Nearshoring Software Development to Colombia

Nearshore software development in Colombia is gaining momentum, with Medellín and Bogotá now known as “The Silicon Valley of South America.” The country offers a full package of benefits: a highly skilled talent pool of 165,000+ IT professionals, specialized tech expertise, up to 50% cost savings, and ideal time zone proximity to the US. No wonder Colombia’s tech outsourcing market is expected to reach $803.1 million by 2025, unlocking new opportunities for your tech business.

I’m David Gomez, Head of IT Recruitment in Latin America at Alcor, a new generation tech R&D accelerator. We help US and European tech product companies build R&D teams across Latin America and Eastern Europe. Our team doesn’t just focus on the next–level IT recruitment in Colombia and scales your team from 10 to 100 developers per year in a new market – we also provide full back-office support with payroll, benefits, procurement, and more. Free insourcing and no buyouts.

In this article, you’ll discover the key reasons why Colombia appeals to software companies, the challenges to consider when nearshoring software development to Colombia, get a sneak peek at local software development rates, explore the country’s top tech hubs, and find an efficient solution for doing your business there.

Key Takeaways

• With a talent pool of 165,000 developers, strong ICT education, cultural alignment with the US, and cost savings of up to 50%, Colombia offers companies the perfect mix of skilled engineers, affordability, and convenient time zone proximity.
• Bogotá, Medellín, and Cali stand out as Colombia’s top innovation centers, combining thriving startup ecosystems, international investment, and strong universities to create a powerful tech landscape.
• The country’s legal and tax systems differ from US standards, but with the right compliance, payroll, and legal support, companies can easily avoid risks and operate effectively in Colombia.
• Clearly defined goals, the right collaboration model, and strong Agile-based management practices are key to ensuring productive cooperation with Colombian development teams.
• Instead of outsourcing, Alcor helps tech companies establish fully branded R&D centers in Colombia, combining top-tier tech recruitment EOR services and operational support. This is your team from day one – insource them at any time without buyouts.

Benefits of Nearshoring to Colombia

Nearshoring your software development to Colombia offers a competitive edge with its vast pool of skilled and affordable tech talent, backed by strong educational institutions and a thriving startup ecosystem. With moderate labor costs and high-quality engineers, US-based companies can cut development expenses by up to 50%. Colombia’s growing ICT market, government support, and unicorn startups make it an attractive tech destination. Its geographic proximity and shared time zones with major US cities ensure real-time collaboration and frequent visits. Plus, cultural alignment between Colombian developers and US companies helps build dedicated, trust-based engineering teams for long-term success.

A vast pool of skilled software developers 

The country has more than 165,000 Colombian software developers – the third-largest tech talent pool in LATAM. Each developer is well-versed in various technologies and programming languages, among which are JavaScript, Java, C++, CSS, Python, SQL, and Ruby. Currently, Colombia ranks #10 in programming expertise in South America and improves its results every year.

High-quality STEM education

What’s more, software developers in Colombia possess a strong higher educational background in ICT. Over 15,000 graduates enrich the Colombian software development pool annually, ensuring an unyielding supply of skilled professionals to meet the industry’s demands in fields like science, technology, engineering, and mathematics. Notably, 9 Colombian universities are ranked in the Best Global Universities in Latin America list. At the same time, 24 higher education institutions from Colombia have been heralded as top global universities in the prestigious QS World University Rankings. 

Alcor’s top tech recruitment knows how to wow you: we hire 5 software engineers within the first month and 30+ tech talent in just 3 months. Companies like Grammarly, GoTransverse, Sift, and many others have already successfully established their engineering teams abroad with us.

Moderate labor costs 

To ensure cost efficiency (but not compromise on software quality), some tech entrepreneurs opt for nearshore technology outsourcing or tech recruitment in Colombia, as local wages are considerably lower than in the US. For example, senior full-stack developers in the US earn $122K a year, while Colombian software engineers with the same level of expertise get only $63K annually. Such a significant difference in labor costs enables tech companies from the USA to save up to 50% on product development. Later in the article, I’ll share a detailed table with salary rates of the key roles in a software development team, so that you can get a bigger picture. 

