In 2009, the estimated size of the IT market (computers, software, components, and related services) in Colombia was USD 2.5 billion. Representing a small proportion of the global economy (currently around 1% of GDP), the sector has been growing well above GDP growth rates in recent years and presents niche opportunities for U.S. exports. The market is expected to increase marginally (0.5 percent) in 2010.
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. Colombia’s software exports have been increasing modestly, driven by special applications such as animation.
Total imports of computers and components into Colombia suffered a dramatic reduction in 2009 (around 20 percent), mainly as a result of the economic downturn, and especially affecting imports from the U.S. However, U.S. market share within this industry has 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 percent of market share, while the U.S. is struggling to maintain 20 percent. However, the U.S. still holds the lead in state of the art technology products and also the eventual ratification of the U.S.-Colombia Free Trade Agreement (CTPA) by the United States Congress should have a positive impact for U.S. suppliers, as import duties would be eliminated on U.S. products entering Colombia, while Chinese products will continue to be imposed tariffs ranging between 5-15 percent.
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
• Routers and switches
• Components and accessories for the above
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, 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 that improves internal communications throughout company’s networks
• Software tailor-made for communicating different platform languages
• Software for data mining and data conversion
• Software for financial and management solutions
• Software for transportation logistics
The computer and components industry in Colombia is very competitive, and as seen above, the U.S. has been losing market share. However, good opportunities may still be found by targeting key government and private sector procurement opportunities such as port modernization projects and the WIMAX spectrum rollout. Cisco is an important player in the networking realm. U.S. companies hold the lead in the provision of software platforms, especially from Microsoft, Oracle and Symantec; these companies enjoy an excellent reputation in Colombia.
Also, Colombian industry continually seeks to improve its efficiency and competitiveness to survive in the global marketplace. Innovative software developments have been identified as one of the key drivers for the improvement of Colombian industries. Local and foreign software companies are focused mainly on financial, billing, business resource planning, inventory and human resources applications. A notable trend in recent years is the formation of companies to cater specifically to the needs of companies or institutions with customized software and network solutions.
Colombia has a well-developed communications and banking system in urban areas but there is still plenty of room to implement new software development in most rural areas. The expected launch of a rural communications satellite in 2013 will boost connectivity immensely and offer new opportunities for U.S. exporters.
U.S. suppliers of software should keep in mind that local companies expect foreign software companies to be able to work with their specific needs and requirements in a solution-driven rather than product-driven environment. Many Colombian manufacturing companies, which have not already implemented computerized operating and management systems, will without doubt need to search for software solutions to improve their existing procedures, leading to higher efficiency.
In summary, the Colombian IT market offers a diverse range of opportunities for U.S. exporters. Computing devices and applications are used in a great number of industries as well as households. Also, there is continual interest in big business to keep up-to-date with technological developments. CS Bogota encourages U.S. companies to participate in government procurement programs