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10 Jul 2024

BOT Panama

Amongst the many other Latin American countries we covered in this series, Panama is also another country that is making a name for itself as a fantastic location for nearshore outsourcing, particularly in the field of software development. This guide will provide you with the necessary information on setting up a development center in Panama and how you can hire Panamanian developers when you opt for nearshoring to Panama.

How To Set Up a Development Center in Panama

panama facts

Why Should You Set Up A Panama Development Center?

A Prime Location and Time Zone Advantage

Panama offers a strategic geographical advantage with its location in the Central Time Zone, which aligns well with North American business hours. This time zone alignment facilitates real-time communication with clients and partners in North America, enhancing coordination and productivity. Also, Panama’s central location provides easy access to other Latin American markets, offering opportunities for regional expansion.

A Great Talent Pool

Panama has a growing number of skilled professionals in software development, IT, and engineering. The country’s universities and technical institutes produce graduates proficient in the latest technologies and methodologies. Establishing a development center in Panama allows companies to access this developer talent, benefiting from the technical expertise and innovative thinking of Panamanian developers. Furthermore, the cost of hiring software developers in Panama is relatively lower compared to more developed countries, providing significant cost savings without compromising on quality.

Supportive Business Environment

The Panamanian government has implemented several initiatives to create a favorable business environment for technology companies. These include tax incentives for research and development, streamlined processes for setting up businesses, and support for innovation and entrepreneurship. Panama’s commitment to fostering a tech-friendly environment is evident in the growth of tech hubs and incubators throughout the country. Companies establishing a development center in Panama can benefit from these policies and the supportive infrastructure designed to facilitate business growth.

Cultural Compatibility and Language Proficiency

Panama’s cultural compatibility with Western countries is a significant advantage for international businesses. The workforce in Panama is known for its professionalism, strong work ethic, and adaptability to international business practices. Moreover, many Panamanian professionals are proficient in English, reducing language barriers and ensuring effective communication with global teams. This cultural and linguistic alignment simplifies integration into global operations and enhances collaboration across borders.

Cost Efficiency

Setting up a development center in Panama can lead to substantial cost savings. The lower cost of living translates to lower operational expenses, including salaries, office rent, and utilities. These cost efficiencies do not come at the expense of quality, as Panama offers a competitive edge in terms of technical skills and professional standards. For businesses looking to optimize their budgets while maintaining high standards, Panama presents a compelling option.

Emerging Tech Ecosystem

Panama’s software development sector is on the rise, with increasing investments in technology and innovation. The country is witnessing the growth of tech startups, innovation labs, and co-working spaces, creating a vibrant community of tech professionals and entrepreneurs. This emerging ecosystem fosters collaboration, knowledge sharing, and continuous learning, providing a dynamic environment for a development center. Companies can benefit from being part of this growing tech landscape, gaining access to local innovations and industry trends.

Stable Economic Growth

Panama has demonstrated consistent economic growth over the past decade, making it a stable and reliable location for long-term business investments. The country’s economic policies are geared towards promoting foreign investment and economic stability. This stable economic environment reduces risks and provides a solid foundation for companies looking to establish a development center. Investors can have confidence in Panama’s economic future, ensuring a stable operational base for their development activities.

Selecting the Ideal Location for Your Development Center in Panama

When determining the optimal location for your development center in Panama, it's essential to consider various factors that can significantly impact your business's success. Panama consists of a number of different cities and regions, each with its own distinct advantages and considerations. Factors such as the availability of a skilled workforce, cost of living, infrastructure quality, and regulatory environment should all be carefully evaluated when selecting the perfect site for your development center.

Key Things to Think About When You're Picking a Spot For Your BOT Panama Development Center

Availability of Skilled Workforce

When selecting a location for your BOT development center in Panama, consider the availability of a skilled workforce. Panama City, the capital, is known for its educational institutions and professional talent pools. Ensuring that your chosen location has access to a robust and competent workforce is crucial for the success of your development center.

