Investment in Software and IT Services sector in Colombia

1. INVESTMENT IN
SOFTWARE AND IT
SERVICES SECTOR
L ib erta
y O rd e n

2. OPPORTUNITIES IN THE LOCAL INDUSTRY
The financial sector has been one of the most dynamic
sectors in mobile internet demand, based on a mass
bancarization dynamic sought by the government to
offer everyone the possibility to manage their finances
using mobile devices. This trend has created many
opportunities for the provision of back office and call
center services in the country.
Colombian energy generation, transport and
distribution companies, significant growth, and
current regional expansion processes, increasingly
demand more BPO and IT services
Due to the sustained expansion of the health sector
and the growing demand of the population (47 million
inhabitants), this sector requires increasing support in
mobile telecommunication services for remote monitoring
of patients (Telemedicine) and information consolidation
(Data Entry).
The Oil & Gas sectors demand more services
related to mobile telecommunications as well as
control and drilling, extraction, and oil transport
processes for their daily activities increase.
Qualified human capital availability, its strategic
and competitive geographical location with easy
access to world markets, and location in the center
of 5 time zones, sharing time zone with important
business centers, have allowed Colombia to become a
distribution regional hub for outsourcing, software, and
IT services.
The National Government is currently carrying out
an ambitious plan, more than COP $90 trillion over
the next years, for the development of road, port,
railway, and airport infrastructure in the country,
that will require accounting, finance, and logistics
support services to control projects operation.

3. Colombia – A market in Constant Development
IT Market in Colombia – 2011
Market Share per Technology Market
% Sales
Hardware
IT Services Market in Colombia – 2011
Share per IT Service
% of Sales
Software
30%
Consulting
Services
11%
11%
Deployment and
support
41%
26%
58%
20%
Education and
entertainment
Integration and
development
Outsourcing
Source: IDC, 2012.
• In 2011 IT spending in Colombia
added up to USD 6,119 million:
Hardware USD 3,568 (58%),
IT services USD 1,851 (30%),
and software USD 698 (11%).
Households and communications
& media industries, financial and
government sectors, represent
more than 50% of total IT
spending in the country. IDC,
2012.
• The IT market has grown more
than 26% in the last 5 years.
Between 2010 and 2011, sales
showed a significant increase of
approximately 44%. IDC, 2012.
• IT Services remain as the second
technology market, keeping over
30% of market share. In 20102011, sales increased more than
16%. ITO, deployment and support
services represent more than 65%
of the total IT services market.
IDC, 2012.
• ITO: Industry’s sustained
growth in its different verticals
is driving an increasing high
demand for IT services.
• Verticals: Colombia offers
a wide range of sectors
that demand a high number
of outsourced services:
Companies investing in the
country and local businesses
mean potential demand for
these services.

4. A GROWING MARKET WITH HIGH CAPACITY
OF SKILLED LABOR
Infrastructure and Privileged Location
• After Mexico, Colombia with 47.1 million
inhabitants is the second largest Spanishspeaking country in the world. It has multiple
areas of development: nine metropolitan areas
with population over 500,000 inhabitants. DANE,
2012.
• Colombia is the 28th largest economy in
the world and one of the largest Non-OECD
economies.
• The country has the second fastest growing labor
force in the region. IMD, 2012.
• Colombia is the third Latin American country with
the highest number of graduates in the areas of
Business and Engineering. Euromonitor, 2012.
• Each year more than 200,000 people
graduate from higher education in Colombia:
55% undergraduate and 30% in masters and
specialization degrees. Observatorio Laboral Ministry of National Education, 2012.
• Prime strategic location: Located in the heartland of the main
commercial and financial centers in the hemisphere, it shares cultural
affinity patterns, suitable to consolidate operations in the region.
• Infrastructure capable of support world-class operations: 5 submarine
cables (three in process) supplemented by an internal optical fiber ring
that will connect 1,078 municipalities in 2014. MinTIC, (Ministry of
Information and Communications Technologies) , 2013.
12,100
Number of graduates in engineering fields 2011
Source: Observatorio Laboral – Ministry of Education, 2012.
4,964
1,849
1,270
Systems
Engineering
Electronic
Engineering
Telematic
Engineering
Electric
Engineering
1,037
Telecomunication
Engineering

