum, with Ramirez stating that “over the last year, several US firms have established themselves in the region.” This includes firms of all sizes, from small practices to sizable regional players. The benefits are include logistics and firm culture too.

Fernando Barraza of Arizona based BeachFleischman, which has operations in Mexico, emphasises the practical benefits: “Our office in Mexico is a four and a half hour drive away. Why not leverage Mexico when you can drive there versus traveling 20 plus hours and being half way across the world?”

Beyond geography, cultural alignment represents a significant advantage. Firms report stronger organisational integrations with teams in Latin America where clients and staff visit the Latin American offices. The teams in the country visit more as visas are easier to obtain, travel times shorter, and costs lower compared to distant locations. This facilitates regular in-person collaboration that builds genuine connections between teams, allowing for seamless integration of company values and business practices across borders. As Barraza notes, “Latin America has a lot of cultural affinity with the U.S., we’re a lot more in sync.” For firms in regions with substantial Hispanic populations, this synergy is even more pronounced.

Building your own operation

Some firms like H&CO and BeachFleischman have established their own operations in Latin America. H&CO began in India in 2016 with 13 employees and has grown to over 200 today, the Colombian team started in 2021 and has 120 employees. BeachFleischman’s Mexico efforts started as an experimental venture by two professionals with Mexican origin and now has 16 employees in Mexico supporting their U.S. operations across bookkeeping, tax, audit and administrative functions. The personal connection was crucial to BeachFleischman’s success. As CEO Eric Majchrzak explains, “Fernando’s vision and passion is why we’re here. If Fernando weren’t here, I don’t know that we would be in Mexico.”

Some firms have opted for strategic partnerships with established Latin American firms. This approach allows access to talent without having to build an operation in a foreign jurisdiction with unfamiliar laws and regulations.

Two common approaches that allow firms to test Latin American outsourcing with minimal risk are Employer of Record (EOR) Services and Build-Operate-Transfer (BOT).

EORs are third-party companies that employ workers on behalf of U.S. firms. “What has facilitated the speed of growth is the EOR model where firms don’t need to set-up in the country,” explains Ramirez. “You can interview someone, hire them the next day…” These specialised firms provide accounting talent on demand, handling recruitment, basic training and employment logistics while the U.S. firm directs the day-to-day work.

Under the BOT model, firms partner with experienced consultants who build and operate in-country teams on their behalf, with the intention of eventually transferring ownership once established. The consultant handles everything from legal formation to recruitment and training, allowing firms to benefit from local expertise while minimising risk.

The BOT approach is particularly valuable in Latin America, where local knowledge can significantly accelerate establishing effective operations. Once stable, the operation gradually transfers to the accounting firm over time giving them time to develop internal management capabilities and really own the operation.

One recurring theme is the substantial upfront investment required. Lucia Valenzuela, at James Moore and Co. extensively researched establishing operations in Colombia yet found the initial costs daunting: As she looked into building an operation in Bogota and initial costs pied up, “my risk appetite (was) slowly dwindling.”

The investment isn’t just financial but also involves key people’s time and expertise. As Barraza cautions, “If you’re looking for a turnkey solution, forget about it. You’re not going to find that anywhere (including India). You are going to have to, as a firm, invest time, resources, energy, goals, et cetera, to your nearshoring, outsourcing endeavour.”

Finding talent with U.S. tax knowledge or familiarity with U.S. accounting software presents a challenge. While Latin America has many qualified CPAs, they are trained on local law and regulation.

Language barriers also persist despite the perception of greater English proficiency in Latin America. Valenzuela’s firm found that even professionals that graduate from university with a certain level of proficiency in English, still were not conversational enough to put them in front of a client.

Operating in Latin America means navigating complex regulatory environments and potential political instability. Firms need to account for different labour laws, statutory benefits and severance requirements that can significantly affect the total cost up front.

Making Latin American outsourcing work

For firms considering Latin America, several points emerge:

1. Boots on the ground
A common thread among successful outsourcing operations is having someone with cultural connections and language skills leading the initiative. Your firm is likely to have Spanish speakers already. If not, you should work with someone who does.

2. Start with appropriate service lines
Begin with standardised processes before expanding to more complex services. Do not put Latin American staff in front of clients until they have developed both technical and language skills.

3. Consider starting small
Working with service providers can provide lower-risk ways to start compared to establishing your own entity immediately. These approaches allow firms to test the waters before making larger commitments.

4. Set clear strategic goals
Firms that established concrete metrics for their outsourcing initiative can manage the process and understand what success looks like. You need to start with the long term in mind.

5. Focus on integration
H&CO attributes much of their success to fully integrating their Latin American team members. Ramirez explains: “The biggest thing we do is integrate each resource. They’re a part of H&CO, not an extension. They live by the values of the firm. The location doesn’t matter.”

The future outlook

Latin America is gaining traction as an outsourcing destination for accounting firms. While it presents challenges in terms of investment requirements, language barriers and regulatory complexity, the advantages of proximity, time-zone alignment and cultural affinity make it an attractive alternative to traditional outsourcing locations.

For accounting firms willing to make the commitment, Latin America represents not just a source of labour arbitrage but a strategic advantage in serving an increasingly global and diverse client base. Those who partner with experts who understand both the Latin American business environment and the specific needs of accounting firms can accelerate their entry into the region while setting themselves up for long-term success.