Cost of Living and Operational Expenses

The cost of living in different regions of Panama can vary significantly, impacting your operational expenses. Areas with a lower cost of living can offer substantial savings on salaries, office rentals, and other operational costs. While Panama City is the capital and offers extensive infrastructure and amenities, other cities like Colón might offer lower costs while still providing access to skilled labor and necessary resources. Evaluating these factors can help you balance quality and cost-effectiveness in your operations.

Infrastructure and Connectivity

Infrastructure quality is a key factor to consider when choosing the location for your BOT Panama development center. Reliable internet connectivity, transportation networks, and access to modern office facilities are essential for smooth operations. Major cities such as Panama City and Colón generally offer superior infrastructure and connectivity. Ensuring that your development center is in a location with robust infrastructure will help maintain productivity and efficiency.

Regulatory Environment and Business Incentives

Understanding the local regulatory environment is critical when establishing a development center in Panama. The Panamanian government offers various incentives to attract foreign investment, including tax benefits and simplified business setup processes. Some regions might have specific regulations or additional incentives that could be advantageous for your BOT project. Conduct thorough research on the regulatory landscape and available business incentives to ensure compliance and maximize potential benefits.

Cultural Compatibility and Language Proficiency

Cultural compatibility and language proficiency are important factors for ensuring smooth communication and integration with global teams. Panama's workforce is known for its strong work ethic and professional demeanor, and many professionals are proficient in English, particularly in urban areas. Panama City has a higher concentration of English-speaking professionals. Selecting a location where language barriers are minimal will facilitate better collaboration and integration into your global operations.

Proximity to Clients and Partners

Consider the proximity to key clients and business partners when choosing your BOT development center's location. Being closer to your major clients or strategic partners can improve coordination, reduce travel time and costs, and foster stronger business relationships. If your primary clients are based in North America, cities in the northern part of Panama might offer more convenient access and time zone alignment.

Quality of Life

The quality of life in the chosen location can significantly impact employee satisfaction and retention. Factors such as safety, healthcare facilities, educational institutions, and recreational options play a crucial role in attracting and retaining top talent. Cities like Panama City are known for their high quality of life, offering a range of amenities and services that can enhance the living experience for your employees. Considering these aspects can help ensure a happy and productive workforce for your development center.

Top Panamanian Cities for Setting Up a Nearshore Development Center

Panama City

Panama City, the capital of Panama, is the top choice for setting up a nearshore development center. As the largest city, it offers robust infrastructure with reliable internet connectivity, modern office spaces, and excellent transportation networks. Panama City is home to some of the country's best universities, producing a steady stream of skilled graduates in IT, software development, and engineering. The city's vibrant tech ecosystem, supported by numerous tech hubs and innovation centers, fosters a collaborative environment for tech professionals. Also, Panama City's cultural compatibility and high proficiency in English make it easier for international companies to integrate their operations smoothly.


Colón, located near the Atlantic entrance of the Panama Canal, is another prime location for a nearshore development center. The city boasts a lower cost of living compared to Panama City, which translates to lower operational expenses without compromising on quality. Colón has reputable universities and technical institutes that provide a skilled workforce in various technical fields. The city’s infrastructure, including reliable internet and modern office facilities, supports efficient business operations. Colón's high quality of life, with its rich cultural heritage and pleasant climate, also helps in attracting and retaining top talent.

Assessing Infrastructure and Connectivity in Panama

Internet Connectivity

Assessing the quality of internet connectivity is crucial when setting up a development center. Major cities like Panama City and Colón offer reliable high-speed internet, essential for seamless communication and project management.

Transportation Networks

The transportation infrastructure varies across regions, with Panama City boasting the most developed network, including extensive roadways and an international airport. Colón also provides good connectivity, facilitating the movement of goods and personnel.

Office Space Availability

The availability of modern office spaces is vital, particularly in Panama City where a wide range of options exist, from high-end commercial buildings to tech parks. Colón also offers suitable office facilities, albeit with slightly less variety.

