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Published On: July 10th, 2024|Tags: , , , |11.9 min read|

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Introduction

Colombia is emerging as a promising BPO destination, particularly appealing to North American companies seeking cost-effective outsourcing for a broad spectrum of consumer services. The country’s strengths include its strategic location, a skilled and bilingual workforce and robust infrastructure. Colombia’s business environment is further bolstered by supportive government policies that enhance internal BPO operations, facilitate international collaboration, and stimulate growth.  

Over recent decades, Colombia has established itself as a dynamic economy in Latin America and a top BPO location, offering competitive advantages in the offshore and nearshore sectors. The country’s cities, such as Bogotá, Cali, and Medellín, have become key hubs for business process outsourcing activities, providing a mix of cost-efficiency and high-quality service delivery. Significant specialisations include customer contact management, call centres, back-office operations, and content moderation. These cater to various industries, demonstrating national expertise in banking and finance, mass communication, FMCG, travel and hospitality, healthcare, IT, and many more.  

Consequently, today, Colombia is recognized as a global BPO leader, ranking among the top five most preferred outsourcing destinations worldwide according to the Offshore BPO Confidence Index 2023. Additionally, various statistics underscore the country’s outstanding performance and competitive position, such as the following:

As highlighted by IDC (Source: ProColombia), in 2021, Colombia’s sales in the business process outsourcing sector exceeded 2.6 billion U.S. dollars, surpassing markets like Argentina, Peru, and Chile. This accounted for 19.1% of the region’s total sales.
According to the insights from the Colombian Ministry of Commerce, Industry, and Tourism, the country has experienced steady growth in BPO and KPO services exports over recent years, with an impressive annual increase of 18%.
Colombia has become an important investment destination for the BPO sector. As indicated by FDI Markets (Source: ProColombia), between 2015 and 2021, more than 100 investment projects totalled over 300 million U.S. dollars in capital.

Outsourcing in Colombia: Competitive Advantage

The evolving BPO sector in Colombia presents substantial opportunities and benefits, notably attractive to brands from the United States or Canada seeking to expand, scale, and thrive through nearshoring. Key attributes such as cultural alignment, multilingualism, professionalism, innovation, and a business-friendly atmosphere precisely define the national outsourcing landscape.

Colombia as a great BPO destination: assets and advantages.

1. Strategic Location

Spanning across five time zones, Colombia strategically benefits organisations targeting key economic hubs in the United States and Canada. The country’s geographical advantage, being near the U.S. East Coast and sharing a similar time zone with the Eastern United States, simplifies team collaboration and minimises the need for significant adjustments to work schedules. Additionally, Colombia’s convenient location allows for easier travel between North America and Latin America. For instance, the United States and Colombia are well-connected, with direct flights between 10 U.S. cities and nine Colombian cities. As reported by Aviation Week, this network is operated by seven airlines, which collectively perform over 300 flights per week. This extensive connectivity facilitates frequent business travel and easy access for overseeing operations, making it convenient for US companies to effectively manage their outsourcing and nearshoring activities in Colombia.

The time difference between Bogotá and New York is one hour behind.
The time difference between Cali and Los Angeles is two hours ahead
A direct flight between Bogotá and Washington takes around 5 hours and 30 minutes.
2. Multilingualism

Colombia stands out for its bilingual proficiency in Spanish and English, which is crucial, especially for efficient cooperation with North American business partners. Regarding foreign languages, the Colombian government has undertaken several initiatives to enhance proficiency among young generations, particularly in English and French. These efforts are part of the Colombia National Bilingualism Program, which recognised the strategic importance of mastering other languages for the country’s competitiveness.

The increasing population of Spanish speakers in the U.S. and Canada underscores the growing need for bilingual customer services. A new report from Instituto Cervantes reveals that with 41 million native Spanish speakers and 12 million bilinguals, the United States is now the world’s second-largest Spanish-speaking country. This significant demographic shift creates a substantial demand for communication in Spanish, whether through phone or digital channels. Consequently, Colombia’s multilingual capabilities become even more valuable to North American businesses aiming to connect with their diverse customer base.

3. Colombia’s BPO Talent Pool

Colombia is renowned for its highly qualified human capital and robust talent pool. With a population exceeding 50 million people and a median age of 31.6 years, the working-age population constitutes around 43.6% of the total, according to data from Worldometer and CEIC. The major urban centres such as Bogotá, Cali, and Medellín contribute significantly to its vibrant workforce, with these cities hosting some of the country’s main universities that produce professionals in various disciplines relevant to the BPO sector.

