Latin America is making a name for itself on the global IT scene. With increasing contributions to sectors like fintech, e-commerce, and artificial intelligence (AI), the up-and-coming region is shaping the future of tech.
Brazil, LatAm's most technologically advanced country, leads the charge. The nation is fast becoming a tech powerhouse, with over 13 unicorns and a growing pool of over 750,000 software engineers.
Brazil offers a blend of talent, innovation, and cost-effectiveness to US companies looking to expand their IT teams. The country's tech ecosystem has already attracted investment from major players like Microsoft, IBM, Intel, and Disney, all of which have local software operations.
Looking to go global with your software development department? Ahead, we make a compelling case for hiring IT workers in Brazil.
Why hire workers in Brazil? A quick summary
- Skilled workforce: Brazil has the largest tech talent pool in LatAm, with an estimated 750,000+ software developers and 100,000+ annual STEM graduates.
- A dynamic tech scene. Brazil is a top 10 global tech power with a vibrant startup landscape.
- Time zone overlap. Tech hubs like São Paulo and Florianópolis are one hour ahead of Eastern Standard Time (EST).
- Cost-effective talent. Average salaries in Brazil remain lower than in the US due to a favorable exchange rate and lower cost of living.
- Multilingual workforce. English proficiency is increasing nationwide and is strong in the IT sector.
Latin America's largest tech talent pool
With a population of over two million, Brazil is Latin America's largest country and economy. The tech workforce is considered among the best in the region and the world, consistently ranking fifth globally among preferred destinations for outsourcing IT workers.
As of 2023, Brazil is home to over 750,000 IT professionals and over 500,000 software developers. This talent pool far surpasses other LatAm countries, with Mexico hosting about 220,000 developers, Argentina 115,000, and Colombia 62,000.
Brazil's massive talent pool is growing thanks to the nation's commitment to STEM education. In 2023 alone, Brazil invested $1.2 billion in tech education, with a focus on AI, data science, and cloud computing. Brazil's top-rated IT institutions produce an estimated 100,000 STEM graduates annually.
A dynamic tech scene
In 2024, Brazil's technology sector witnessed a significant uptick, with a 6.8% growth that propelled the nation back into the top 10 global tech powers. This growth was driven by investments in digital transformation initiatives, including semiconductors, industrial robotics, and AI, totaling USD 32 billion. The government also introduced AI for the Good of All, a national strategy to position Brazil as an AI global leader, with plans to invest USD 4 billion.
Major tech corporations are also recognizing Brazil's potential. Microsoft, for instance, announced a $2.7 billion investment to enhance its cloud infrastructure and AI capabilities in the country, marking its largest-ever single investment in Brazil.
Brazil boasts a dynamic startup scene, with significant activity in fintech, healthtech, and agritech sectors. In 2024, fintech startups raised USD 4 billion, while healthtech and AI-focused startups secured $1.5 billion and $1 billion, respectively.
While São Paulo remains Brazil's primary tech nucleus, several other cities — including Florianópolis, Recife, and Curitiba — are emerging as innovation centers.
Time zone compatibility
Brazil spans four time zones:
- UTC−5 (Acre Time): Covers the state of Acre and parts of the western Amazon.
- UTC−4 (Amazon Time): Encompasses states like Mato Grosso, Mato Grosso do Sul, Rondônia, and Roraima.
- UTC−3 (Brasília Time): The primary time zone, including major cities such as São Paulo, Rio de Janeiro, and Brasília, where about 93% of the population lives.
- UTC−2 (Fernando de Noronha Time): Applies to a few small Atlantic islands.
During US Daylight Saving Time, major tech hubs like São Paulo and Florianópolis are only one hour ahead of Eastern Daylight Time (UTC−4). Unlike traditional outsourcing hubs like India, this time zone compatibility translates to overlapping business hours, real-time collaboration, and faster decision making.
How to hire workers in Brazil
Thinking about tapping into Brazil's dynamic, time zone-aligned workforce? As a foreign employer, you have three options for hiring local talent:
1. Establish a legal entity. Setting up a legal entity involves creating a local subsidiary or branch in Brazil. This option lets you hire Brazilian workers directly, but takes several months and carries serious administrative and financial burdens.
