Information and Communications Technology market in Colombia 

Information and Communications Technology (ICT) is a key pillar for enhancing Colombia's productivity and competitiveness. The country has experienced substantial growth in the ICT sector, thanks to public initiatives like Plan Vive Digital (2010-2018).

Colombia has prioritized ICT use among Colombians and Small and Medium-Sized Entreprises (SMEs) and has invested in increasing internet and broadband penetration to provide e-learning, e-government, e-health, and e-business services.

Colombia is one of the top adopters of digital government in South America, though challenges persist in boosting internet adoption among citizens and improving rural infrastructure.

Key opportunities for Canadian ICT companies in Colombia:

• Cybersecurity
• Telecommunications Equipment, Software, and Services
• Digital Media and Video Games/Animation
• Enterprise Software Solutions (ESS)
• Agricultural Technologies (Agtech)
• Fintech
• Educational Technologies (Edtech)
• e-Health

Notable challenges for Canadian ICT companies in Colombia:

• Colombia's ICT sector is complex and evolving. The country is emerging from a fifty-year war with the Revolutionary Armed Forces of Colombia (FARC) and gaps in social and physical infrastructure are prominent, especially in rural and remote areas. While the percentage of internet users is 73%, most do not have broadband or a home computer and rely instead on - sometimes limited - mobile connectivity by smartphone.
• Colombia's private and public spending in the ICT sector has been inconsistent and difficult to predict. Business cycles are long and change frequently. Decision-making for ICT products and services is usually carried out by the Director General (CEO or President) and/or the board of directors with recommendations from technical experts. It can be difficult to access these decision makers, who may already have a preferred supplier in mind.
• Main foreign competitors for ICT equipment are Israel, Spain, United States, France and China and while they enjoy relatively barrier-free entry into the market, Colombia has invested significant resources to develop the local industry. This, in addition to comparable low cost of talent means that Canadian companies must offer competitive pricing or have a niche product that is not available locally. Canadian ICT companies can use their technological advantage in addition to experience and product-quality to demonstrate their value proposition over local and other foreign ICT company offerings. Although Colombia is open to globalization and has FTAs with over 60 countries, some aspects of its economy are protectionist.
• Business in Colombia starts with personal and informal knowledge of the actors involved. Buyers prefer to know the person, the company, and to develop a business relationship. Suppliers must maintain visibility in the long-term. For this reason, a local representative is highly recommended. A local representative or partner helps to reduce the time and commitment required to visit and nurture relationships in-market. Canadian ICT companies may also explore joint ventures or investing in the market to establish a local presence.
• Law 80 dictates that government contracting agencies must use a public competitive bidding process. To be successful in an RFP, the preference is to be involved in the drafting of the requirements from the beginning so that the RFP can be tailored to include the provider's specifications. Corruption and lack of transparency are factors in the sector in the systems for public tenders, which continue to lack transparency and are not necessarily reliable. It is important that Canadian companies follow the tender process closely and bring to light any irregularities as soon as they are observed.

Colombia's business landscape:

Many world-class technology companies have opened a branch in Colombia, as these companies not only seek to increase their participation in the domestic market, but also use Colombia's strategic location as a hub for in nearby Latin-American markets. Investors have identified the country's enormous potential, which is considered the "Silicon Valley of Latin America".

Colombia is the fourth-largest market for ICT in Latin America, after Brazil, Mexico, and Argentina. There are about 6,200 ICT companies in Colombia, located mainly in Bogota (63%) and in Medellin (14%). The hardware industry in Colombia is small, and the market relies on imports, while the software and services industry emerged as an important regional nearshoring center, especially development firms with regional expansion plans in the FinTech, Animation and app sub-sectors.

Under the Petro Administration, the Colombian Ministry of Information Technologies and Communication (MinTIC) continues to focus on closing the connectivity gap between urban and rural areas. The new administration presented the following priorities in the new National Plan for Development:

• Connectivity: Achieve 100% Internet access by 2026
• Digital Culture: Promote a digital culture for shared beneficial use
• Legislation: Establish a flexible and modern regulatory framework
• Transparency: Adopt technologies to improve public management
• Cybersecurity: Promote a safe digital environment
• Digital government: Consolidate an agile and efficient State
• ICT: Consolidate the national industry as an engine of growth
• Talent: Promote access to knowledge
• Digital Economy: Achieve digital transformation

Colombia has a strong network of chambers of commerce and business associations that have a strong focus on business development and professional development, especially in urban centers. Government entities such as Procolombia, invest in programs and services to support the commercial sector.

Summary

Many world-class technology companies have opened a branch in Colombia, as these companies not only seek to increase their participation in the domestic market, but also use Colombia's strategic location as a hub for in nearby Latin-American markets. Investors have identified the country's enormous potential, which is considered the "Silicon Valley of Latin America".

Over the last years, the initial large pool of IT talent attracted multinationals, which lead average salaries and digital nomads to increase rapidly. A talent shortage has become a top concern within the local business community. To help local entrepreneurs address the issue, recruitment, and retention strategies such as partnerships between multinationals and top universities are being put into place to protect the local industry.

Also, while education levels among the population vary (especially between urban and rural populations) the country's post-secondary institutions are accessible and offer quality programs that are sometimes bilingual. ICT professionals in the country are adaptable however, training and performance management are vital. Overall, there is a lack of specialization in most professions and employees are somewhat generalists in their field.

The various regions of Colombia have differing ICT needs:

• In the Caribbean region, there are ICT opportunities in the logistics and distribution sector
• Mining and hydrocarbon for the Santander region
• Financial sector for the Bogotá region
• Energy sector in the Antioquia region
• Agro-industries/biology in the Coffee Triangle region.

Unlike Canada, which has a strong fixed telephone, home computer and broadband adoption, Colombia's internet access is largely dependent on mobile internet access via smartphone. There are more mobile phone subscriptions than there are people, due to individuals having more than one smartphone. That said, many smartphone mobile users have limited data plans. Less than 60% of the population have a computer or broadband internet access, likely due to cost. Also, the lack of broadband service in rural and remote areas is an important factor. This gap in connectivity represents an opportunity for companies with innovative solutions to extend coverage to these underserviced areas.

Colombia's investments in artificial intelligence and the internet of things, including through the World Economic Forum's Centre for the Fourth Industrial Revolution launched in 2019, positions Colombia well as a leader in the region in ICT.

Canadian companies in Colombia

• CGI Group
• Yulcom Technologies
• FreshWorks Studio Inc
• D2L Corporation
• Talent.com

Upcoming sectoral events and activities

• Andicom – September, Cartagena, Colombia
• Expo-i – September, Bogota, Colombia
• Andina Link and Smart Cities Expo – March, Cartagena, Colombia

For more resources and information on the ICT market in Colombia, please contact bogotatd@international.gc.ca