5. Innovation and New Markets Open Up
There is a worldwide trend that seeks to develop new
processes to enter emerging markets, where the idea is
to locate innovation centers to suit the requirements
of target markets. In line with this trend, the National
Government encourages the establishment of innovation
centers in the country.
Continuous strengthening of commercial relations
between Colombia and the world, opening a window of
opportunities for investment in all business outsourcing
services.
Attractive Regulatory Framework
Available tools to enable operations in areas such as services exports (Plan
Vallejo), intellectual property rights, Statutory Law of Habeas Data, Value
Added Tax (“VAT”) exemption for services provided from Colombia, income
tax exemption for software developed in the country, possibility of applying
to the free trade zones regime, First Job Law, and opportunities to benefit
from Telework.
Telecommunications Infrastructure Submarine Cables
The Government’s Commitment to the Sector
The Government is committed to support and provide
aid through the Productive Transformation Program –
PTP – a strategy aimed at promoting sector growth;
in recent years the program has created a favorable
environment to consolidate sector worldwide
recognition. Program efforts develop throughout
four main themes: Human Capital and Regulatory
Framework, Consolidation, Promotion and Sector
Innovation and Infrastructure and Sustainability.
Vive Digital
Government plan aimed at generating economic growth
based on the use and appropriation of ICT in Colombia
and the development of a national digital ecosystem.
The Presidency of the Republic and the MinTIC (Ministry
of Information Technologies and Communications) lead
the plan. In terms of connectivity, by 2014, it is expected
to have 1,078 municipalities online out of 1,100 in the
country.
CFX - 1
MAYA - 1
SAM - 1
GLOBENET
AMX - 1
S
PCC
-AM
PAN
IN PROCESS
Source: MinTIC, 2011.

6. COLOMBIA, A COUNTRY WITH MULTIPLE
AREAS OF DEVELOPMENT
Bogota
Cali, Barranquilla, and Bucaramanga
• Outsourcing:
IT Services: – Infrastructure –
Network & Desktop – Application
Management – Hosted
Application Management – Hosted
Infrastructure
Business: Business Outsourcing
Services
• IT Support and Training:
Support: – Hardware and Software
Implementation & Support
• Training and Education
• Outsourcing:
IT Services: – Network & Desktop
– Application Management and
Support
• IT Support and Training:
• Support: – Hardware and Software
Implementation & Support
• Training and Education
Medellin
• Outsourcing:
IT Services: – Network & Desktop
– Application Management and
Support
• IT Support and Training:
• Support: – Hardware and Software
Implementation & Support
• Training and Education
• Outsourcing:
IT Services: – Infrastructure –
Network & Desktop – Application
Management – Hosted
Application Management – Hosted
Infrastructure
Business: Business Outsourcing
Services
• IT Support and Training:
Support: – Hardware and Software
Implementation & Support
• Training and Education
• Digital Animation
• Mobile App Development
Coffee Triangle

7. MAJOR FOREIGN COMPANIES WHICH HAVE CHOSEN
COLOMBIA AS AN INVESTMENT DESTINATION
“Colombia is a key country in our regional expansion strategy; it’s a country experiencing strong growth that has a
very capable workforce and a very competitive cost structure. For that reason we decided to open offices here.”
Peter Kroll, Senior Vice president,
Capgemini North Latin America.
• Globant, Argentina: This software,
IT services, and maintenance
outsourcing transnational
corporation established a software
development center in Bogota
aimed at the international market.
• Indra, Spain: This consulting
services and technological
solutions company opened its
second software laboratory in the
country in Pereira in order to meet
both domestic and international
demands.
• Synapsis, Chile:This company
purchased the Colombian
operations of Latin American
broadband and IT services provider
Diveo (investment: USD 35
million).
• Capgemini, France: This IT
company opened a branch
in Bogota to serve local and
regional clients, establishing
its regional headquarters in
Colombia. (Jobs created: 400).
• Stefanini, Brazil: This Brazilian
IT solutions firm purchased
Colombian IT development
company Informatica &
Tecnologia, consolidating its
presence in Latin America.