Latin America is in the spotlight as one of the most promising custom software development destinations for North American businesses. The region develops rapidly and is currently home to more than a million IT experts distributed among several major technology hubs. Today, we are going to take a look at the factors that make software development in Colombia a popular trend. Let’s see what makes the Colombian software development market attractive to foreign investment and how your business can benefit from working with Colombian talent.
Why opt for software development in Colombia in times of economic uncertainty?
As the global tech market scrambles to recover from the worst crash in the past two decades, businesses look for new ways to optimize costs while maintaining efficiency. The string of massive layoffs in the tech industry’s major players is a clear marker of the industry’s need to reinvent some of the long-standing business practices. That is where the new outsourcing destinations like Colombia come into the picture offering great talent, streamlined communication, convenient cooperation models, and opportunities for cost optimization that the old outsourcing hubs like India and China could not sustain.
1. Little to no time zone differences
A critical problem associated with outsourcing to traditional offshore destinations in Asia was the time zone differences that caused frequent communication breakdowns and scheduling issues. Colombia offers a solution to that problem. Opting for software development services in Colombia, the US-based businesses can work with teams located in the same or adjacent time zones. Additionally, Colombia is situated in close geographic proximity to the US making potential business trips much faster and more convenient.
Read more: Nearshoring vs offshoring: a comparative study
2. Vast talent pool
Colombia offers one of the largest tech talent pools in Latin America with more than 150,000 IT professionals across the country. The main hubs for software development in Colombia are situated in Medellin, Bogota, Barranquilla, Cali, and Cartagena. Also, 24% of the Colombian population is young, between up to 28 years, and 31% are middle-aged between 29 and 49 years. With a majority (55%) of the population being of working age, the country is looking at the positive human potential for the expansion of its tech talent pool.
3. Cost optimization opportunities
Cost reduction has always been the main reason why North American companies outsourced their operations overseas. Delegating certain aspects of the company’s functioning to experts located in other countries, specifically developing economies, allows the business to save costs while maintaining its performance. Colombia is a developing economy, which brings opportunities for cost reduction when hiring and maintaining software development teams in the country.
4. Friendly business environment
Colombia is quickly gaining points for its increasing economic and political stability as well as for the maturity of legal practices (IP protection), corporate standards, and overall business activity. According to Kearney Global Services Location Index, Colombia takes the 13th spot among global locations in terms of digital output, skills of talent, the legal protection of intellectual property, and business and corporate activity. The country is rapidly becoming one of the prominent outsourcing hubs that combine the maturity of business practices, cost efficiency, vast talent pool, and geographic proximity to the US.
Global tech hub: How Colombian IT sector grows in prominence
It would not be fair to consider Colombian software development market growth a new thing as the country has already been recognized as one of the leading technology hubs in Latin America. For instance, Kerney’s Global Services Location Index ranks Colombia 3rd in Latin America and 13th worldwide in terms of talent availability, digital and business environment, and financial attractiveness. Let’s see what factors contribute to the country’s growing influence on the global tech market.
1. A competitive IT market
Colombia is the fourth biggest IT market in the region with growth prospects indicating the possibility of moving to the third position. Obviously, it would be difficult for the Colombian software development market to match the size of those in Brazil and Mexico due to the sheer size and population of these countries. However, as the amount of foreign capital and the number of IT companies in the country increases, delegating software development in Colombia offers immense value for North American businesses.
There are more than 350 software development firms listed on Clutch with many smaller companies that are not listed on ranking websites in Colombia. The main industry verticals these companies work with are healthcare, telecom, logistics and supply chain, energy, and manufacturing. The main areas of expertise are custom software development, mobile app development, and web development, with a smaller fraction of vendors offering technology consulting and team extension services. Additionally, only a fraction of vendors in the region has a talent pool of 1,000 or more experts.
2. A country with technology export expertise
The country exports its technology services worldwide with the US being the largest consumer of digital services. Overall, 33% of Colombia’s IT export goes to the US, with Ecuador taking second place at 14.1%, and Mexico being third at 8.3%. Software development in Colombia is a well-established industry with a global network of partnerships and mature practices.
Colombian software development companies also work with global partners across Europe and Asia. Offshore software development in Colombia is particularly popular among Spanish tech companies. The US companies, however, are the largest consumers of Colombian software development services.
3. Globally connected country with developed infrastructure
Colombia is an upper-middle economy that cooperates with the rest of the globe on numerous levels. The country is a valuable member of the global value chain that actively participates in the international tech exchange. Global tech giants like Microsoft, SAP, IBM, Oracle, and many more have already expanded their outreach to the country by developing nearshore software in Colombia. Tech companies like N-iX have also established a strong presence in the country capitalizing on the professionalism of the local talent. This trend expands the international network of cooperation and increases the weight of Colombia in the global technology market.
