If you are evaluating your options for nearshore technology outsourcing, we have good news for you. Software outsourcing in Colombia is booming in a big way, and you can build the dedicated engineering team you’ve always wanted with considerable benefits.
Intellias has recently entered the Colombian IT market and is already reaping the benefits of the country’s strong tech ecosystem and skilled engineers. Looking ahead, we plan to collaborate closely with Colombian IT experts, educational institutions, and tech hubs. This location is particularly attractive due to its growing talent pool, competitive costs, and high-quality work.
As Intellias CEO Vitaly Sedler mentioned, there’s something about Colombia that reminds him of home, especially in how the IT market is developing. I personally enjoy the vibe of the Colombian team—they have a great working culture and professional attitude. We’re optimistic about our ambitious plans for growth and expansion in Colombia, and we’re rooting for the team!
This article explores the potential of nearshoring to Colombia and aims to present an outlook on the country’s IT landscape to help you make the right decision. Without further ado, let’s dive right in.
Overview of the Colombian IT market
Over the course of the past couple of decades, Colombia has fully recognized the need for drastic socioeconomic changes and made major progress towards becoming a top IT nearshore destination by doubling down on STEM education, building modern infrastructure, and creating highly favorable conditions for the growth of foreign investments.
Projected growth dynamics of the Colombian ICT market
Source: Global Data
Outsourcing software development to Colombia has been on the rise since the government made some favorable regulatory decisions and launched a series of country-wide initiatives.
These initiatives highlight Colombia as a prime location for nearshore technology outsourcing, encouraging North American companies to consider relocating some of their operations from traditional offshore destinations. Here are some key examples:
- National Digital Strategy (2023-2026): Adopted by Colombia’s Ministry of Information and Communication Technologies (MinTIC) and the National Planning Department (DNP), this strategy focuses on expanding digital infrastructure, enhancing data security, and developing digital skills. It aims to boost the attractiveness of Colombia for nearshore technology outsourcing.
- AI Centers Investment: The Colombian government is investing over $25 million to establish two AI centers in Bogotá and Zipaquirá through MinTIC. These centers will concentrate on AI, data analysis, and cloud computing R&D, and will train over 1,200 AI experts in collaboration with Microsoft.
- Fedesoft: The Colombian Federation of Software and IT Services (Fedesoft) supports the growth of Colombia’s software and IT industry through advocacy, collaboration with the government, educational institutions, and the private sector.
- Mission TIC 2022: This program, funded by the government and Fedesoft, successfully trained up to 100,000 software professionals by 2022, significantly boosting the technology market with a pool of well-trained and skilled professionals.
- INNpulsa: This national agency supports promising ventures and helps companies innovate and expand, driving economic development and creating opportunities.
High-tech parks and free-trade zones (FTZs) with favorable taxation have been growing very quickly in the past few years. For example, the Ruta N building complex in Medellín has become home to multiple ICT companies and become a local innovation hub.
As you can see, The Colombian government is putting a lot of effort into building a solid foundation for the future of the national IT outsourcing market and creating thriving ICT communities in the country’s major cities. These initiatives have helped Colombia become a significant player in the Latin American tech landscape, hosting 12.8% of the region’s tech companies.
According to recent studies (see below), engineering talent remains the strongest asset in Colombia’s ICT portfolio, and the numbers are likely to go up as the country makes steady headway toward a more technology-founded future.
Colombia global ranking in the 2023 Network Readiness Index
The Network Readiness Index (NRI) is a prominent global benchmark for evaluating the use of ICT and its impact on economies worldwide. The 2023 NRI report assesses the network readiness of 134 economies based on their performance in four key pillars: Technology, People, Governance, and Impact. Each pillar is subdivided into three sub-pillars and includes a total of 58 variables.
Source: Network Readiness Index 2023 Report
In the 2023 NRI, Colombia is ranked 65th out of 134 assessed economies. The country excels particularly in the People pillar, but the Impact pillar presents the most significant opportunity for improvement.
