Colombia has emerged as a formidable player in the software development outsourcing domain, presenting a blend of skilled talent, competitive costs, and technological advancements. This comprehensive exploration delves into the current context and opportunities in software development outsourcing in Colombia.
The South American country has attracted a variety of large companies, which have established a presence in the country, showcasing its growing importance as a business and IT hub. Renowned firms like Arup, McKinsey & Company, and J.P. Morgan are among the notable names that have recognized and invested in Colombia's dynamic market, further endorsing its status as a key player in the global business arena.
At the same time, Colombia's tech scene is rapidly growing, especially in cities like Bogotá and Medellín. There are a lot of new and exciting startups, including big names like Rappi and LifeMiles. The software development community in Colombia is also notable for its large JavaScript community, regular participation in hackathons and challenges, and active engagement in forums.
The fact that Colombia is actively involved in technology circles highlights the dynamic and thriving nature of its tech ecosystem.
Economic background
Colombia's economic journey has been a blend of challenges and triumphs. From its early days as an agriculture-driven economy, majorly reliant on coffee exports, to its embrace of industrialization and diversification, the country has shown remarkable resilience.
The late 20th century was a pivotal era with the boom in oil exports and a shift towards a more open-market economy. In recent times, this Latin American country has strategically expanded into sectors like technology and tourism, underlining its adaptability.
The nation's evolution into a burgeoning tech and startup hub signals a promising direction for its future economic landscape.
Colombia's economy is expected to grow by 1.5% in 2024, accompanied by a decrease in inflation. Additionally, the government aims to manage its fiscal deficit, which has been set at 4.3% of GDP for 2023, by issuing bonds and acquiring loans, while also managing debt maturities.
What Makes Colombia a Top Choice for Software Development Outsourcing?
Not only cultural similarities and time-zone alignment are the core reasons to consider Colombia as a top choice for software development outsourcing, but also the following factors contribute to its appeal:
Skill Proficiency: The Regional Leader
In the Global Skill Report released by Coursera in 2023, Colombia was ranked first in the Latin America skill proficiency category, measuring abilities in business, technology, software development, and data science.
From the graph, we can observe the relative strengths and weaknesses of each Latin American country in these three areas. Colombia shows the highest proficiency in Technology compared to Business and Data Science within its own skill set. With a 95% proficiency, this data suggests a strong focus and investment in technological skills, development, and education.
Colombian developers are proficient in a variety of programming languages, including React, Angular, Python, Swift, and Flutter. This diversity in skill sets enables Colombian developers to cater to a wide range of software development needs, from web development to mobile app creation.
Fluency in English: Constant Improvement
Although the country as a whole may not have a high proficiency in English, the major cities have shown significant improvements. Barranquilla, Bogotá, and Medellín have the highest English proficiency scores above 500, categorized as positive proficiency according to Education First.
The EF report also indicates that 11.5 million people in Colombia, which is about a quarter of the population, are studying English through various formal and informal means.
Furthermore, Colombian professionals and engineers, especially those engaged in outsourcing companies and international projects, exhibit a commendable level of English proficiency.
This proficiency is not just about basic communication; Colombian professionals are skilled at conveying complex ideas in English, a skill honed through extensive training and exposure to international settings. These experiences continually enhance their language abilities, enabling them to engage with global partners effectively.
Costs Effectiveness
One of the key reasons why companies choose to outsource software development to Colombia is cost-effectiveness. This Nearshore destination offers competitive rates compared to other outsourcing destinations, such as Offshore destinations. There are several reasons why we have a cost advantage, including:
Lower Labor Costs: Colombia has a lower cost of living compared to many Western countries, resulting in affordable labor costs for software development services. This, in turn, allows companies to save on expenses while still receiving high-quality work.
Currency Exchange Rates: The favorable exchange rates between the Colombian peso and major international currencies make it even more cost-effective for foreign companies to outsource software development to Colombia.
The following table compares the common roles of software developers in Colombia and the United States tech industry, showcasing the cost savings that can be achieved by outsourcing to Colombia:
Role | Average Hourly Rate in Colombia (USD) | Average Hourly Rate in the United States (USD) |
Middle Developer | $25 - $29 | $52 - $62 |
Senior Developer | $29 - $35 | $62 - $72 |
Architect/Team Lead | $39 - $69 | $86 - $96 |
UX/UI Designer | $25 - $49 | $40 - $48 |
DevOps | $29 - $50 | $57 - $67 |
Strong IT Infrastructure:
Colombia has made advancements in its IT infrastructure, leading to its growing importance in the software development outsourcing industry.
