Soaring demand for tech talent in the US is driving a competitive marketplace. IT staffing shortages have led many companies, including giants Amazon, Microsoft, and IBM, to tap into talent from a surprising place: Uruguay.
Uruguay is a small country of 3.5 million people between Argentina and Brazil. The country's IT industry has been growing steadily for the last few decades, fueled by government initiatives and a heavy investment from US venture capital companies. The tiny country is home to the highest concentration of professionals with IT skills in South America, many of whom offer expertise in high-demand fields like artificial intelligence (AI), machine learning (ML), and cloud and mobile engineering.
Uruguay's flourishing tech scene and vibrant labor market make it a compelling choice for US companies seeking IT talent. Learn more about the benefits of hiring in Uruguay in this article.
Why hire workers in Uruguay? A quick summary
- Tech talent: Uruguay has a bilingual, highly educated workforce, particularly in coveted fields like AI and ML.
- Favorable business environment. Uruguay offers a high quality of life, political stability, and favorable tax policies.
- Cost-effective salaries: Uruguay's lower cost of living means US companies can hire skilled developers at competitive rates.
- Time zone overlap: The country is just two hours ahead of EST.
- Cultural alignment: Uruguay shares many business values with the US, including collaboration, reliability, and innovation.
Uruguay's thriving tech scene
In Uruguay, STEM development is a national priority. The Uruguayan government famously introduced Plan Ceibal in 2007, becoming the first country in the world to provide laptops for all public school students. Over the years, the local government has complemented the program with tax breaks, investment in education, and initiatives, including the 2025 Digital Agenda.
Uruguay's investment in IT has paid off. Today, the country boasts the fastest internet in Latin America and over 1,000 startups, most located in the country's capital and dynamic tech epicenter, Montevideo.
Uruguay's tech talent pool
Uruguay has a 98.7% literacy rate, equal to that of the US. The country offers free education at all levels, including university.
Uruguay's excellent education system has created a bilingual, highly educated talent pool. The country has the highest density of tech-skilled individuals in South America, according to a report by Microsoft and CUTI.
Uruguay's tech talent pool is growing quickly, with universities and coding programs churning out an estimated 5,000 STEM graduates per year. The country boasts the highest proportion of AI-skilled workers in Latin America, as well as the highest proportion of IT workers with English language proficiency.
Time zone and strategic location
Uruguay offers a more convenient time zone than traditional offshoring destinations like India and the Philippines. Uruguay is only one or two hours ahead of New York, depending on the time of year.
Uruguay is also a regional hub with a strategic location. Its Mercosur membership and trade agreement with Mexico mean Uruguay can serve as a launchpad for companies seeking to penetrate the LatAm market of over 400 million.
Cultural compatibility
In business, Uruguayans value creativity, communication, and hard work. Compared to the US, Uruguay has a more collectivist culture, emphasizing teamwork and trust.
How to hire workers in Uruguay
Uruguay is an appealing talent hub, with strong expertise in AI, ML, and data analytics. US companies interested in tapping into the market have three main options for hiring workers in Uruguay:
Open a legal entity in Uruguay
Opening a legal entity in Uruguay involves setting up a branch, subsidiary, or other form of corporate entity. Establishing an entity lets you hire workers directly. However, the process is expensive and time-consuming, requiring an in-depth understanding of local labor laws and tax regulations.
Hire contractors
Hiring independent contractors is a quick, catch-all solution for tapping into the Uruguay talent pool. Independent contractors are freelancers who operate independently, with autonomy over where, when, and how they complete their work.
There are downsides to hiring contractors as a US company: These professionals offer flexibility and lower overhead, but at the expense of control and commitment. In addition, Uruguay enforces strict penalties for misclassifying employees as contractors, and the penalties for misclassification can be steep.
Use an Uruguay Employer of Record (EOR)
The easiest, most streamlined way to hire in Uruguay is to work with a local employer of record (EOR). An EOR legally hires employees on your behalf and handles all the hard work, including payroll, taxes, and compliance.
As a local EOR, Howdy.com makes hiring in Uruguay simple. Our on-the-ground experts hook you up with everything you need to expand your team without the hassle.
Ready to start building your remote team in Uruguay? Book a demo to learn how easy hiring with Howdy.com can be.
Key labor laws in Uruguay
Employment contracts in Uruguay
Employment contracts in Uruguay must be in writing. Contracts must outline job responsibilities, salary, working hours, and termination conditions.
Working hours in Uruguay
The standard workweek in Uruguay is 44 hours, typically spread over five or six days. Employees must receive a break of at least one hour for every six hours worked.
Overtime in Uruguay
Overtime in Uruguay is compensated at 200% of the regular hourly wage. Work on public holidays or non-working days is paid at 250% of the regular wage. Employees are limited to eight hours of overtime per week.
Employment taxes in Uruguay
Employers must contribute 12.625% of an employee's salary towards social security. This covers health insurance, pension fund, labor re-conversion fund, and labor credit guarantee fund. Employees contribute between 18.1% and 23.1% of their salary, depending on income.
Benefits and leave in Uruguay
Employees are entitled to 20 days of paid annual leave after one year of service, with an additional day added every four years, up to a maximum of 25 days. Maternity leave is 12 weeks, fully paid. Paternity leave is three days. Sick leave is fully paid after the first three days of illness.
Termination in Uruguay
Employers can terminate employees with notice and severance pay. Severance pay is equivalent to one month's salary for each year of service, up to a maximum of six months. The notice period must be specified in the employment contract.
Howdy makes it easy to source, onboard, and pay Uruguayan employees. We handle labor laws and tax regulations so you can focus on growing your business and building a top-notch global team. Book a demo to unlock expert support on compliant hiring in Uruguay and across LatAm.
FAQs for hiring in Uruguay
Why hire workers in Uruguay
Uruguay offers a stable economy, progressive labor laws, strong infrastructure, and ample time zone overlap with the US and Europe. Critically, the county has a growing, educated talent pool proficient in English and trained in AI, data engineering, and other critical IT skills.
What is the minimum wage in Uruguay?
Uruguay's national minimum wage is 23,604 Uruguayan pesos (UYU) per month.
How do you pay employees in Uruguay?
In Uruguay, the standard payroll cycle is monthly, with salaries typically paid by the 5th day of the following month. You must withhold and remit employee contributions, including social security and income tax, to the appropriate authorities. Partnering with an EOR can help you stay compliant by handling taxes, benefits, and contracts on your behalf.
How is payroll calculated in Uruguay?
Payroll in Uruguay is calculated by combining salary, social contributions, and tax deductions.
What is Uruguay's 'Aguinaldo'?
Aguinaldo is Uruguay's mandatory annual Christmas bonus or 13th-month salary. The Aguinaldo is paid in two installments: June and December.
What are the rules for terminating an employee in Uruguay?
While there's no required notice period, you're expected to provide around two weeks' notice for termination in Uruguay. Employees are entitled to severance pay, calculated as one month's salary for each year of service, up to a maximum of six months. Exceptions may be made if the dismissal is for serious misconduct.
Tap into Uruguay's tech talent with Howdy.com
At Howdy, connecting companies with top-tier LatAm talent is what we do best. As an EOR, we help you hire, onboard, and manage your remote global team the easy way, handling everything from bespoke sourcing to payroll and taxes.
Ready to tap into Uruguay's top 1% of tech talent? Book a demo with Howdy.com to get started today.