Source: Network Readiness Index 2023 Report
The 2023 NRI Report only proves what we claimed earlier — the country’s human capital is a significant asset, making Colombia truly appealing for nearshore technology outsourcing.
The advantages of nearshoring to Colombia are not limited to the bustling software engineering community, a well-developed ICT infrastructure, and unflagging government support. Colombia is also one of the most beautiful and biodiverse countries in the world, offering a wide range of location choices for residents, digital nomads, and companies considering technology outsourcing to Colombia.
Colombia’s legal framework facilitates smooth dispute resolution and supports foreign direct investment (FDI). The Double Taxation Bilateral Agreement with the U.S. boosts its competitiveness by preventing double taxation. This agreement contributes to Colombia’s reputation as a top investment-friendly destination in Latin America, as acknowledged by the World Bank.
Those efforts started paying off right away. Many tech giants have chosen Colombia for nearshore development services and moved their operations to this country:
No matter whether you’re considering setting up shop in Colombia or looking for reliable nearshore outsourcing companies there to help you with team augmentation/outstaffing, the country has everything you require to provide the right expertise and engineering talent necessary to optimize the cost of software development.
Major IT hubs in Colombia
Historically, the capital city of Bogotá (population 8 million), Medellín (population of around 2.5 million), the second largest city in the country, and Cali are the key technology centers and main IT hubs that attract thousands of specialists and millions of dollars in foreign investments.
Bogotá
Bogotá, the capital city of Colombia, has emerged as a thriving modern IT hub in recent years. The city offers a fertile environment for startups and established tech companies alike.
- Booming tech industry: Bogotá is home to a large number of tech startups and companies with a focus on modern software development, eCommerce, fintech, and digital marketing.
- Skilled talent: The city boasts highly skilled and educated talent, with many universities and educational institutions offering specialized programs in IT and related fields.
- Infrastructure and connectivity: Bogotá has a robust IT infrastructure, including high-speed internet connectivity and modern office spaces, making it an attractive location for tech companies.
- Investment and government support: The Colombian government has implemented initiatives to support the growth of the tech industry in Bogotá by providing funding opportunities, tax incentives, and entrepreneurship programs.
Medellín
Medellín, the second-largest city in Colombia, has transformed into a prominent IT hub with its innovative approaches and investment in technology. Here are some key characteristics of this alternative to Bogotá:
- Entrepreneurial spirit: Medellín continuously fosters an entrepreneurial city culture, with numerous co-working spaces, incubators, and accelerator programs supporting startups and tech ventures.
- Urban transformation: The city has invested heavily in digital infrastructure, providing high-speed internet access, smart city initiatives, and tech-powered public transportation systems.
- Diverse talent pool: Medellín is known for its skilled engineers, particularly in artificial intelligence and robotics. The city’s universities and training centers produce a steady stream of tech professionals of various skill levels.
- Collaboration and networking: Medellín’s city administration encourages collaboration between academia, technology businesses, and the government through events, conferences, and networking opportunities.
Cali
The third-largest city in Colombia, Cali has also been gaining recognition as an emerging IT hub, attracting both local and international tech companies.
- Steadily growing tech scene: In the past years, Cali has experienced a surge in the number of tech startups, particularly in mobile app development and eCommerce.
- Bets on innovation: The city has heavily invested in innovation centers and research parks, providing resources and support for tech entrepreneurs and startups.
- Regional connections: Cali’s strategic location offers fast and easy access to other major cities in Colombia and Latin America, providing opportunities for business expansion and international partnerships.
While all these cities have made significant strides in becoming modern IT hubs, they differ in terms of scale, specialization, and overall ecosystem maturity. Bogotá, as the capital, has the largest tech industry and the most extensive support infrastructure. Medellín is renowned for its innovative approaches and a strong focus on digital transformation. Cali, although smaller in comparison with the other two cities, is an up-and-coming destination that has been steadily growing its tech scene and investing in building a supportive ecosystem.