2. Hire independent contractors. Hiring independent contractors or freelancers can be a quick solution for short-term projects. This option comes with lower upfront costs, but gives you limited control over workers and team culture. Hiring contractors also comes with the risk of misclassification, which can lead to legal troubles and fines.
3. Partner with an Employer of Record (EOR). An EOR is a third-party organization that legally employs workers on behalf of your company, handling compliance, payroll, and HR. This option balances reduced risk with quicker market entry.
At Howdy.com, connecting US companies with top-tier LatAm tech professionals is our superpower. As a Brazilian EOR, we take care of compliance, benefits, HR, payroll, and everything in between. That way, you can focus your attention on what matters: Building your Brazilian software dream team. Book a demo to get started.
Key considerations for hiring in Brazil
Labor laws in Brazil
Brazil's labor relations are governed by federal law. Brazil's Consolidação das Leis do Trabalho (Consolidation of Labor Laws or CLT) outlines the rights and obligations of employers and employees, covering working hours, overtime, and termination procedures.
Employment contracts in Brazil
Employment contracts in Brazil are typically for an indefinite term. Fixed-term contracts are permitted under specific conditions, such as temporary services or seasonal work, and cannot exceed two years.
Working hours in Brazil
In Brazil's tech industry, the standard workweek is 44 hours with a maximum of 8 hours per day. Employees working more than 6 hours daily are entitled to a one-hour meal break.
Overtime in Brazil
Tech workers may work up to 2 hours of overtime per day. Overtime pay is at least 50% higher than the regular hourly wage. On holidays and weekends, this rate increases to 100%.
Employment taxes in Brazil
Employers in Brazil are responsible for various taxes and contributions, including:
- Employee Income Tax (IRRF). 7.5% to 27.5%, depending on salary bracket
- Work Accident Insurance (RAT). 1% to 3%, depending on the risk level of company's main activity. Tech companies tend to require a 2% RAT.
Benefits and leave in Brazil
Employees are entitled to these benefits:
- Paid vacation: 30 calendar days after 12 months of employment, which can be split into up to three periods.
- Sick leave: Employers cover the first 15 days of illness. After that, the Instituto Nacional do Seguro Social (National Social Security Institute or INSS) provides coverage.
- Severance Fund (FGTS): Employers contribute 8% of the employee's monthly earnings to a government-managed fund.
Termination in Brazil
Employment can be terminated with or without cause. For terminations without cause, employers must provide at least 30 days' notice or pay in lieu of notice. An additional 3 days are added per year of service, up to a maximum of 90 days.
FAQs for Hiring in Brazil
Can US companies hire employees in Brazil?
Yes. However, they must establish a legal entity or partner with a local Employer of Record (EOR) to comply with Brazilian labor laws. Hiring contract workers is also an option.
What are the risks of misclassifying employees as independent contractors in Brazil?
Misclassification can lead to significant penalties, including back taxes, fines, and mandatory benefits payments.
What is the Gratificação de Natal or Christmas bonus in Brazil?
Brazil's Gratificação de Natal (Christmas bonus) is a mandatory, annual benefit for employees. It's equivalent to one full month's salary, paid in two installments, with the first half typically paid by November 30th and the second half by December 20th. Those employed for less than a year receive a prorated amount.
What are the public holidays in Brazil?
Brazil observes several national public holidays, including:
- January 1: Confraternização Universal (New Year's Day)
- April 21: Dia de Tiradentes (Tiradentes Day)
- May 1: Dia do Trabalho (Labor Day)
- September 7: Dia da Independência (Independence Day)
- October 12: Nossa Senhora Aparecida (Our Lady of Aparecida)
- November 2: Dia de Finados (All Souls' Day)
- November 15: Proclamação da República (Republic Proclamation Day)
- December 25: Natal (Christmas Day)
Brazil also celebrates movable holidays like Carnival and Good Friday based on the liturgical calendar. Dates vary every year. In addition, each Brazilian state and municipality can establish its own holidays.
Hire Brazil's top 1% with Howdy.com
Let Howdy.com do the heavy lifting. As a Brazil EOR, we specialize in helping US tech companies hire Brazil's top 1% of tech talent. We connect you with qualified candidates while handling all aspects of compliance, from tax withholding to benefits to termination.
Want to start building your Brazilian engineering office today? Get in touch to learn how Howdy.com can help.
