If you are evaluating your options for nearshore 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.
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 to provide North American companies with solid incentives to relocate at least some of their operations from traditional offshore locations to Colombia:
- The Mission TIC 2022 program aimed at training up to 100,000 software professionals by 2022, an undertaking that was very successful and was co-funded by the government and leading Colombian IT associations such as Fedesoft.
- INNpulsa is the entrepreneurship and innovation agency of the National Government dedicated to supporting the rapid growth of promising ventures and facilitating the innovation processes that enable companies in the country to expand, thereby fostering greater economic development, equity, and opportunities for all Colombians.
- 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.
- ICT industry stimulation laws, and the 2019 ICT modernization law in particular, gave a solid boost to the entire IT sector by facilitating and democratizing access to services, resources, and technologies.
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. 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 2022 Network Readiness Index
The advantages of nearshore outsourcing 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.
And those efforts started paying off right away. According to a 2022 report by Biz Latin Hub,
around 60 foreign companies chose Colombia for nearshore development services and moved their operations to the country during the first quarter of 2022, and that trend is still going strong.
Today, Colombia hosts a number of major-league companies that have chosen it because of the great value-to-cost ratio it offers:
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, 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, 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.
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.
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. As you can see below, Colombia comes second after Mexico, with a little over 23%, which is truly impressive and above the world median.
Source: The World Bank
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 2021 World Talent report by the International Institute for Management Development (IMD), Colombia ranked 5th 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.
Nearshore outsourcing rates in Colombia
Since the country is still an emerging player in the IT market, the rates for nearshore outsourcing in Colombia are considerably lower than what you’d be paying in the US.
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.
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 your nearshoring endeavor may require and what benefits it will bring to the table.