4. Cost-efficiency

Colombian BPO services offer cost-effective solutions compared to North American providers, maintaining high-quality standards. Lower operational costs, which include wages and overheads, result in significant savings for businesses looking to streamline their outsourcing budgets. For instance, according to the Average Salary Survey, Colombia’s yearly average gross salary in July 2024 was around 44,600 U.S. dollars. In contrast, it was approximately 83,500 U.S. dollars in the United States and 71,500 U.S. dollars in Canada.

5. Trade Agreements 

Trade agreements like the US-Colombia Trade Promotion Agreement (CTPA) substantially benefit BPO initiatives by creating a stable business environment. They facilitate outsourcing partnerships between US and Colombian firms by eliminating entry barriers into each other’s markets and minimising regulatory complexities. This promotes cost savings for BPO operations, allowing for more efficient resource allocation and potentially reducing operational expenses. Additionally, mutual agreements establish a strong legal framework that safeguards foreign investments and intellectual property rights.

A Hypothetical Scenario

ABC Airlines, a leading U.S. carrier, utilises the US-Colombia Trade Promotion Agreement (CTPA) to outsource its customer service operations to a call centre in Cali, Colombia. The agreement facilitates the seamless setup and operation while providing essential legal protections for ABC Airlines’ investments and intellectual property rights, bolstering confidence in their outsourcing arrangement. As a result, the North American company achieves significant cost savings from lower operational expenses in Colombia, enhances operational efficiency through robust support, improves service delivery to enhance customer loyalty, and maintains competitiveness in the global airline industry.

6. Developing Infrastructure

Colombia has significantly upgraded its transportation, telecommunications, and energy infrastructure, strengthening the BPO sector through reliable connectivity and efficient logistics. Improved internet speeds, robust data centres, state-of-the-art business amenities, and advanced technology hubs contribute to companies’ seamless service delivery and operational excellence. This enhanced infrastructure supports productivity and collaboration through efficient communication networks and improves employees’ work-life balance, offering opportunities for leisure activities during their free time. 

A view of Colombia: a modern place with great infrastructure for doing business.

7. Government Support

The Colombian government supports the BPO sector with various incentives, including trade agreements, tax reductions, and favourable conditions within Free Trade Zones (FTZs). Moreover, the country provides efficient business registration procedures, strong legal protections for investors, and a conducive business environment that attracts foreign investments. A prime example of this support is ProColombia. This government agency offers crucial assistance to BPO companies through market intelligence, business matchmaking services, and support in establishing operations in the country.

8. Cultural Alignment with North America

Colombia’s cultural affinity with North America enhances business interactions and client relations, fostering a collaborative and understanding environment between Colombian BPO providers and their clients from the United States and Canada. Shared cultural values and business practices facilitate smoother communication and operational synergy, making Colombia an attractive choice for companies seeking seamless outsourcing partnerships.

9. Enhanced Security

Colombia has made significant strides in enhancing security measures, creating a safer environment conducive to business operations. Government initiatives, such as increased funding for law enforcement and strategic security programs, have effectively reduced crime rates and improved overall safety across the country. For instance, projects related to safeguarding cities in Colombia have played pivotal roles in securing urban areas. These improvements not only help reassure residents and domestic businesses but also bolster confidence among international investors considering the BPO sector.

10. Cultural Heritage and Natural Attractions 

Colombia’s natural beauty, diverse landscapes, and rich cultural heritage offer BPO professionals and visiting executives a unique quality of life. The country’s scenic attractions and historical sites provide recreation, relaxation, and artistic exploration opportunities, contributing to a balanced lifestyle conducive to productivity and employee satisfaction.

Key BPO Hubs

There are several dozen cities in Colombia where modern business centres operate. The key top outsourcing destinations among them are Bogotá, Cali and Medellín. All these places are strategically located, well-connected, and large enough to provide a relevant and educated workforce. Additionally, they offer excellent infrastructure, incredible history, a rich cultural background, and tourist attractions. 

Images of the key Colombia's BPO hubs: Bogota, Cali and Medelin.

1. Bogotá

Thanks to its skilled workforce and advanced infrastructure, Bogotá thrives as a pivotal hub for Business Process Outsourcing in Colombia. The city hosts numerous global corporations, drawn by its excellent business amenities, robust technical infrastructure, and modern office spaces. Universities like Universidad de los Andes and Universidad Nacional de Colombia contribute significantly to producing educated professionals. Beyond business, Bogotá offers an exciting cultural scene and numerous recreational attractions. With its blend of professional opportunities, cultural richness, and recreational attractions, the city stands out as a dynamic centre for global enterprises and an inviting destination for business and leisure.

