GARTNER: COLOMBIA WELL POSITIONED FOR OFFSHORE SERVICES

Over the last four years, the Colombian Government has focused its attention on strengthening a group of industries that they have identified as Sectors of Productive Transformation.  These sectors were selected following an elaborate analysis by the Ministry of Commerce and Industry and McKinsey and Company. Two of the eight sectors that they identified as having the potential to transform the country are the Business Process Outsourcing (BPO) Sector and the IT sector.

In order to accelerate the development of these sectors, the government has designed a twenty-year plan that includes:

-       New legislation permitting the creation of Single Enterprise Free Trade Zones for these types of businesses, giving them special income tax structures and tax exemptions for importing equipment and materials related to their operation

-       The creation of legal stability contracts, providing companies with insurance on the benefits of Single Enterprise Free Trade zones in case of policy reversals by new governments or changes made to the current legislation

-       Increased visibility of the country at international levels through a government agency, Proexport Colombia, which is in charge of promoting investments, tourism and exports internationally.

As I’ve discussed in some of my recent blogs, these efforts are starting to payoff, as exemplified by the arrival of major international players like Convergys with its call center in Bogota and Hewlett Packard with its Global Services Center in Medellin (one of only five in the world). Finally, the international IT and Off shoring Services Consultant Gartner has recently published their December report in which they have identified Colombia as one of the leading countries suitable for the allocation of off shoring services, further emphasizing the success of these developing sectors. (See complete report below)

Analysis of Colombia as an Offshore Services Location

Frances Karamouzis, Allie Young

This report (see Note 1) analyzes Colombia's suitability for offshore outsourcing, based on 10 criteria: language, government support, labor pool, infrastructure, educational system, cost, political and economic environment, cultural compatibility, global and legal maturity, and data and intellectual property security and privacy. Sourcing managers can use this report to judge whether Colombia might be a good location for their organization's captive or outsourced offshore IT and business process services.

Key Findings

Colombia has launched a marketing campaign through Proexport, the Colombian government's trade bureau, to raise awareness of Colombia as a destination for offshore services and to capture a select portion of the business process outsourcing (BPO) and IT outsourcing (ITO) export services market.

Colombia offers market access to the U.S. and other countries for specific types of application services but is primarily focused on BPO work where Spanish-language skills are a business requirement.

A small but growing number of multinational corporations (MNCs) in the high-tech and manufacturing sectors have successfully established Colombia as a location for call center and transaction BPO work, and some indigenous Colombian service providers are gaining scale to support other Latin American organizations.

Few service providers have yet exploited Colombia as a major commercial global delivery hub for near shore delivery to the U.S.

Recommendations

Investigate Colombia for internal shared services, BPO, contact centers and captive centers, particularly when Spanish-language skills and proximity to U.S. buyers and a similar time zone are key requirements.

Seek opportunities in an emerging country such as Colombia to benefit from less competition for IT talent/resources, and preferential treatment and/or exclusivity regarding real estate or other subsidies

ANALYSIS

Table 1 provides a summary of Gartner's rating of Colombia, based on our 10 criteria. Figure 1 shows Colombia's location and time zone difference compared with selected cities.

Table 1. Colombia: Outsourcing Rating - Source: Gartner (November 2010)

Criterion	Rating
Language	Fair
Government Support	Fair
Labor Pool	Fair
Infrastructure	Fair
Educational System	Fair
Cost	Good
Political and Economic Environment	Good
Cultural Compatibility	Good
Global and Legal Maturity	Fair
Data and Intellectual Property Security and Privacy	Fair

Language

The official language of Colombia is Spanish. English is the second most-spoken language in Colombia.

1. As the trade exchange between Colombia and the U.S. continues to grow, the use of the English language in Colombia increases each year. (Exports from Colombia have tripled between 2002 and 2009.

2. There are 9,895 English-certified professionals across all Colombian cities with different levels of proficiency (Basic High, Intermediate and Advance.

3. The national government has undertaken additional initiatives to boost English-language proficiency with programs such as I-Speak.

4.Promoted by the Colombian Ministry of Industry, Trade and Tourism.

Analysis: Colombia's focus today is to capitalize on the Spanish-speaking market for BPO; in the future, it will target the English-speaking market for application services. For English-specific IT services, there is still significant growth needed to garner the appropriate level of English- speaking labor to lead application services work.

Gartner rating: Fair Government Support

According to Colombia's Ministry of Information and Communications Technologies, Colombia's free-trade zone policy is competitive, allowing for 15% income tax, no import duties, and vendors may sell in the local market (in addition to exporting).

5. In "The Global Competitiveness Report, 2009-2010," Colombia is ranked No. 80 (out of 133) for government efficiency (down nine places from 2009). Its rankings also declined for transparency of government policymaking, public trust of politicians, ethics and corruption, and property rights.

