Information Technology

An Expert's View about IT and Telecommunications in Colombia

Posted on: 25 May 2012

The size of the IT market (computers, software, components, and related services) in Colombia is estimated at USD $2.78 billion, representing a small proportion of the national economy (currently around 1% of GDP), but is a sector which has been growing well above GDP growth rates in recent years.
Local production in the IT sector consists of computer hardware assembly and repair. There is also a growing software development industry, and IT related services have grown significantly over the past two decades. These developments have helped the IT sector in Colombia become the second largest in Latin America, in proportion to GDP. There are approximately 3,000 companies operating in the sector (mostly retailers and distributors), employing more than 32,000 people and generating around USD $158 million in taxes.
A notable trend in recent years driving growth in this sector is the formation of companies to cater specifically to the needs of companies or institutions with customized software and network solutions. Colombia has been successful in attracting call centers and BPOs (business processes outsourcing). Companies such as HP and Unisys have also established large data center operations in Medellin in 2010-2011. These operations require large investments in computers, servers, software and components.
Total imports of computers and components into Colombia suffered a dramatic reduction in 2009 of 20%, mainly as a result of the economic downturn, and especially affecting imports from the U.S. However, U.S. market share within this industry had been diminishing well before the economic downturn. The U.S. held the lead in exports of computers and components to Colombia up until 2006, but since then Chinese exports to Colombia have taken the lead, and currently hold around 40% of market share, while the U.S. is struggling to maintain 15%. However, the U.S. still holds the lead in state of the art technology products and also the implementation of the U.S.-Colombia Free Trade Agreement (US-CTPA) should have a positive impact for U.S. suppliers, as import duties would be eliminated immediately upon entry into force of the agreement for U.S. products entering Colombia, while Chinese products will continue to be imposed tariffs ranging between 5-15%.

Best Prospects/Services
Colombia continues to offer good opportunities for U.S. companies operating in the IT sector. The most dynamic sectors for U.S. exports in recent years have been:
• Computers (desk tops, laptops, hand-held computers)
• Data processing machines
• Components and accessories for the above

However, it should be noted that most of the above imports (although U.S. technology) is actually supplied through assembly plants in Mexico, China and elsewhere.
Also, opportunities have been increasing in Colombia for the sale of software. The sale of illegal software has been a major problem in Colombia, affecting companies such as Microsoft, Oracle and others but recent efforts by the government to enforce software copyright laws has stimulated sales of legally acquired products. CS Bogota strongly recommends that companies register their patented technology in Colombia. Opportunities exist in the following areas:
• Software for data security solutions for transactions over the Internet
• Software tailor-made for communicating different platform languages
• Software for data mining and data conversion
• Software for transportation logistics

Colombia also has a small but dynamic animation industry which has special needs, in terms of specialized software.

Read the full market research report

Posted: 25 May 2012

See more from IT and Telecommunications in Colombia

Expert Views    
Telecommunications Industry   By U.S. Commercial Service
Telecommunications Equipment and Services   By U.S. Commercial Service Colombia
Hot Tips    
Telecommunications Industry in Colombia   By U.S. Commercial Service Colombia
Information Technology in Colombia   By U.S. Commercial Service Colombia
Electronic Commerce in Colombia   By U.S. Commercial Service Colombia