Business process outsourcing (BPO) operations have become a focal point of growth within the broader IT market. As a platform for providing services within Latin America, the US and Spain, Colombia has several advantages, including an investor-friendly regulatory framework, competitive wages, a neutral Spanish accent and a variety of suitable locations.
PROMISING GROWTH: BPO industry revenues reached $763m in 2011 and made up 41% of total IT services revenue, according to the International Data Corporation and Colombian Association of Contact Centres and BPO (Asociación Colombiana de Contact Centres y BPO, ACDECC). Statistics from the ACDECC indicate that since 2006 the sector has nearly tripled its revenues from $260m and more than doubled employment from 32,000 in 2006 to an estimated 84,000 in 2011. Colombia’s recent success in the BPO sector is symptomatic of the sector’s wider regional and global growth. According to Gartner Research, an IT research and consulting firm, from 2007-10 the industry in Latin America expanded at an average annual rate of 6%, and forecasts that when final figures are known the rate will have doubled from 2011 to 2013 as BPO operations in Latin America grow 12% annually, bringing total annual revenues to $9.9bn by the end of 2013.
Fabio de Jesús Pineda Callejas, the general manager at PersonalSoft, told OBG, “Colombia is supporting, through its investment promotion agency Proexport, the entry of investors from countries such as the US, Spain, India and the UK, in sectors with growth potential like software and BPO. Medellín is leading the reception of investors in these sectors, which represents a challenge for local suppliers, but also an opportunity to look for partnerships and better practices.”
ADVANTAGES: While Colombia still lacks the linguistic capacity to compete with countries such as India and the Philippines in the English market, its neutral Spanish accent has given it a boost in the rapidly growing Spanish market. This is particularly important considering demand growth for BPO services in Spanish has outpaced that of the English-speaking world. From 2007 to 2012 BPO markets in Latin America grew 13% against growth of 9% and 10% in the US and the UK, respectively, according to McKinsey & Company.
Regarding Colombia’s advantages in terms of hosting BPO operations, Jorge Enrique Cote Velosa, the CEO of Contact Centre Americas, told OBG, “On top of the readily observable advantages many are aware of, Colombia boasts seven different cities with over 1m inhabitants, a rare occurrence in the region, that provides BPO companies with numerous options in terms of finding the right location at the right price when establishing operations.” Good connectivity is a key advantage for Barranquilla. Ana María Badel, director of ProBarranquilla, told OBG, “The city’s telecommunications infrastructure is the most competitive in Colombia, as three submarine cables connect it with the world.” The government’s liberal free trade zone framework allows companies to establish free trade zones virtually anywhere in the country and pay only 15% in corporate income tax, provided they meet requirements. Colombia also has some of the most competitive wages in the region. According to data from Salary Expert, the average annual salary for a data entry clerk is $3858, significantly lower than that of Argentina ($5589), Mexico ($9173), Peru ($12,208) and Chile ($21,501). Similar trends follow for the positions of database administrator and computer operator.
DIFFICULTIES: However, the industry is not without its challenges and like many emerging BPO destinations, the key for the country, according to Carlos Augusto Castro, the general manager of outsourcing company Enlace Operativo, is to offer sophisticated services and a general shift towards services with greater added value. The industry has been identified by the government as one of 16 strategic subsectors and efforts are being made to shift towards more bilingual and higher-value-added services. Proexport estimates that 73% of BPO companies already offer professional services, with the remaining 27% operating only as call centres.