6. While foreign direct investment (FDI) terms have improved in the past decade, FDI is currently at 4% of the overall GDP, so FDI terms need to improve further to attract greater investment.

7. Analysis: The Colombian government has made significant strides in the past several years, but still needs to increase investments and fight corruption issues to increase its status as a trusted government. Additional government-subsidized marketing efforts are needed to raise awareness and increase the visibility of Colombia, and targeted investments in the IT sector will be needed to make Colombia a more attractive country for IT investment.

Gartner rating: Fair Labor Pool

As of 2009, Colombia had 74,000 people employed in the following IT services sectors: ITO (12,500), BPO (60,000) and knowledge process outsourcing (KPO) (1,500) (this represented 0.3% of the total workforce of Colombia).

8. Colombia is one of the leaders with the most flexible labor policies in Latin America. In 2010, Colombia rated 23.7 on a scale from 0 to 100, where 0 was the most flexible, which placed it ahead of other Latin American locations.

9. According to the Colombian Ministry of Education, between 2001 and 2008, more than 97,000 students graduated from universities and technical schools in Colombia.

Publication Date: 9 December 2010/ID Number: G00209136

Analysis: Colombia has made major employment strides in structuring a solid foundation for the growth of the BPO and IT services industry. Labor laws, and the low presence of labor unions, combined with longer shift options, offer flexibility and make it easy for prospective vendors or organizations seeking captive center options to deal with HR issues. The availability of talent is steadily growing. However, it still constitutes a very small percentage of the total workforce and is spread across three primary locations in Colombia (Bogota, Cali and Medellin).

Gartner rating: Fair Infrastructure

According to a 2009 IMD study, Colombia is the Latin American country with the largest investment in information and communication technology (ICT) infrastructure as a percentage of its GDP. Almost 11% of Colombian GDP (equivalent to $25 billion) is planned under the 2010 three-year investment plan for infrastructure alone.

10. According to the World Economic Forum's Networked Readiness Index, 2009 to 2010, Colombia ranked No. 60 out of 133 countries.

One indicator of infrastructure capability and ability to scale is the growth of local telecommunications operators. Between 2005 and 2008, the revenues of local Colombian telecom operators almost doubled.

11. The main sources of revenue included: fixed telephony, long distance, mobile, and Internet access.

Analysis: Colombia has focused on making consistent investments in telecommunications infrastructure in the past several years, and the rate of increase of the use of broadband and mobile services has been dramatic. The country's overall ability to manage this growth has been commendable. The recent investment proposed for infrastructure development is significant (a double-digit percentage of its GDP). If these proposals are executed, the time to implement them will still be substantial.

Gartner rating: Fair Educational System

Colombia's educational rankings have declined from previous years. "The Global Competitiveness Report, 2009-2010" ranked Colombia No. 71 for higher education and training and No. 72 for health and primary education out of 133 countries.

12 Colombia has 189 universities, of which 74 offer masters degrees and 34 institutions grant Ph.D.s. There are 19 universities that grant International Baccalaureate certifications.

13. The graduates (approximately 37,500 engineers) from these institutions serve as the vital fuel of talent for the industry.

Analysis: The education system in Colombia is in need of: investment; reform of policies and focus; and strategic alignment with the main commercial sector of BPO and IT services. It needs to develop competitiveness among its students with regard to technical and functional skills, as well as English-speaking competency for global delivery model requirements.

Gartner rating: Fair Cost

The average salary of a software engineer/developer/programmer in Colombia ranges from $12,660 to $29,013, according to PayScale.

14. The operational cost in Colombia is competitive (compared with other Latin American countries), as Colombia offers: flexible structures and work shifts can be scheduled over a greater range of hours; competitive broadband cost; and the lowest severance pay in Latin America.

15 Analysis: Colombia's overall cost structure for sourcing (as defined by a combination of salaries, telecom, real estate and other operational costs) is competitive compared with other countries in Latin America. Government policies have focused on creating an easier and friendlier climate with regard to labor laws, use of temporary contractors and staff severance issues that often plague neighboring countries such as Brazil. Additionally, the government has structured a program that provides financial relief related to the required social payments per worker (which amount to 30% of staff salaries).

16 Rating: Good Political and Economic Environment

Kidnapping and violent crime have declined drastically and are now confined mainly to rural areas, where the state lacks control due to the presence of guerrillas and drug cartels.

17. In the "2010 Global Peace Index," Colombia was ranked No. 138 out of 144 countries (where 1 equals the most peaceful country).

18. The World Bank ranked Colombia No. 5 out of 183 countries for protecting investors. This makes Colombia the second-highest-ranked country in Gartner's 30-country study of offshore destinations.

