As more and more North American companies recognize the benefits of nearshore software development, Colombia is becoming increasingly popular as an outsourcing destination in the region. Total revenue is projected to reach $2B by the end of 2024, a nearly 13% increase from 2023 [1]. Software development outsourcing to Latin America is popular due to the country’s skilled workforce, cost-effectiveness, and favorable time zone alignment with the US and Canada. Let's look at the top reasons why Colombia, in particular, is attracting attention.
What makes Columbia a top outsourcing destination in 2024
Colombia stands as the third largest IT outsourcing market in Latin America, both in terms of value and the number of developers, with over 150,000 engineers and more than 400 companies specializing in nearshore software development [2]. Additionally, Colombia leads the region in technical ability rankings. The government’s recognition of the importance of technology outsourcing has led to substantial investments in the industry. Furthermore, its stable economic and political environment enhances its appeal for nearshore software development in Colombia. Let’s delve into each of these points in more detail:
1. Top expertise
According to Coursera, Colombia boasts the highest technical skill proficiency in the region and ranks 19th worldwide [3]. In this ranking, proficiency is compared to the most advanced market in the world. Their expertise ranks in the top 5% of all IT markets globally in general software development skills and in the top 30% in data analytics. This means that only 5% of the most complex requests will pose a challenge to Colombian developers. This impressive result is partly shaped by Colombian developers' grasp of business processes, enabling them to deliver software solutions that align with corporate strategies. By anticipating business needs, they can suggest innovative approaches that drive growth and enhance operational efficiency.
Most Colombian IT specialists focus on C# and C++, with 67K and 66K developers respectively [4]. The most common specialization for companies is mobile and web development.
The English language proficiency in Colombian IT hubs is above average. Compared to Colombia’s competition, the score is higher than in Brazil and significantly higher than in Mexico. Colombia's established relationship with the US and its cultural similarities make it a favorable destination for outsourcing. Additionally, its business-friendly environment and cultural compatibility frequently bring a spotlight to nearshore software development in Colombia.
2. Government support
A significant advantage for software developers in Colombia is the low cost of living; one dollar in Colombia buys 330% more than in New York [5], effectively tripling a developer's purchasing power in cities like Medellín. The country has not experienced major economic struggles in many years and maintains a moderate inflation rate.
According to the US classification system, Colombia has been on the list of countries with satisfactory intellectual property protection laws since 2018. In a report prepared by the Chamber of Commerce in 2023, Colombia ranks 31st globally in intellectual property protection [6]. The Colombian government is committed to creating an appealing environment for technology outsourcing, and even more initiatives and reforms can be expected to be aimed at this in the future. Legal assurance, government commitment, and global competitiveness foster a conducive environment for companies to innovate and operate securely.
Another index showing the results of systemic efforts to make Colombia attractive for North American companies is the Ease of Doing Business score, which ranks Colombia 67th [7]. A high Ease of Doing Business score indicates a favorable regulatory environment. This means that setting up operations, obtaining necessary permits, and adhering to local regulations are relatively straightforward.
3. Culture of excellence and innovation
Colombia has a vibrant and rapidly growing startup ecosystem. Over the last five years, it has experienced a 28% annual growth, effectively doubling the industry every three years [8]. A country like Colombia, with a growing startup culture, often exhibits a high level of cultural compatibility and proficiency in global business practices and communication, reducing barriers and enhancing cooperation with international clients. A dynamic startup environment fosters innovation and creativity, shaping the talent pool that is not only technically proficient but also adaptable and motivated, essential qualities for successful outsourcing projects.
Major American companies, including Google, IBM, Microsoft, and Amazon, have established offices in Colombia. These companies often invest in local talent development, creating a pool of experienced professionals with both top expertise and Western business practices.
Read more: Software development outsourcing in Colombia: Market overview
Wrap up
In conclusion, a skilled workforce, government support, and a business-friendly environment. The country's commitment to technological growth and innovation makes nearshore software development in Colombia an attractive choice.
Why should you choose N-iX as your technology outsourcing partner in Latin America?
N-iX is a reliable tech partner for Fortune 500 companies, offering team extension services in Latin America. Here are some of the things that ensure our success:
- Access to a vast talent pool: We have over 2,200 in-house tech specialists and a database of over 270,000 CVs. Our R&D center in Medellin, Colombia, and our talent acquisition capabilities across the region allow us to scale your team quickly and accelerate your digitization. We offer a flexible and fast IT staff augmentation process, allowing you to scale up or down as required and add more experts as needed.
- Diverse tech expertise: We have strong and diverse tech expertise, including data, AI and ML, cloud, IoT, embedded software, and more.
- Industry recognition: N-iX has been recognized by CRN, IAOP, and Forrester for its outstanding services and growth.
- Transparent and efficient processes: Our processes are transparent and efficient, designed to help you extend your development capabilities seamlessly. We apply proven agile methodologies, build effective CI/CD, and engage experts in specific industries to ensure high-quality deliverables, rapid deployment, and continuous improvement throughout the project lifecycle.
References:
- IT services - Colombia, Statista
- Clutch
- Global Skills Report, Coursera 2023
- Cost of Living Comparison Between Medellin, Colombia And New York, NY, United States
- Ease of doing business, WB
- 2023 International IP Index, US Chamber of Commerce
- Colombia Tech Report 2022 - 2023, KPMG Colombia
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