The underlying salary insights that US companies need to know for an effective talent acquisition approach in LatAm.

One of the biggest challenges for US startups hiring in Latin America (LatAm) is determining the right salary range. Cost-efficiency is a major driver behind remote hiring, but finding the right balance between affordability and attracting top talent can be tricky. Unlike the US, where salary benchmarks are relatively standardized, LatAm presents a more fragmented and varied compensation landscape.

In this article, we’ll break down how startups should approach salary benchmarking in LatAm, key compensation differences between the US and LatAm, and why price discovery is often more effective than relying on static benchmarks.

Why Salary Benchmarking in LatAm is Difficult

Many US companies expect a simple benchmark that tells them what they should pay software engineers in LatAm, but the reality is more nuanced. Here’s why:

• Country-Specific Markets: LatAm is not a single market like the US or Europe. Each country has different legal systems, economic conditions, and talent pools. A single salary benchmark across the region would be too abstract to be useful.
• Smaller Talent Pools: Countries like Argentina have around 60,000 software developers, while the US has over 4.4 million. With such a limited pool, salaries vary widely based on skills, experience, and employer demand.
• Extreme Salary Dispersion: In the US, geography largely dictates salary ranges, but in LatAm, salaries can range from $25,000 to $150,000 per year for software engineers. This broad range reflects how companies value talent and the efficiency of remote hiring markets.

If you’re looking for a one-size-fits-all number, you won’t find it. Instead, startups need to take a more strategic approach to pricing talent.

Comparing US vs LatAm Compensation Structures

Startups often make the mistake of focusing purely on salary when evaluating hiring costs. However, several other factors influence total compensation:

1. Equity vs Cash

LatAm engineers are generally averse to equity-based compensation. Unlike in the US, where equity can be a strong incentive, most engineers in LatAm prioritize cash over stock options. While this limits long-term incentives, it also reduces your overall compensation costs, especially if your company reaches later funding stages.

2. Health Insurance Expectations

Unlike in the US, where employer-sponsored health insurance is standard and expensive (averaging $17,000 per year for a family), remote contractors in LatAm do not expect employer-provided healthcare. This significantly reduces the total cost of employment.

3. Payroll Taxes & HR Overhead

Hiring remote engineers as contractors instead of employees allows companies to avoid US payroll taxes (typically 15.3%, with half covered by employers). Additionally, HR overhead is significantly lower—handling contractors via a payroll platform can cost as little as $50 per month compared to $1,200 per year for a US-based employee.

Cost Comparison: US vs LatAm Hiring

Expense	US Employee	Remote Engineer (LatAm)
Salary	$100,000	$100,000
Payroll Taxes	$7,650	$0
Health Insurance	$12,000	$0
Equity (1%)	$37,500	$0
PEO/Payroll	$1,200	$600
Total Cost	$158,350	$100,600

[*] Assumes 1% equity in a $15 million seed round (~$37,500 over four years).

Benchmarks vs Price Discovery: What’s the Best Hiring Approach?

While salary benchmarks provide a starting point, they are often too rigid to be useful for startups making a few hires. Instead, we recommend a price discovery approach:

• Test the Market: Post job listings at different salary ranges to gauge candidate interest and response quality.
• Evaluate Offers in Real-Time: If candidates are not applying or dropping out at the offer stage, your salary may be too low. If you are receiving too many applications, you might be overpaying.
• Understand LatAm Hiring Culture: Unlike US candidates, LatAm engineers tend to accept the first reasonable offer they receive rather than negotiating multiple competing offers. This means your initial offer needs to be competitive.

Finding Reliable Salary Data

Several platforms provide salary benchmarks for LatAm engineers, but each has limitations:

• Pave (YC): Reliable for US salary data but lacks remote hiring insights.
• Deel (YC): Offers regional salary insights but skews towards local employment contracts rather than US-based remote hiring models.
• Recruiting Firms: Agencies like Silver.dev track real-time salary trends by working directly with candidates and startups. This data tends to be more accurate than generic benchmarking reports.

For startups making their first hires in LatAm, working with a recruiting partner can provide deeper market insights and a more tailored hiring strategy.

Final Thoughts

Hiring software engineers in LatAm presents a unique opportunity for US startups to access high-quality talent at a lower cost. However, salary benchmarks alone won’t guarantee successful hiring. Instead, companies should take a dynamic approach—leveraging market testing, understanding local compensation structures, and staying flexible in their salary expectations.

If you’re looking for expert guidance and up-to-date salary benchmarks for hiring in LatAm, Silver.dev provides data-driven hiring solutions tailored for US startups. Contact us to learn more.