Information Technology
A Top Export Prospect for Colombia

Sources:
* Global Trade Atlas (computers and components – HS 8471)
**Manufacture of electronic components (excluding software and services), DANE
***Estimate based upon industry sources (includes software and services)
****Current data, August 2011.

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Overview

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%.

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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:

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:

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

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Opportunities

Colombian IT spending is projected to grow at 13% from 2010-2014 and per capita IT spending is projected to rise by 43% from US$48 in 2010 to US$74 by 2014. The retail PC market surged in 2010, with strong growth continuing in 2011.

However, the computer and components industry in Colombia is very competitive and, as seen above, the U.S. has been losing market share. But good opportunities may still be found by targeting key government and private sector procurement opportunities. 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 efficiency in Colombian industries. Local and foreign software companies are focused mainly on financial, billing, business resource planning, inventory and human resources applications.

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.

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, which are announced on the website: https://www.contratos.gov.co/puc/ (In Spanish only) and also to participate in local trade shows such as:

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Resources

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