As the country continues to benefit from macro-economic stability, Colombia’s IT sector is increasingly becoming an intrinsic part of society. Growth is currently driven by better economic performance. A series of government measures are also improving market conditions for IT firms. On the consumer side, Colombia’s Vive Digital plan is not only enhancing connectivity levels of the population, but also creating the necessary environment for IT to permeate daily life.

According to the “Global Information Technology Report 2013”, published by the World Economic Forum, “In Colombia, the introduction of ICT into society in general and the public sector in particular has always counted on strong political support at the highest level, from the first directive signed by President [Andrés] Pastrana Arango in 1999 to the launching of Vive Digital by President [Juan Manuel] Santos in 2010.” The impact has been visible. Although there are still some areas in which the sector lags behind, the prospects for the coming years are good. Despite being composed of mainly small to medium-sized enterprises (SMEs), Colombian IT firms have been quickly adapting to international trends and specialising in specific niches, and government now represents about 40% of acquisition of IT products and services.

Although the sector has decisively permeated certain businesses, such as financial services for example, expansion options abound. “Several sectors are still not using technology. Agriculture, industry and transport are big opportunities for technology developers,” said Ximena Duque Alzate, innovation and new business advisor at the Colombian Federation for the Software Industry (Federación Colombiana de la Industria del Software, Fedesoft), a private sector group representing Colombia’s software manufacturers. The sector is also helping to deal with specific issues, such as poverty reduction, provision of education services and increasing social cohesion in a post-conflict society.

Vive Digital

Four years on, the Santos administration’s IT flagship project, Vive Digital, can claim many successes after its initial implementation in 2010. Colombia is now better connected, and the strategy has helped with the social and economic inclusion of some of the least developed communities. According to government data, the programme has achieved one of its most ambitious goals, that of quadrupling internet connections, which totalled just 2.2m in 2010. To a large extent, this was driven by the establishment of more than 7600 digital kiosks. This was also helped by the rise in the number of municipal areas connected to high-speed internet, which have increased from 200 in 2010 to 1078 today. Creating additional public internet access points remains critical. In June 2013 the Ministry of Information Technology and Communications (Ministerio de las Tecnologías de la Información y las Comunicaciones, Mintic) announced it would tender a project worth COP353bn ($176.5m) to install 2800 internet centres. However, the project was later expanded, and in September 2013 the government announced that the project would cover 4200 internet centres at a total cost of COP532bn ($266m) to be complete by the end of 2014. As in previous initiatives, the project will target schools and indigenous communities.

Rural Focus

A large proportion of government investment to expand internet access is going to the least connected regions of Colombia. According to figures by Mintic, in the 2010-14 period the government will have channelled $131m in improving internet connectivity in the central and southern regions. The funds have been used to establish internet connection centres in rural communities, subsidising broadband access for low-income families and expansion of fibre optics infrastructure. The Colombian subsidiary of Mexican communications outfit Azteca is currently expanding the county’s fibre-optic network. Worth $235m, the contract involves the deployment of 12,000 km of fibre-optic cable out of the 19,000 km total the government is installing in order to increase connectivity.

Much is also being done through the Fondo de Tecnologías de la Información y las Comunicaciones (Fontic) a fund managed by Mintic. Fontic collects fees from telecommunications operators for a number of licences and authorisations, and then channels that money into some of the government’s IT development projects. In 2014 the fund’s budget increased 40% to $700m.

Online Opportunities

This has fuelled fast progress on the internet front, with the number of broadband connections reaching 8.2m in the fourth quarter of 2013, compared with 2.2m in 2010 when the Santos administration took over and established the objective of quadrupling internet connections. Internet access is also growing due to the rapid increase in smart phones and the expansion of 4G. Mintic expects 4G internet connections to reach 2m by the end of 2014.

Internet access coupled with rising disposable income is opening the door for online transactions and e-commerce. Figures by the Colombian Chamber of E-Commerce show a consistent increase over recent years, with internet purchases rising from $600m in 2010 to $2.5bn in 2013. But for e-commerce to become more relevant, other elements of the equation must also develop. Colombia still has limited rates of internet banking use, which has a positive impact on improving trust among consumers. Growth in the number of debit and credit cards will also promote a more conducive environment for e-commerce to develop.

Internet accessibility is additionally fuelling the rise of news and entertainment websites, which have been attracting rising advertising investment (see analysis).

Connecting SMEs

In an effort to promote business efficiency and increase productivity, government policy has focused hugely on SMEs and easing their access to equipment. According to Mintic, 17,150 SMEs have benefitted from government funding to increase their use of technology over the past four years, with more than 50% of small firms now connected to the internet. Authorities are also trying to determine new ways to further incorporate IT usage in business. Although access to IT infrastructure has improved, the challenge now is to further include it in productive activities that can increase the economic impact of the sector.

A government tender, announced in March 2014, aims to allocate $14.2m in government grants to companies that develop applications to encourage IT use in small companies. The funds will be used to finance two-thirds of the total value of new projects.

Despite government efforts, cost perception is sometimes an obstacle. With SMEs making up the vast majority of businesses in Colombia, they are a natural target for IT players. “SMEs are great potential for software developers,” Fabio Pineda Callejas, general manager at Personal Soft, a local software development company, told OBG. “However, they have the belief that IT is very expensive, and so a lot of smaller businesses do not invest in it.” Government investment in internet penetration, as well as measures to equip businesses with computers and facilitate human resource (HR) certification, will help to increase the use of additional IT.