In general, Colombia is known for having the largest JavaScript developers community in the LATAM region that regularly holds major events dedicated to specific technologies (BogotaJS, MedellínJS, and others), and to front-end development as a whole.
Nearshoring to Colombia: benefits for US companies
Nearshore software development in Colombia has been growing steadily over the course of the past decades, as the country amassed momentum and prepared the fertile soil for the rapid growth of the ICT industry. Today, Colombia offers a number of hard-to-beat advantages to any company evaluating the prospect of adopting the nearshore model and hiring Colombian IT teams on a long-term basis.
Cultural alignment and strong economic ties to the US
Being one of the most important US partners in the LATAM region (and boasting a 200-year history of working together), Colombia has many examples of highly successful integrations with US-based businesses. The country is regularly highlighted in reports from top consulting firms as one of the best outsourcing locations in terms of ease of doing business and cultural alignment, which in real life translates into initially similar expectations regarding communication frequency and methods, understanding of business requirements, the need to observe quality and security standards, and priority of IP protection.
Vast pool of highly educated engineers
Colombia is known for its outstanding technical education programs at major universities that graduate around 13,000 software developers and other IT specialists annually, which means that there is no shortage of young and motivated people with agile minds and a passion for their craft.
Compared with other countries in the region, Colombia has one of the largest proportions of STEM-related technical degrees in the general structure of tertiary education.
Source: Latinometrics
At the same time, the quantity of graduates is not the only remarkable characteristic of the country’s educational system. What’s also extremely important is the maturity and knowledge of potential employees — and Colombia does not disappoint here as well.
According to the 2023 World Talent report by the International Institute for Management Development (IMD), Colombia ranked 6th in the Americas — a very decent result considering the size of its nearest competitors and a great indicator for any companies that are weighing the pros and cons of nearshore software outsourcing in Colombia.
Source: IMD World Talent Report
Geographic proximity and ease of travel
According to Aviationweek, as many as seven major airlines currently connect 10 US cities with nine Colombian destinations, performing over 300 flights per week with 51,000 seats available. Coupled with an average direct flight time of under 6 hours between NYC and Bogota and no visa requirement for short business and leisure stays, the decision to nearshore in Colombia leads to unprecedented ease of meeting with the remote team on a regular basis.
Matching time zones
Colombia shares the EST time zone with the US, which means that you have every opportunity to talk to your nearshore team members throughout the day during normal business hours, which is extremely convenient. Make your Colombian teammates part of your daily meetings and coordinate important project-related activities, such as go-live releases, with greater precision and efficiency.
Cost savings
Colombia provides significantly lower labor and operational costs compared to other nearshoring destinations. This economic advantage helps companies reduce overhead expenses while maintaining high-quality standards. For instance, the average annual salary for a software developer in Colombia is lower than in Mexico, Uruguay, and Chile. Moreover, the costs of rent, utilities, taxes, and transportation are also relatively affordable.
| Country | Average annual salary |
|---|---|
| Colombia | $25,000 – $30,000 |
| Uruguay | $30,000 – $40,000 |
| Chile | $35,000 – $45,000 |
| Mexico | $28,000 – $35,000 |
Note: Comparison data is based on aggregated information from Indeed.com, Glassdoor.com, and Payscale.com in 2024. Figures may vary depending on specific technology, experience, industry, or niche.
These savings can lead to higher profit margins and increased competitiveness for businesses in global markets.
Favorable Business Environment:
Colombia offers a favorable business environment marked by economic stability, positive international business rankings, and strategic government policies that attract foreign investment. The country has shown resilience and continues to play a significant role in the Latin American economy.
The government provides tax incentives and exemptions, particularly for foreign investments in the technology and digital sectors. ProColombia, the country’s investment promotion agency, supports foreign investors with comprehensive assistance and information, making Colombia an appealing choice for nearshore technology outsourcing.