Key Recruitment Strategies for Hiring Top Panama Software Development Experts

Talent Pipeline Development

Establishing partnerships with local universities, technical schools, and professional organizations can help build a talent pipeline for your software development center in Panama. Participate in career fairs, industry events, and networking sessions to engage with potential candidates and showcase your company's opportunities. Offering internships, apprenticeships, and training programs can also attract top talent early in their careers, providing valuable experience and fostering long-term relationships with potential hires.

Competitive Compensation Packages

To attract and retain top talent in Panama, it's essential to offer competitive compensation packages that align with industry standards and reflect the value of the skills and expertise sought. Conduct market research to understand salary benchmarks and compensation trends in the local market, ensuring your offers are attractive to prospective candidates. You can also consider offering benefits such as health insurance, retirement plans, flexible work arrangements, and professional development opportunities to enhance the overall value proposition for potential hires.

Employer Branding and Company Culture

Building a strong employer brand and promoting a positive company culture can differentiate your software development center and attract top talent in Panama. Highlight your organization's values, mission, and commitment to employee development and well-being through various channels, including social media, company website, and employee testimonials. Showcase your workplace culture, team dynamics, and employee perks to create an appealing employer brand that resonates with potential candidates. Engage with current employees to leverage their networks and referrals, tapping into hidden talent pools and fostering a sense of community within your organization.

Building and Managing a Development Team in Panama

Understanding the Panamanian Tech Talent

Panamanian tech professionals are highly skilled and dedicated to their work. They value a good balance between work and personal life, opportunities for career growth, and a supportive work environment. Knowing these priorities can help you attract and retain the best talent.

Finding the Right Developers

Recruiting the right people is essential. Use local job boards, recruitment agencies, and tech events to find skilled developers in Panama. Emphasize your company's values, growth opportunities, and the chance to work on exciting projects to draw in top talent.

Navigating Panamanian Work Culture

Respecting Panamanian culture is crucial. Panamanians appreciate direct communication and professionalism. Providing cultural sensitivity training can help your team understand these cultural nuances and work better together. Celebrating local holidays and respecting customs can also help integrate your team.

Setting Clear Goals and Responsibilities

Make sure to clearly outline project goals, roles, and responsibilities. This helps ensure everyone is working towards the same objectives. Regular updates and feedback sessions can keep the team aligned and motivated.

Improving Communication

Good communication is essential, especially if your team is remote. Use various tools to facilitate real-time collaboration and keep everyone connected. Regular check-ins and open dialogue can help resolve issues quickly.

Supporting Professional Growth

Investing in the growth of your team members is key. Offer training, workshops, and mentorship to help them improve their skills. Recognizing and rewarding their hard work can build a loyal and motivated team.

How The Build, Operate, Transfer Panama Model Can Help In Starting Up A Nearshore Software Development Center in Panama

The Build, Operate, Transfer (BOT) model can significantly aid in establishing a nearshore software development center in Panama by providing a structured and safe approach. Initially, a company partners with a local firm to build the development center, making use of the local firm's expertise in navigating Panama's regulatory, legal, and business environments. During the operate phase, the local partner manages the day-to-day operations, including hiring and training staff, setting up processes, and ensuring smooth delivery of services. This allows the company to focus on its core competencies while benefiting from the local partner's experience. Once the center is fully operational and meets the desired performance standards, the ownership is transferred to the company. This phased approach minimizes initial risks, reduces time to market, and ensures a seamless transition, ultimately leading to a fully functional, cost-effective, and high-quality software development center in Panama.

Hire Developers In Panama For Your Development Center

As a business, you may opt to establish a Panama software development center and therefore would want to hire developers in Panama. To ease this challenging task, Blue Coding is here to help! We are a renowned nearshore outsourcing agency founded in 2014. Our mission is to connect our clients with the best and most skilled software development experts. Our Build, Operate, and Transfer (BOT) facility will also assist you in establishing a successful Panama development center without taking on too much stress. You can learn more about our services by booking a free strategy call with us now!

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