Thriving tech market

First and foremost, among LATAM countries, Colombia holds the impressive position of being the #4 largest provider of IT services. Its ICT services market shows no signs of slowing down and is projected to grow to $35.5 billion by 2028.

The Colombian government pays special attention to the tech industry and implements various initiatives and programs for its development. One of them is the ICT Sector Modernization Law that aims to ensure greater legal certainty for prospective investors, fostering nationwide infrastructure expansion to enhance the availability of ICT services, thus promoting wider access to emerging technologies.

Robust startup ecosystem 

Colombia is building a strong reputation in tech with 1,582 startups, and ranks #2 in South America and #36 globally for its startup ecosystem. It also boasts world-famous unicorns: Rappi, with a valuation of $5.25 billion; LifeMiles, with a total worth of $1.15 billion; and Habi, valued at $1 billion. All in all, there are ca. 289 known startups in LATAM, with nearly 190 of them located only in Bogota.   

 

Geographical

and time-zone alignment

Many tech companies are considering offshoring software development to Colombia due to its strategic geographic position. Located in the northwestern part of South America, this country is within easy reach of some American cities. The flight duration from New York to Bogota averages around 5 hours, while the trip from Miami takes approximately 3 hours. Geographic proximity makes it easy to organize company meetings, team buildings, and other activities.  

What about UTC-5 time zone compatibility? For US-based tech companies, working with a nearshore software development company in Colombia means there is no – or only a minimal – time difference between Bogotá and major US cities such as Miami, New York, Washington, D.C., and even California. This shared time zone allows for real-time communication, smooth coordination, and quick problem-solving with your remote team.

Cultural alignment

Another advantage of nearshoring software development to Colombia is its cultural proximity to American companies. Much like their US colleagues, Colombian engineers share a strong motivation for achievement and success, driven by a results-oriented mindset and a passion for continuous growth.

Overall, Colombian developers are known for their relationship orientation, appreciation of personal communication, trust-building, close-knit teamwork, proactivity, and dedication – all of which are crucial when developing long-term engineering partnerships and fostering a strong, collaborative team culture.

Colombia’s Top 3 Tech Hubs

Bogotá, Medellín, and Cali form the backbone of Colombia’s competitive tech ecosystem. Bogotá stands out as the country’s primary tech hub, attracting most startups, talent, and international investment. Medellín shines with innovation in fintech and e-commerce, supported by strong government initiatives and global tech players. Meanwhile, Cali is emerging as a growing center for tech services, especially in agribusiness, backed by a robust digitalization strategy and academic institutions. These cities offer an ideal foundation for outsourcing software development to Colombia.

Bogotá

Bogotá is Colombia’s leading and most competitive tech hub, hosting 62% of the country’s tech companies and producing 57% of its tech talent. In 2024, it attracted 105 new investment projects, mostly from the US.

Here’s more about this tech hub:

• Startup ecosystem rating: #1 in Colombia, #2 in South America
• Startups: 791 startups
• Top in: FoodTech
• Top universities: National University of Colombia, University of America in Colombia, University of the Andes, Pontifical Javeriana University
• Tech conferences: Bogotá DevDay, Bogotá Tech Summit, Blockchain Summit, and Cybersecurity Forum

Medellìn

Medellín is a 2nd vibrant LATAM hub based in Colombia. The city’s former mayor – a software developer himself – along with the local government, called Medellín a Valley of Software to reflect its tech-driven transformation.

Here’s what makes Medellín stand out on the tech map.

• Startup ecosystem rating: #2 in Colombia, #7 in South America
• Startups: 459 startups
• Top in: E-commerce, Fintech
• Top universities: University of Antioquia, Pontificia Bolivariana University, EAFIT University, CES University
• Tech conferences: Ruta N Summit, IoT Medellín Conference, AI Summit, Blockchain Summit, UX/UI Design Conference, Startup Weekend.