Innovation potential
Colombia isadvancing in research and development (R&D) and technological innovation, emerging as a significant hub for innovation. According to the Global Innovation Index, the country ranks 66th globally, surpassing several of its Latin American peers in innovation performance.
Colombia’s investment in R&D and its collaborations with international partners are driving technological progress. Major cities like Bogotá, Medellín, and Cali have become key centers for innovation and technology. The Global Startup Ecosystem Index 2024 highlights the country’s improvement, with the Colombian startup ecosystem climbing two places from the previous year, overtaking Chile, and now ranking second in Latin America. This underscores Colombia’s growing potential as a center for innovation and entrepreneurial activity.
Nearshore outsourcing rates in Colombia
Colombia is a competitive nearshore technology outsourcing destination within Latin America. However, compared to US rates, Colombian outsourcing costs offer truly substantial savings.
The typical rate range for senior developers across various technologies will be between $45 and $65 per hour, with possible discounts for long-term engagements and full utilization.
Don’t forget that when you choose an outsourcing model for software development, you will only be paying the agreed hourly/monthly rate with no extras.
Pick a reliable software outsourcing company that will provide professional nearshore software development services and save on recruitment costs, workplace rental, equipment, and other expense items — your nearshore partner will assume full responsibility for all that.
Navigating challenges in nearshore technology outsourcing to Colombia
While Colombia offers a promising landscape for nearshore technology outsourcing, there are several challenges that US companies should be aware of.
Overcoming language barriers
Average English proficiency in Colombia ranks 17th out of 20 Latin American countries. However, English language skills in Colombian IT hubs have improved over the years. Many Colombian outsourcing companies are investing in language courses to ensure their employees are not only bilingual but also familiar with technical vocabulary and the intricacies of their clients’ businesses.
By prioritizing English language skills and expanding language training programs, Colombian developers can enhance their communication abilities further. Consistent efforts in this area will support the continued improvement of English proficiency in the Colombian outsourcing sector.
Tackling infrastructure and connectivity issues
While major cities in Colombia benefit from strong infrastructure, some regions, particularly rural areas, still face issues with reliable internet connectivity and other IT infrastructure challenges. The country is investing significantly in enhancing internet connectivity and technical infrastructure to better support the global outsourcing market.
However, companies should remain mindful of how their nearshoring providers are leveraging these advancements. It is crucial to assess the reliability and technical performance of partners to ensure they can meet the demands of your projects effectively.
Balancing geopolitical disruptions
Geopolitical stability can be a concern in many Latin American countries, and Colombia is no exception. According to the World Bank’s Political Stability Index, Colombia scored -0.64 in 2022, reflecting some challenges in political stability. However, the country has made strides towards political reform and stability, particularly following the 2022 presidential elections.
While you cannot directly influence geopolitical stability, partnering with an outsourcing company experienced in navigating Colombia’s economic and political landscape can be advantageous. Such a partner can offer valuable insights and strategies to help mitigate associated risks and ensure a smoother outsourcing experience.
Unleash the full potential of nearshore outsourcing in Colombia with Intellias
If you are still on the fence regarding the best way to augment your software development team or build an end-to-end SaaS product for business, Intellias in Colombia is your way to go.
Intellias specializes in delivering software engineering services to US businesses seeking a trustworthy nearshore partner, with a particular presence in Latin America, including Colombia. With a remarkable track record of over 20 years in the industry, Intellias excels in merging its technical expertise and deep understanding of various business domains to tackle challenges of any magnitude and complexity.
We are one of the leading software development companies operating globally, with a constantly growing footprint in the LATAM region in general and Colombia in particular.
Companies like Siemens, LG, TomTom, Hello Fresh, and HERE Technologies already benefit from our software development services. Reach out today and we’ll be happy to provide you with a detailed breakdown of what we can do for you if you’re considering Colombia for nearshore technology outsourcing.