According to the Network Readiness Index (NRI) 2023 report by Postulans Institute, Colombia distinguishes itself in the realm of digital and ICT readiness, especially when compared to other upper-middle-income countries and its regional peers in the Americas.
It notably outperforms the average in three critical NRI pillars: Technology, People, and Governance. This achievement highlights Colombia's strong foundation in technology infrastructure and skilled human capital availability.
The quality and accessibility of the internet in Colombia are instrumental in supporting its growing digital economy and technology sector.
In 2022, Colombia made great strides in internet connectivity, reaching almost 50 million high-speed connections. This notable achievement indicates the country's commitment to improving its digital infrastructure. For more details, you can read the full report on the CRC website (spanish).
The city of Medellín, in particular, has made notable achievements in the IT sector. In 2019, Medellín became the first Spanish-speaking city to join the World Economic Forum's Fourth Industrial Revolution Network Affiliate Center. The selection of cities for this network is based on factors like investments in science, and technology, and the connection between academia, public, and private sectors.
These factors collectively make Colombia a highly appealing destination for outsourcing software development due to its consistent efforts to enhance digital infrastructure, nurture a talented workforce, and maintain robust governance. With its competitive cost advantages, Colombia has become increasingly attractive for software development outsourcing, positioning itself as a promising and reliable partner in the global outsourcing landscape.
The Leading Tech Cities of Colombia
As Colombia continues to establish itself as a tech powerhouse in Latin America, several cities within the country have emerged as hotspots for technology and innovation. Each of these cities brings a unique blend of talents, industries, and opportunities, contributing to the vibrant tech landscape of Colombia.
Bogotá
Bogotá, the capital of Colombia, stands at the forefront of the country's financial software industries. The city's modern infrastructure and extensive talent pool make it a prime location for IT and software services, particularly for the banking industry. It's the hub of large-scale software projects, supported by a large human capital well-versed in various software platforms like ORACLE, Microsoft, and IBM.
Medellín
Medellín has been recognized globally for its innovation, particularly after being named “The World’s Most Innovative City” in 2013 by the Urban Land Institute. This city is known for its solutions in the energy sector, with Ruta N and the Medellin Innovation District being key drivers of its information and communications technology advancements.
Barranquilla
In Barranquilla, software development is largely centered around management software for infrastructure projects. The city's tech scene is also geared towards the transportation and logistics industry, with a significant number of computing engineers specializing in Java and Oracle.
Tech entrepreneurs benefit from direct flights to and from these major cities, making it easier to conduct business while traveling.
What about other South American countries for software development? Read our analysis about Outsourcing Software Development to Latin America: What You Need to Know
Top Colombian Companies for Software Development Outsourcing:
Leanware: Established in Bogotá in 2020. With a dynamic team of over 40 skilled engineers and professionals, has rapidly evolved to become a prominent player in the field of software development outsourcing. Leanware stands out with its comprehensive and client-focused solutions. We excel in custom software development, integrating the latest technologies to cater to various business needs and ensuring exceptional product experiences for our client's users.
Perficient: Perficient is a global digital consultancy with a strong presence in Colombia known for its expertise in delivering end-to-end digital solutions. They specialize in areas like cloud technologies, custom software development, and digital experience, helping businesses transform to meet modern challenges.
ActiveOne: Specializes in software development and IT services, offering customized solutions to businesses across various sectors. They are known for delivering effective digital solutions to enhance business operations.
FlutterLab: As a specialized software development firm, FlutterLab focuses on leveraging Flutter, Google's UI toolkit, for creating natively compiled applications. They are known for their expertise in building high-quality, visually appealing mobile and web applications using Flutter.
Tecla.io: is an innovative hiring platform connecting tech companies with top tech professionals in Latin America. They offer a range of services including recruitment and staff augmentation, helping businesses access a diverse pool of skilled, senior, and engineering talent. Tecla.io stands out for its ability to provide clients with an elite network of vetted software developers and other tech professionals, facilitating easier and more efficient hiring processes, especially for companies looking to build nearshore teams.
FAQ about Outsourcing Software Development to Colombia
How does outsourcing in Colombia contribute to cost savings?
Lower average salaries for software developers in Colombia compared to the U.S. and Europe lead to significant cost savings without compromising on quality.