Cali

Colombia’s third tech capital, Cali, is making bold strides toward digitalization. The city’s 2024–2027 strategy  roadmap includes infrastructure renewal, digital expansion, and tech adoption in government.

Here’s what supports that vision.

• Startup ecosystem rating: #3rd in Colombia, #13 in South America
• Startups: 147
• Top in: Tech services for the agribusiness industry
• Top universities: ICESI University, University of Valle, Javeriana University, Santiago de Cali University
• Tech conferences: ARQCONF Summit Cali, International Conference on Computer Systems Engineering and Technology (ICCSET)

Nearshore Software Development Rates in Colombia

Nearshoring to Colombia offers a major cost advantage for tech companies.

Salaries of Colombian developers are up to 2x more affordable for US employers, compared to the wages of American engineers. Our salary comparison table highlights competitive compensation across roles like DevOps, Python, and Mobile App Developers. But it’s not just about salaries – the total employment cost includes benefits, bonuses, and recruitment fees, which still keep Colombia significantly more affordable.

As I mentioned above, opting for hiring a Colombian software engineer costs less than working with programmers in North America. In fact, in Colombia, you can hire two senior developers for the same price you would pay for one strong mid-level engineer in the US. This fact greatly appeals to US-based companies that make strategic decisions to go for nearshore software development outsourcing to Colombia. My accounting team has prepared a summary comparison of Colombian vs US salary rates, which will help you easily spot the difference and make a data-driven decision.

Positions	Senior
	Colombia	USA
PHP Developer	$79,800	$102,000
Java Developer	$66,600	$110,400
Python Developer	$79,800	$145,000
Mobile App  Developer	$79,200	$140,000
Blockchain Developer	$78,000	$156,600
Data  Scientist	$75,000	$126,000
DevOps  Developer	$72,000	$145,200
Cloud Engineer	$54,000	$146,400
Embedded  Developer	$67,200	$110,400
Colombian salaries were converted to US dollars at the relevant exchange rate for September 2025.

However, to truly understand the cost of your development team, you need to calculate total labor expenses in Latin America. That includes:

• Employee benefits package, which typically includes health insurance, professional training, hardware, and corporate merchandise, totaling about $6,500 in LATAM and $15,500 in the US; 
• Prima, a 13th-month salary;
• Recruitment fee, which is typically 20% of the gross annual salary for a senior developer in Latin America and 30% in the US.

After conducting in-depth research on the local talent market and salary benchmarks, I compiled a detailed breakdown of the competitive total employment cost for some of the most common senior tech roles in Colombia.

Total Annual Senior Engineer’s Employment Cost
Positions	Colombia	USA
PHP Developer	$108,910	$148,000
Java Developer	$91,970	$158,920
Python Developer	$108,910	$187,000
Mobile App  Developer	$108,140	$229,900
Blockchain Developer	$106,610	$218,980
Data  Scientist	$102,750	$179,200
DevOps  Developer	$98,900	$204,160
Cloud Engineer	$75,800	$205,720
Embedded  Developer	$92,740	$158,920

Challenges of Nearshoring Software Development to Colombia

Nearshoring to Colombia comes with some challenges, but all are manageable with the right partner. Local labor law differs significantly from US standards, especially around employment classifications, which can lead to compliance risks. The taxation system is also complex, with unique corporate tax rates, VAT, and recent reforms affecting both resident and non-resident businesses. However, with the right legal and operational support, you can avoid pitfalls and operate smoothly. Companies like Franki have already benefited from Alcor’s expertise in handling compliance, contracts, and local payroll.

Complex labor law

Nearshoring software development to another country always comes with legal compliance and regulatory considerations that need to be carefully addressed. Colombian legal frameworks greatly differ from the US ones in definitions of employment types, contractual obligations, and worker protections. In addition, local legislation has certain nuances when it comes to classifying contract workers and independent contractors, and their misclassification can lead to significant penalties and potential legal issues.