2. Cali

Cali shines as a distinctive hub for customer support and content moderation within the BPO industry. The city benefits greatly from educational institutions like Universidad del Valle, which nurture talents in business, technology, and bilingualism. With its cost-effective solutions and strategic location in southwestern Colombia, Cali facilitates efficient international operations and seamless connectivity. Beyond its business advantages, Cali enthrals visitors with its rich cultural heritage and historical attractions. Renowned as the world’s salsa capital, it attracts dance enthusiasts from around the globe. The city’s pleasant climate and scenic beauty, highlighted by places like Farallones de Cali National Park, enhance its high quality of life and affordability, making it an ideal destination for BPO operations and relaxation.

Due to several strategic advantages, Cali has positioned itself as a prime BPO hub, particularly for consumer services. The city’s geographic advantage in the same time zone as North America enhances multi-country connectivity. Its robust educational ecosystem with nine certified universities and numerous bilingual schools ensures a steady pipeline of skilled professionals. Moreover, Cali’s focus on sustainable urban development, including extensive optic fibre networks and innovative transportation solutions, further bolsters its appeal as a conducive environment for BPO operations catering to international markets.

3. Medellín

Medellín offers a compelling blend of academic excellence, scenic beauty, and outstanding leisure opportunities. The city is home to prestigious universities such as Universidad de Antioquia and EAFIT University, which contribute to its skilled workforce in the BPO and IT sectors through specialised programs. Nestled in the Aburrá Valley and surrounded by lush green mountains, Medellín’s picturesque landscape enhances its appeal as a destination for both business and leisure.

A Short History of Colombia’s Outsourcing

In the early 80s. of the previous century, the World Bank recognised Colombia’s potential in outsourcing due to its skilled labour force, competitive costs, and good communication infrastructure. The advent of the internet in the early 2000s brought vast opportunities, leading to a surge in BPO services. By 2007, BPO became central to Colombia’s outsourcing industry, initially dominated by call centres. However, the sector shifted towards high-value, data, and knowledge-based services. Today, BPO and KPO industries contribute 3.5% to Colombia’s GDP, with over 700,000 employees, as stated by Colombia’s Ministry of Commerce, Industry, and Tourism.

Colombia in a Brief

Colombia borders Venezuela, Brazil, Peru, Ecuador, Panama, and the Caribbean Sea in the northwestern part of South America. It boasts diverse geography, including the Andes Mountains, the Amazon rainforest, and numerous coastal beaches. Bogotá, the capital, is a cultural and economic hub, while cities like Medellín and Cali are known for their innovation and vibrant lifestyles. Colombia is renowned for its rich cultural heritage, lively music and dance traditions such as cumbia and salsa, and significant biodiversity. The country’s complex history spans thousands of years, beginning with indigenous civilizations and transitioning to Spanish colonization in the 16th century. Following independence from Spain in 1819 and the dissolution of Gran Colombia in 1831, Colombia experienced periods of political instability and violence but has made significant progress in recent decades toward peace, economic growth, and social development.

Images of what Colombia offers: modern cities, history and natural beauty.

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FAQ Section

1. Why is Colombia considered a promising BPO destination?

Colombia offers strategic advantages such as its geographic location in the same time zone as North America, facilitating seamless communication and collaboration between outsourcing partners. The country also boasts a skilled and bilingual workforce, robust infrastructure, and supportive government policies that enhance the business environment.

2. What are the educational qualifications of the BPO workforce in Colombia?

Colombia’s BPO sector benefits from a robust educational ecosystem comprising nine certified universities and numerous bilingual schools. These institutions ensure a steady supply of skilled professionals trained in business, technology, and languages critical for BPO operations.

3. How cost-effective are BPO services in Colombia compared to North America?

Colombian BPO services are significantly more cost-effective than those in North America, offering substantial savings in operational costs such as wages and overheads. This affordability, coupled with high-quality service delivery, makes Colombia an attractive option for outsourcing.

4. How does Colombia’s infrastructure support the BPO sector?

Colombia has invested in developing its transportation, telecommunications, and energy infrastructure, providing reliable connectivity and efficient logistics for BPO operations. Improved internet speeds, advanced technology hubs, and state-of-the-art business amenities further bolster productivity and operational efficiency.

5. What government support does Colombia provide for the BPO industry?

The Colombian government supports the BPO sector through various incentives, including trade agreements, tax reductions, and favourable conditions within Free Trade Zones (FTZs). These initiatives promote foreign investments, simplify business operations, and ensure a conducive environment for BPO companies.

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