Colombia’s emerging IT power

One doesn’t necessarily think of Colombia and immediately associate it with a burgeoning IT industry. Instead, the country remains primarily associated with its natural resources, such as coffee, oil and gas and minerals. It has also been seen as a risky place to travel. Colombia is now doing its best to ditch its old reputation though, and bill itself as a regional technology hub.

The country sees business process outsourcing and the IT sector as two industries where it can succeed. Its geographic proximity to the United States and position in the Eastern time zone make it more easily accessible than other traditional BPO-heavy economies such as the Philippines and India. Colombia is highly connected – leveraging five submarine cables capable of delivering more than 550 Gbps to service the country’s bandwidth needs.

Despite Colombia’s relatively poor road infrastructure, citizens are well connected through mobile phones. In fact, the country of over 46 million people expects to achieve 47 million cellular connections by the end of 2012. According to ProExport, the trade bureau of the Colombian government, plans are already underway to build new fibre optic rings throughout the country – connecting 96 per cent of communities by 2014. At least six regions in Colombia have potential to support the growth of successful software, BPO or IT services companies, including the major urban areas of Bogota and Medellin, as well as centrally located Cali, Bucaramanga, and “coffee-land” areas, as well as Barranquilla to the north.

The Current State of IT in Colombia

Colombia already has a number of success stories with some of the world’s biggest IT and BPO players. IBM Corp. (NYSE: IBM) has built a new data centre in Bogota, geared toward systems integration, outsourcing and support services, and in 2010, Hewlett-Packard Co. (NYSE: HPQ) announced plans to open a service centre in Medellin. The service centre highlights the talent pools available to the industry, as it’s expected to create up to 1,000 software development, engineering and marketing jobs. On the periphery, but still showcasing the region’s capabilities, technology company Eaton purchased ESI, a Colombian electrical services and equipment VAR in mid-2011.

These cases show that the country definitely has the potential to make a splash in the technical sectors it covets, but it must continue to improve its internal infrastructure, in addition to its image abroad.

To that end, Colombia has been working with Canada to foster increased investment between the countries. A Free Trade Agreement came into force in 2012 between the two countries, while International Investment Agreements and a Double Taxation Agreement further define the investment climate. According to a presentation by ProExport, Canada accounts for 3.6 per cent of investment in Colombia, with an accumulated total investment of $1.3 billion between 2000 and 2010.

One such investment success story comes from NDi Media in Montreal, which partnered with Teravision Games in Bogota to create NDiTeravision. The company has a portfolio of original IP properties for children that it licenses to television producers, broadcasters and gaming companies.

“There are incredibly talented companies [in Colombia], who are doing extremely well that we’re interested in doing business with and forming partnerships with,” said NDiTeravision CEO Neil Smolar. “They’re talented on an international level. I think the word is out.”

Dispelling the Myths

While the Canadian example of NDi hits close to home, it is certainly not the only case of tech-savvy Colombian companies making strikes in foreign markets. On a recent trip to Bogota, Colombia, journalists had a chance to meet with executives from a number of high-tech businesses based in Bogota, including ZIO Studios, Zemoga and Globant. These businesses are serving multinational and global clients using local talent.

Colombia’s university system is a mix of public and private institutions, but combined, they graduated 10,251 computer science engineers in 2011, and a total of 108,784 between 2001 to 2011. The Colombian Ministry of Education estimates a total of 1,838,718 students graduated from IT related disciplines between 2001 to 2011, including grads from systems engineering and electronics engineering fields.

Showcasing the country’s young and connected talent, the City of Bogota recently hosted the second Colombia 3.0 conference, bringing together industry leaders from Colombia and abroad to discuss fields such as mobile application development, software development, 3D animation and video games.

There’s no doubt Colombia’s urban centres are a showcase for a new generation of Colombians with insight and understanding of IT. Their desire to succeed in the digital world should fuel the country’s push to innovate, but it will be a difficult journey.

The Long Road Ahead

A year-long study on the prospects for the BPO and IT industries in Colombia by consulting firm AON Hewitt was recently presented to government and industry leaders in Bogota. The findings highlighted key positives for building a successful industry such as an already large IT/BPO industry, a large talent pool, cost advantages, high literacy rate, strategic geographic location, availability of world-class IT infrastructure, and highly reliable telecommunications infrastructure. The study’s authors also sighted the presence of strong macro-economic fundamentals and industry initiatives to promote sector growth. The stage seems all but set for Colombia to emerge as a leader in the high-tech sectors it desires, but there are still many hurdles for this emerging IT player before it reaches the top.

Specifically, the study authors noted the significant lack of formal leadership and cohesive vision. This could come through the creation of an associating bringing together key stakeholders in government, academia and industry to work side-by-side to tackle challenges like education gaps and incentives for businesses. Also sighted was a negative perception of the IT and BPO industries from potential employees, a low lever of academic-industry linkage, and the lack of a common direction from government initiatives.

Yet there is a massive opportunity for Colombia if it can overcome these hurdles. The study’s authors believe the country needs to focus its efforts around IT, BPO and what they call emerging segments. For IT, they suggested concentrating areas such as ERP and package implementation, as well as cloud-based services and support. In the BPO industry, they propose emphasis on bilingual, voice based services, back office operations for the finance and telecommunications industries, and the creation of a mega-entity composed of multiple BPO firms, so as to be able to complete on a global level. The emerging segments, which were highlighted by events such as Colombia 3.0 and in the cases of Zio Studios and Zemoga, the study authors propose the country focus on digital media, application development, regional shared services and e-governance.

Colombia certainly has more than a few isolated success stories when it comes to these three sectors, and its prowess in technology-heavy industries is easily spotted; even the creation of a Ministry of Information and Communication Technology is evidence that governments in Colombia, both national and municipal, are prioritizing these industries.

Colombia’s potential to become globally recognized as a leader in IT is very real, and as industry, government and academia begin to bridge their current divides, look for more international companies to begin looking at this emerging competitor for their operations. As the country works tirelessly to dispel its past reputation, it is poised to become more than a regional hub, but a global IT player.

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Jim Love, Chief Content Officer, IT World Canada

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