• Solution: To effectively navigate this challenge, US companies must engage in thorough research and stay updated on local labor law developments. Alternatively, they can seek professional legal guidance from a partner to assist with employment agreements, consultations on local legislation, and intellectual property rights protection.

By leveraging the expertise of external parties, companies can better ensure compliance with labor laws and mitigate potential risks associated with nearshore technology development in Colombia. 

Taxation system peculiarities

Another pain point American companies often encounter when deciding to team up with a nearshore software development team in Colombia is tax regulations. In terms of this, Colombia has its own nuances, making it crucial to thoroughly study the local taxation system, understand the tax obligations and incentives for businesses operating there.

This includes familiarizing themselves with:

• a corporate income tax rate of 35%,
• value-added tax (VAT) rate of 19%,
• payroll taxes of 9%,
• any potential tax exemptions or benefits available to foreign companies.

Note: This applies to those who plan to hire under the FTE model. If, however, you choose the B2B model, in this case, paying payroll taxes is not mandatory for the company.

In addition, one should constantly keep an eye on changes and updates in Colombian taxation laws. For instance, Colombia’s Tax Reform Law, introduced on January 1, 2023, introduces substantial modifications to tax regulations impacting resident and non-resident companies alike. Interestingly, IT companies in Colombia can benefit from a 25% tax discount and 100% tax deduction for investments in research, technological development, and innovation projects that aim to address commercial issues, generate new knowledge, or resolve internal processing problems. 

Solution: If you are planning to enter a new market, it’s important to thoroughly explore the tax system, including its rules, rates, and obligations. It will help you develop a comprehensive understanding of local tax regulations, ensuring compliance and optimization of your financial strategies.

Alcor’s EOR expertise: With us, you don’t have to worry about payroll, tax payments, or benefits management. We handle it all – with 100% legal compliance and accounting – saving you tens of thousands of dollars and freeing your teams from extensive paperwork. Need an Employer of Record in Colombia or another LATAM country? We are ready to help!

Real-life client case: This is exactly what we did for Franki. We provided them with detailed consultations to compare the available hiring models in LATAM and guided them toward the most cost-efficient option – B2B. We also shared our expertise in local employment regulations, benefits, bonuses, and paid time off.

As a result, they achieved 7 senior hires in just 4 weeks – fully compliant and hassle-free – while also saving a significant amount of money, since under the B2B model, payroll tax payments are not mandatory for the company according to local legislation.

Want to hear more about our clients’ experience? This video testimonial is just for you: 

Tips to Nearshore Your Software Development to Colombia

Planning to nearshore your software development to Colombia? Here’s how to make it work. Start by defining your business goals, tech stack, and hiring needs to avoid mismatches. Choose the best collaboration model: freelancers (budget-friendly but risky), outsourcing (flexible but less control), or building your own dedicated team (full control with back-office support). Ensure effective team management through Agile practices and strong leadership. Finally, select a reliable provider with proven experience, clarify cooperation terms, and ensure smooth onboarding. With the right approach, nearshoring to Colombia can offer access to top talent, cost savings, and long-term scalability. 

If you’re planning to go global and work with nearshore software developers in Colombia, here are some pieces of advice that will help you enter this market with flying colors:  

1. Define your technical & business priorities

Before you nearshore to Colombia, it’s crucial to establish a clear understanding of your technical stack, project scope, and hiring objectives. Assess whether you need temporary support, long-term expertise, or a full dedicated development team, and determine the critical roles and seniority levels required to meet your product goals. This structured approach will minimize mismatches and accelerate time-to-productivity.

2. Decide on the collaboration model 

• Freelancers. On one hand, opting to hire a freelance developer in Colombia can significantly reduce labor costs and taxes, while also streamlining the recruitment process. However, freelancers often work on multiple projects with different companies, which may result in limited involvement and dedication to your specific product. Moreover, the nature of this collaboration model carries the risk of data leakage and requires careful consideration of intellectual property rights protection. 