Transforming the way that the government and citizens interact, Colombia’s expanding e-government readiness has been exemplified by HR training efforts. According to the “Global Information Technology Report 2013”, Colombia has been able to train almost 200,000 civil servants through partnerships with universities and other institutions such as the Organisation of American States. This has been matched by strengthening awareness on users’ side. Internet access centres developed under Vive Digital are being used to run free training programmes to help citizens deal with the government online. The training programmes have been focusing on requesting judicial information certificates, paying home or car taxes and requesting pensions or student loans. According to Mintic, 1900 state services are now accessible online.

Efforts are additionally targeting the business community. A $12m loan from the Inter-American Development Bank (IDB) will help boost SMEs’ IT usage. The goal is to create a government electronic invoicing platform, easing tax compliance for smaller companies and helping authorities to establish a more efficient tax collection method. This is especially relevant in terms of value-added tax, for which the evasion rate is 25% in Colombia, according to IDB figures. Putting firms more easily in contact with tax authorities will also help reduce the costs of operating in the formal economy.


Part of the challenge is also easing access to equipment. Over the past four years the government has invested in both direct allocation of equipment and subsidy distribution to reduce equipment gaps. More than 600,000 computers have been distributed to schools and other educational institutions. Furthermore, 1.5m subsidies, averaging COP300,000 ($150) each, have been given to families to help buy computers. Mintic is also currently selecting a manufacturer to provide tablets to be distributed in public schools. The COP91bn ($45.5m) investment will aim to give students and teachers access to equipment and is part of the Computadores para Educar (Computers for Education) programme, which was established in 2002 to promote the use of computer equipment in schools. In addition, focus on hardware accessibility has also pushed the development of the segment. According to the International Data Centre, a telecommunications consultancy, in 2013 hardware represented 58% of the total IT market in Colombia.

Software Development

Major international IT solutions providers are present in the market. But demand depends on the type of solution needed. “If companies go for package-type software solutions, they go with the big international companies such as SAP and Oracle,” Callejas told OBG. “But if they are searching for something that is custom-made, they generally go with local companies.” Betting on the potential of the software segment, the government is aiming to establish six software development centres across the country, hoping to create conditions for local entrepreneurs to launch new IT businesses.

Total sales for software and associated services reached $2.3bn in 2013, according to Fedesoft figures. By comparison, software exports are still relatively small, at $134m in 2013, although this represented a 34% increase on 2012 figures. Domestic software firms have been working with the government to reduce the disadvantages of scale, especially when competing in government contracts. “When there is a public tender and the government asks for companies with upwards of a certain sales value, that puts a lot of the local competitors out of the race – a lost opportunity for local industry,” Alzate told OBG.

Another challenge software manufacturers face is dealing with the banking sector. Due to the intangible nature of the business, where there are little physical assets, IT companies in general have difficulty getting financing. A new law is set to change this by allowing companies to include other aspects of the business, such as future contracts, for credit evaluation by banks.

Software ventures and smaller IT firms also benefit from the support of the Administrative Department for Science, Technology and Innovation ( Departamento Administrativo de Ciencias, Tecnología e Innovación, Colciencias). Indeed, IT products that are considered innovative by Colciencias are excluded from paying revenue tax for a grace period of two to three years. Another measure that will also benefit the IT sector is the government’s October 2013 announcement that it was exempting IT firms from paying sales tax.

Outsourcing Services

Outsourcing of IT services has increased consistently over the years, with other cities besides the capital Bogotá now attracting operations, creating new employment opportunities. Cities like Bucaramanga, Barranquilla on the Caribbean coast, and Pereira have all seen the establishment of outsourcing services providers, attracted by the available HR and cheaper operational costs. A report by Nearshore Americas put the outsourcing sector’s revenues at $844.9m in 2012, and IT outsourcing already accounts for around 13% of service exports. Development is also being helped by an IDB programme, which involves a $12m loan to finance government training for more than 4000 people. Other segments are showing promise. According to a report by consultancy Frost & Sullivan, expectations are that revenues for the cloud computing market in Colombia will increase in value from $31.6m in 2012 to $196.5m by 2017.

Economic growth is also attracting a surge of foreign IT companies into the Colombian market. As part of an investment drive to enhance its data centre capacities across several markets, IBM plans to invest $17m in a cloud data centre in Bogotá. Swedish business processing outsourcing firm Transcom is opening a $3.1m call centre in the city of Cali. The new facility will house more than 500 workers and will serve Spanish- and English-speaking customers in the US and Spain. Japanese fibre-optic cable manufacturer Furukawa is also opening a $5m production unit in the Valle del Cauca region.

However, foreign investment and a host of local ventures are compounding an existing problem in terms of available HR. “It is hard to find qualified employees for the ICT sector because the demand is much bigger than the supply. That, and the lack of bilingualism, are the major setbacks for growth,” John Jairo Gómez Mejía, the general manager of Choucair, a Colombian software testing company, told OBG.


The development of the IT sector will depend greatly on access to technology and internet connectivity. Over the past four years Vive Digital has transformed the importance that IT has in the country and aligned it with other high priorities such as health and education or poverty reduction. The incorporation of technology into more and more small businesses is helping to enhance capabilities and reduce the cost of doing business. Over the coming four years the Santos administration plans to triple existing internet connections to 27m by 2018. Furthermore, authorities are aiming to increase internet penetration in households to 63% and in micro companies to 70%. Another stated goal of the government is to double the number of companies operating in the sector to 3600 in 2018. In order to fulfil its objectives for the IT market, private investment into the sector is vital, as is tweaking the legal framework in order to establish a conducive set of incentives for Colombian IT companies to thrive.