Software Development in Colombia: Trends & Insights

With a projected value of $35 billion by 2027, the software development industry in Colombia is on a meteoric rise. This surge is not unexpected, as more than 75% of US companies are strategically targeting LATAM countries and recognize them as a goldmine of talented software developers. Now, the enticing question beckons: What untapped potential does the Colombian IT industry offer your tech business?

 
I’m David Gomez, Lead IT Recruiter at Alcor, an R&D center services provider in Latin America and Eastern Europe. At Alcor, we can hire developers from Colombia from 0 to 100 within a year for you, as well as provide the employer of record service, plus any other operational support that’s packed in our turnkey solution – software R&D center. 

In this article, I’ll take you on a journey around the Colombian software development industry, revealing its latest news and trends. I’ll describe thriving IT hotspots, share the benefits of expanding your business to this country, and provide a safe solution to do it as simply as possible. 

Software Development in Colombia Overview

Colombia stands tall as the fourth-largest contributor to IT services among its Latin American counterparts. In 2024, the Colombian software development market is set to soar to $1.57 billion, showcasing its steadfast commitment to digital transformation.

What’s even more remarkable is the relentless pace at which this momentum is propelling forward. The cumulative revenue generation potential for ICT providers in the country is estimated at an impressive US$154.80 billion between 2022 and 2027, presenting a substantial opportunity for growth and prosperity of the IT sector. This year, according to Statista, the IT services market in Colombia is projected to reach $2.08b.

At the heart of this rapid evolution lies the government‘s bold vision to position Colombia as the Silicon Valley of Latin America. Through strategic regulatory decisions and the launch of national initiatives, the country’s IT outsourcing sector has experienced a remarkable ascent. In just a span of two years, Colombia attracted an impressive $1 billion in investment from 60 nations, a testament to its growing appeal as a tech destination.  

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Colombian Software Development Industry Latest News

Recently, the land of Eldorado has surprised the world with its thriving startup ecosystem, boasting over 1,300 startups across 31 distinctive sectors. Now, it holds the 4th place among Latin American countries and ranks 40th globally within the 2023 Global Startup Ecosystem Index. 

Fintech, especially, has emerged as a dominant force within Colombia’s startup landscape, constituting over 15% of all startups in the country. This burgeoning sector has propelled Colombia to the forefront of Latin America’s fintech scene, trailing only behind regional giants Brazil and Mexico. With 76% of Colombians already embracing fintech services, the country boasts the highest fintech adoption rate in the region. Some of the most prominent startups to keep an eye on now are:  

• Bold is an independent merchant-acquirer serving small and medium-sized enterprises (SMEs) with low-cost payment terminals;  
• Treinta, a fintech startup aiding micro and small businesses across Latin America in digitalization, surpassing 5 million users in 18 LatAm countries;  
• Rappi, Colombia’s super-app, and the country’s biggest tech startup offers a wide range of services from restaurant and grocery delivery to digital payments and insurance. 

The future of the fintech software development sector in Colombia is also rather promising and expected to show a revenue growth of 21.96% in 2025. 

Software development in Colombia Forecasts & Trends 

Yet the software development industry in Colombia shows encouraging potential across other tech segments, such as:

E-commerce 

Colombia’s e-commerce sector is surging ahead at an astonishing pace. During the second quarter of 2023, sales surged to $3,8 billion from April to June, marking an impressive 11.1% increase compared to the same period in 2022 and a remarkable 70.3% surge from 2021. It’s no surprise that in 2023, Colombia was ranked as the third-largest e-commerce market in Latin America. 

Looking ahead, the future of e-commerce in Colombia appears promising. Forecasts indicate a continuous increase in the penetration rate of the market between 2024 and 2028, with an estimated total increase of 10.4% points. 

Blockchain 

With crypto fever sweeping the nation, over 3.1 million Colombians, making up 6.1% of the population, have joined the ranks of cryptocurrency owners. But the zeal doesn’t stop there – public polling indicates that an impressive 80% of the locals are now receptive to engaging with cryptocurrency. This widespread interest has propelled the country to the 32nd spot globally in the 2023 Global Crypto Adoption Index. 