• IT outsourcing. Outsourcing software development to Colombia is another way to work with local software engineers. It provides access to a broader talent pool with diverse tech stacks, enabling you to handle heavy workloads, fill expertise gaps, or even develop your product from scratch. Initially, it may seem like a cost-effective solution with a high level of flexibility; however, nearshore technology outsourcing often involves the risk of being charged for ambiguous services with unclear pricing structures. Additionally, relinquishing full control over the product development process can potentially result in data leakage and security breaches. 

• Your own development team. To bypass the above-mentioned challenges, tech companies often build their own development teams in financially attractive locations with strong tech industries like Colombia. To achieve efficient recruitment and ensure legal compliance, accounting, and payroll functions, they entrust all hiring & back-office operations to a reliable tech recruiting & support company. This allows companies to maintain complete control over their core element – product development – while benefiting from a dedicated offshore engineering team with comprehensive back-office support. 

3. Evaluate and choose a reliable provider

If you are choosing between outsourcing and building your own development team in Colombia, a provider can take the operational workload off your shoulders. To choose the right tech recruitment services provider, it is important to carefully examine factors such as the company’s hiring experience, case studies, Clutch reviews, scope of services, number of tech researchers and recruiters, and other things. Additionally, evaluating their communication and collaboration processes, candidate screening methods, and ability to meet specific hiring needs can further help in making a final decision.  

However, if you decide to go with a freelance model, you don’t necessarily need a provider. Platforms like Upwork, are sufficient, as they simplify the search for specialists, contract arrangements, and payments.

4. Finalize cooperation terms & ensure seamless onboarding

Once the collaboration model is chosen, it’s time to outline the legal framework and contractual specifics – including scope of services, IP rights, payment terms, and data protection measures. To ensure a successful start, provide a well-structured onboarding process that integrates your nearshore software development team into existing workflows, aligns them with your business culture, and enables early productivity.

5. Implement an effective management approach

When deciding to hire a remote development team in Colombia, it’s essential to consider the collaborative approach you will adopt. Effectively overseeing an offshore team requires robust leadership and management skills to ensure a seamless and productive workflow. In such cases, utilizing remote team management tools, conducting regular sync-ups, implementing frequent performance reviews, and adhering to established project management methodologies such as Agile or Scrum can greatly contribute to successful outcomes and provide valuable assistance. 

Nearshoring Software Development to Colombia Can Be Easier with Alcor

Alcor empowers tech companies to skip outsourcing pitfalls and instead establish their own fully controlled R&D teams in Colombia. We deliver a full-cycle solution that includes senior IT recruitment (top 10% of talent), EOR services (FTE & B2B hiring, payroll, compliance), and complete operational support (offices, hardware, onboarding).

At Alcor, we focus on IT recruitment in Latin America and Eastern European countries, but we do it under the appealing concept of building your own branded R&D center, offering an all-in-one solution that includes:

• In-house hiring: You get access to the top 10% of senior engineers who not only match your technical needs but also fit your team culture.
• Comprehensive Employer of Record:  Whether you prefer FTE or B2B, we handle onboarding, payroll, taxes, and benefits under our legal entities, so you stay 100% safe and focused on product development.
• Full operational support: From office space to hardware procurement, we cover all back-office tasks so your developers can work comfortably while you keep full control over your team.

Our best practices help top American businesses boost their development. Instead of relying on outsourcing, the US-based company Dotmatics chose to assemble its own offshore development team and build its own R&D center. The need for quick but high-quality staff augmentation abroad led the company to Alcor – and the results speak for themselves:

• They assembled a team of 30 highly skilled engineers across multiple tech stacks, with some roles (like Product Manager and QA) closed from the very first candidate.
• While keeping ownership of their product, Dotmatics didn’t have to worry about payroll, legal compliance, or procurement – we covered it all, freeing their focus for innovation and scaling.

What truly sets this case apart is that we went the extra mile: handling stock options that were later fully paid out to developers following Dotmatics’ acquisition by Siemens. And what we see today is that Dotmatics effectively operates a fully transparent business both in the United States and abroad, ensuring clear visibility and accountability across all its operations.