The government also creates incentives for foreign companies that create jobs in Colombia. For instance, the Free Trade Zone initiative cuts taxes for foreign investors who create jobs, and the more jobs they create, the better the taxation conditions they receive. The country’s government clearly sees a huge potential in the software development services in Colombia and makes a noticeable effort to entice both local and foreign investment.
It is also worth noting that the country’s tech talent demonstrates good command of English, which furthers integration into the global tech value chain. For instance, global tech companies like N-iX that work in Colombia, have no problems hiring English-speaking IT experts. There are more than 60,000 English-speaking professionals in Medellin alone, which allows for fluent communication with the US and most European clients.
4. Education and the growing professionalism of local talent
Colombia is the 3rd largest talent pool in Latin America at around 26M people with 150,000 being qualified IT experts. The country makes a strong effort to bring up the quality of education with 4 out of 10 best universities in Latin America being situated in Colombia. Also, around 28% of Colombian students undergo technical training, which gives a stable influx of new tech talent. With the country’s population being young and a large number of tech students, it is possible to extrapolate that trend toward the future growth of the IT sector and software development services in Colombia.
Overview of Colombian software development hubs
There are several IT hubs across Colombia with Bogota and Medellin being the most prominent. Bogota is the area of concentration for business and finance while Medellin is the country’s science and technology innovation hub. The city has a special designation of the Science District in Colombia.
Bogota: Colombia’s start-up capital and the biggest investment hub
74% of all the Colombian startups that have attracted either foreign or domestic investment in 2022 came from Bogota region. Bogota, as the capital city, is the prime area for the growth of business and investment, namely in the banking and financial sector. Out of 85 rounds of investment in Bogota in 2022, fintech service companies participated in 31, making financial sector the most prominent in the capital’s IT market.
A remarkable trend here is that more than a half of the total investment rounds came from the US, namely 44 of 85. Domestic investors were the second most active, followed by the capital from Mexico, Brazil, Switzerland, and Germany. Bogota quickly grows as one of the most attractive outsourcing destinations in Latin America, followed closely by Medellin, the country’s science and technology hub.
Medellin: Colombia’s special science district for technology and innovation
Medellin is specifically attractive to foreign investors thanks to the high concentration of tech talent, English-speaking experts, and diverse expertise across numerous industries. Software development in Colombia is popular among businesses working across numerous industry verticals, and Medellin is one of the better examples of how large communities of IT experts can boost the attractiveness of a particular region for foreign investment.
Medellin has been one of the favorite destinations for digital nomads from across the globe thanks to the city’s tech-friendly economy and lush scenery. Throughout the 2010s, the city has rapidly turned into one of Latin America’s major tech hubs. In the aftermath of the pandemic and the 2022 tech crash, major North American companies have turned their sights towards Latin America as one of the best prospects for nearshore software outsourcing. That is when Latin American tech hubs like Medellin saw a new opportunity for growth and development.
Opt for software development in Colombia with a reliable partner
With an influx of foreign capital into the country, it is safe to say that software development in Colombia will be going through a period of growth in the following years. N-iX has already established a presence in Colombia, namely in Medellin. The number of well-known European and American companies in Colombia continues to grow, bringing new together mature business practices and expert talent.
With companies like N-iX going to the Colombian software development market, alongside such industry-defining giants as Microsoft and IBM, it is possible to predict that the country’s role in the global IT value chain will only grow. It now becomes much easier for US-based companies to get software development services in Colombia, and foreign companies with a broad network of partnerships certainly help in connecting US companies with Colombian talent.
N-iX combines its 20 years of market expertise and the rapidly growing Colombian tech talent to deliver software development services to North American clients from a convenient location. Gaining a strong foothold not just in Colombia but across Latin America allows us to pull professionals from the region’s strong talent pool of 1M experts. Thus, N-iX can either augment in-house teams located in the US or set up development centers in Colombia.
Why choose N-iX for software development services in Colombia
- N-iX is a global software development company that’s been on the market for 20 years working with clients across industry verticals such as manufacturing, automotive, logistics & supply chain, healthcare, and more;
- Our team works with a network of global partners, including US-based companies like gogo, Office Depot, Seeking Alpha, Fluke, and OpenText, to name a few;
- The company partners with such American tech giants as Microsoft, OpenText, Amazon, and Google providing clients with consulting and development services;
- We operate a development center in Medellin and work with talent across Latin America to expand our clients’ access to the region’s top experts;
- N-iX is a globally recognized software development and consulting partner, awarded with numerous industry recognitions such as Forbes, CRN 500, IAOP GO100, Forrester, and more.