The GDP per Capita Issue for India Offshoring vs. Latin America Nearshoring

While India has long been the giant of offshoring, new data shows that Latin America—led by Argentina, Mexico, and Colombia—is gaining ground as a nearshoring powerhouse. The key? A much higher GDP per capita, which translates to better living standards, stronger economic mobility, and a more productive workforce. Discover why Latin America’s GDP per capita and better wealth distribution makes it an increasingly attractive outsourcing destination compared to India’s cost-focused model.

Source  INSEAD 2023 Global Talent Competitiveness Index​  

In today’s rapidly evolving global economy, businesses are increasingly looking for cost-effective, high-quality outsourcing solutions. India has long been regarded as the go-to destination for offshoring, particularly in the software and technology sectors. However, new research led by Leonel Azuela Co-Founder of EvolutionCode.io, highlights that Latin American countries—particularly Argentina, Colombia, and Mexico—are becoming strong alternatives for nearshoring. One key factor in this shift is GDP per capita, which can serve as a proxy for economic opportunity, living standards, and overall workforce productivity. This article delves into the GDP per capita comparison between India and Latin America to shed light on why Latin America presents an increasingly attractive option for outsourcing.

GDP per Capita Comparison Between India and Latin America

India’s economy is larger than those of Argentina, Colombia, and Mexico combined, but when analyzed from the perspective of GDP per capita, a different picture emerges. While India’s total GDP reaches over $3.38 trillion, its GDP per capita is the lowest of the group. Argentina, on the other hand, leads with a significantly higher GDP per capita, reflecting a more favorable economic distribution. Mexico and Colombia fall between these two extremes, presenting more balanced, but still superior, wealth per capita compared to India.

Table: 2023 GDP, GDP per Capita, and GTCI Scores

Source: INSEAD 2023 Global Talent Competitiveness Index

India: High GDP, Low GDP per Capita

India stands out with a massive GDP of $3.38 trillion, but when this is divided by its population of over 1.4 billion people, the GDP per capita drops to $8,379. This imbalance between total economic output and individual earnings suggests limited economic mobility, fewer opportunities for personal growth, and lower living standards across the workforce. For businesses seeking to outsource, these conditions could impact workforce productivity and overall project outcomes.

Latin America: Balanced Wealth Distribution

In contrast, Argentina’s GDP per capita of $26,504, despite its smaller overall economy, highlights a much healthier distribution of wealth. This translates to greater access to education, better living standards, and a more motivated workforce. Mexico and Colombia also demonstrate more favorable conditions, with GDP per capita values of $21,512 and $20,287, respectively. This more balanced economic landscape makes these countries ideal candidates for nearshoring, where a workforce with higher personal income can deliver superior quality and productivity.

Conclusion

The data clearly demonstrates that while India’s large GDP gives it the appearance of a strong outsourcing destination, its low GDP per capita reveals potential pitfalls in terms of workforce economic mobility and productivity. Latin American countries like Argentina, Colombia, and Mexico, on the other hand, show higher levels of individual wealth and stronger living standards, making them increasingly viable nearshoring options.

At EvolutionCode.io, we understand that successful outsourcing isn’t just about cutting costs—it’s about finding the right balance between affordability and quality. By nearshoring to Latin America, we help our clients access highly skilled developers in regions with better living standards and stronger economic conditions. Our approach ensures your projects receive the quality and reliability they deserve.