In 2024, revenue in the cryptocurrency market is forecasted to reach $53.9 million. Looking further, it’s projected to reach a total of $81.9 million with an annual growth rate of 11.02% by 2028. 

Proficiency of Software Development Companies in Colombia

With over 11,000 IT companies, the Colombian software development landscape is thriving. Among them are well-known tech giants such as Amazon, Microsoft, Oracle, IBM, Google, and Cisco, serving as a testament to the country’s robust tech ecosystem.

Non-tech businesses also reap the benefits of the informational technology sector in the country. As of February 2024, there are approximately 400 software development companies in Colombia that offer IT outsourcing services. Most of them specialize in custom mobile app and web development, cloud consulting & SI, as well as UI/UX design services. Comparatively, Mexico hosts around 470 outsourcing providers, the IT market in Argentina has approximately 420, and software development outsourcing in Chile shows the smallest number, with 155 companies in the sector.

Currently, some of the top-ranked Colombian software development companies, according to Clutch, include:

1. Global MVM
2. Ballast Lane Applications LLC
3. Wawandco
4. MAS Global Consulting
5. RevStar

Thus, non-tech companies leverage the cost-effectiveness of outsourcing to Colombian vendors, tapping into the expertise of the country’s skilled developers.

However, for tech companies, outsourcing can pose challenges such as data security risks, hidden costs, and communication barriers. That’s why many product software companies decide to do software development in Colombia with an in-house team of software developers. Typically, such tech businesses partner with local BPO service providers who can assist with IT recruitment, legal compliance, office leases, and other back-office operations.

Top Software Development Hubs in Colombia

Bogotá 

The country’s capital, Bogotá, is the largest IT hotspot in Colombia. The city boasts the highest number of startups in the country, nearly 790, and ranks 2nd among South American cities within the 2023 Global Startup Ecosystem Index.  

Apart from the thriving startup scene, Bogotá also hosts the offices of such global companies as Google, Dell, HP, Uber, Meta, and the list doesn’t stop here. 

Plenty of annual tech conferences take place in Bogotá, such as Bogotá DevDay, Bogotá Tech Summit, Blockchain Summit, Cybersecurity Forum, and many others.  

Bogotá also has prestigious higher institutions that offer technical programs, such as the University of the Andes Colombia, Universidad Nacional de Colombia, Pontificia Universidad Javeriana, and others.

Medellín

The second-largest city and IT hub in parallel, Medellín, is kicking into high gear to become the Silicon Valley of Colombia.  

In the last several years, the city has successfully attracted 379 technology and innovation companies to establish their presence in the city, leading to the creation of over 11,000 job opportunities. Today, Medellín is home to 299 tech startups and takes the 7th place among South American cities in terms of startup ecosystem.  

Like the capital, Medellín also hosts many annual tech conferences and events. The most popular is Ruta N Summit, which focuses on promoting entrepreneurship, investment, and collaboration in Medellín’s tech ecosystem. Other notable events include the IoT Medellín Conference, AI Summit, Blockchain Summit, UX/UI Design Conference, and Startup Weekend. 

The city is renowned for its exceptional universities and is highly esteemed both nationally and internationally. Notable institutions include Universidad de Antioquia, Universidad EAFIT, and Universidad Pontificia Bolivariana, among others.

Reasons to Expand Your Tech Business to Colombia

Vast pool of IT talent 

The Colombian software development industry is rich in big number of skilled software engineers. With a population of 51 million, the nation is home to more than 150,000 IT talents, including 62,000 developers. Among them, the most favored programming languages are Java, C++, Python, SQL, and Ruby.

What’s more, local developers showcase unmatched tech expertise and skills, topping the charts in Latin America and the Caribbean in their overall technology and data science scores. They excel in various domains, including operating systems, computer networking, as well as computer programming, and demonstrate exceptional proficiency in web development, cloud computing, and data analysis.

Alcor's 40 IT recruiters are here to hire seasoned Colombian devs for you in 2-6 weeks! Ready to cooperate? CONTACT US

Exceptional tech education 

Colombian tech wizards boast robust academic backgrounds in ICT. Each year, over 13,000 graduates bolster the Colombian software development industry, ensuring a continuous supply of skilled professionals to meet industry demands. As a result, Colombia ranks fourth among Latin American nations in terms of the highest proportion of graduates pursuing STEM careers.

Noteworthy, 9 Colombian universities feature in the Best Global Universities in Latin America list, while 25 higher education institutions from the country have earned recognition as top global universities in the prestigious 2024 QS World University Rankings.

Moderate costs 

Colombian, as well as Argentinian software developers and other Latin American developers earn around 2.5-3 times less than their counterparts in the US. Lower labor costs make it an attractive choice for Western tech companies considering outsourcing software development to Colombia.  

Take, for instance, the salary of a Senior Game developer, which is around $36,000 a year, while a counterpart from the US gets ca. $140K. Yet the difference with Western Europe is also significant: a Senior Embedded Developer in Colombia earns approximately $39,000 annually, whereas an engineer with the same level of expertise from Germany pulls in around $80,000.  

The table below represents software developer salaries in Colombia for different roles and positions:

Source: Glassdoor

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In addition to beneficial wages, Western tech companies also decide to hire developers from this country due to the advantageous business taxes in Colombia for the tech sector. Under Colombia’s Tax Reform Law, IT firms engaging in research, technological advancement, and innovation are entitled to a generous 25% discount and complete tax deduction on income tax. 

Favorable location 

Nestled in South America, Colombia provides convenient accessibility to various American cities, making it a perfect destination for IT nearshoring. The flight duration from Miami to Bogotá typically ranges around 3.5 hours, which is a relatively short trip. Meanwhile, flying from New York to Bogotá takes approximately 5 hours. 

Another advantage Colombia offers is its shared time zone with major U.S. cities. With a shared UTC-5 time zone with cities like New York, Miami, and Washington D.C., coordinating schedules and conducting business across borders becomes seamlessly efficient.

Simpler Than Outsourcing Software Development to Colombia

Enchanted by the idea of doing software development in Colombia? Look no further, as Alcor stands ready to guide you through this journey!

Alcor is a trusted provider of a software R&D center solution powered by operational services, with 7 years of experience. We offer full-cycle IT recruitment in Medellin, Colombia, and other cities and countries in Latin America and Eastern Europe. The best part is that there’s no need to set up your legal entity as we provide employer of record (EoR) support, encompassing legal employment, payroll, taxes, employee benefits, and onboarding. But we don’t stop here!

Operating across 8+ locations spanning 2 continents, our offerings extend to include additional services such as employer branding, hardware procurement, office lease assistance, and more.

We’re not a typical IT outsourcing agency. Instead, we empower you with your very own software R&D center and a team of seasoned software developers. This means you retain full control over your core operations while we handle the rest, ensuring a smooth and efficient process every step of the way. How does it work in practice? 

A US-based company, People.ai, planned to go offshore with its own team of software developers. To enter the foreign IT market fast and seamlessly, the company turned to Alcor to launch its R&D center. Results? Our IT recruitment efforts triumphantly secured the addition of over 25 proficient tech talents, with half of them honing their skills in AI engineering. Supported by our diligent legal and finance teams, we streamlined the legal framework for People.ai’s establishment in their preferred destination. With formalities swiftly concluded, we accelerated the site selection and setup procedures. In a mere 4 weeks, People.ai proudly inaugurated its brand-new office with full operational support. Today, the company hosts a big team exceeding 220 people, poised to propel People.ai toward the realization of its most ambitious projects. 

Apart from People.ai, Alcor has earned the trust of renowned tech companies like Sift, Ledger, Gotransverse, and a host of other prominent tech companies. Ready to try it out yourself? Contact us for more information! 

References on Software Development in Colombia

1. GlobalData 
2. Business Insider 
3. IDC 
4. Statista 
5. Startupblink 
6. Colombia Tech Report 2022-2023 
7. FinTech News  
8. Marketing 4 Commerce 
9. Forbes 
10. CoinTelegraph 
11. Chainanalysis 
12. Bloomberg 
13. QS World University Ranking 2024 
14. Rest of World 
15. Glassdoor  
16. LatAm list 
17. Coursera 
18. U.S. News