In the past few years, Colombia has experienced a marked improvement in its macroeconomic performance. It has moved up 15 positions on the macroeconomic stability parameter from its 2009 ranking of No. 88 (out of 134 countries), to No. 72 (out of 133).

19. The significant economic downturn of the past 18 months has negatively affected the Colombian economy. According to IHS Global Insight, in 2010, Colombia's GDP growth increased to 4.6% and it is expected to remain at 4.0% or higher through 2014.

Analysis: In the past 10 years, perceptions of, and trust in, the political and economic environment in Colombia have improved considerably. The attractiveness of the business climate continues to improve, given GDP growth and the resiliency of Colombia's economic performance. However, the government needs to continue to address corruption, and improve its overall efficiency, in order to become a more trusted business partner and destination for sourcing.

Rating: Good Cultural Compatibility

Colombia ranks No. 4 in the IMD Global Competitiveness study of Latin America for having a culture open to foreign ideas.

According to the Administrative Department of Security (DAS), the number of international visitors to Colombia has almost doubled since 2002. Approximately 1.45 million foreigners visited Colombia in 2008 and, in 2009, there was a 17.2% increase. This continues to build awareness of other cultures.

Several MNCs have established BPO or IT services centers in Colombia; while these centers mainly serve Latin America, this exposure to MNC practices advances Colombia's experience and global business awareness.

Analysis: Like many Latin American countries, physical proximity and U.S. time zone alignment give Colombia a natural compatibility with U.S. buyers, as trade and business exchange grows between countries. Further, the growth economies in Latin America, including Colombia, are promising for MNC expansion. Thus, while Colombia does not have a distinct advantage over other Latin American locations, it is beginning to capitalize on its proximity to the U.S. as a relatively untapped offshore services market that holds "early entrant" opportunities.

Rating: Good Global and Legal Maturity

The World Bank ranks Colombia No. 37 out of 183 countries for ease of doing business, making it first among Latin American countries, and No. 5 overall in the countries evaluated in Gartner's top-30 country list for 2010.

Colombia is ranked No. 40 out of 104 countries on the Personal Freedom parameter.

20. According to the World Democracy Audit for 2009, Colombia's democracy ranking declined to No. 86, from No. 67 in 2008; similarly, its corruption ranking declined to No. 57, from No. 54 in 2008; press freedom remained constant, at No. 88 in both years.

In 2010, approximately 108 legal stability contracts were either signed or approved in an effort to strengthen and attract investment projects.

21. Analysis: Colombia has many areas of weakness in terms of its image with regard to stability and democratic practices. Improving international relations through investment agreements and contracts with existing and new partner countries worldwide — along with growing relations with the U.S. in terms of investment, trade and aid — will improve the global image of Colombia.

Rating: Fair Data and Intellectual Property Security and Privacy

According to "The Global Competitiveness Report, 2009-2010," by the World Economic Forum, Colombia has made small strides in this area, moving from No. 74 to No. 69 (out of 133 countries). A focus on this analysis related to data and intellectual property categories reveals that it still ranks in the lower third of countries. From an overall pool of 133 countries, Colombia ranked No. 83 for property rights, No. 94 for intellectual property protection and No. 85 for legal framework.

Colombia has been able to reduce software piracy in the past several years, ranking it among the lowest of the top six economies in Latin America. However, software piracy still accounted for 55% of all software in the country in 2009.

22. Colombia is improving its efforts to combat infringement of intellectual property rights through enforcement actions, but much more needs to be done to remove Colombia from the U.S. Watch List 2010. San Andresito in Colombia is featured in the Notorious Markets List of the "2010 Special 301 Report."

23. Analysis: Colombia has made important strides, as demonstrated by its rankings compared with those of other Latin American countries. However, more work needs to be done. Other Latin American countries have attracted a larger number of established vendors and captive centers with focused attention on intellectual property, allowing them to build trust among buyers of BPO and IT services that overcome macrocountry statistics. Colombia has not achieved this yet.

Rating: Fair

RECOMMENDED READING

Some documents may not be available as part of your current Gartner subscription.

"Gartner's 30 Leading Locations for Offshore Services"

"Tutorial for Defining Key Offshore Services and Global Delivery Terms"

"A Successful Outsourcing Strategy Requires a Clear View of Future Market Disruption"

"Ten Competencies and Key Activities for Mastering Multisourcing"

"How to Achieve Efficient and Effective Multisourcing"

"Global Delivery Model Market Competitiveness Cube Provides Insights into IT Services Providers' Direction"

Evidence

1 "Colombia education system," www.virtualcampuses.eu/index.php/Colombia.

2 Departamento Administrativo Nacional de Estadística (DANE).

3 Common European Framework of Reference for Languages (CEFR).

4 For details of this English-language proficiency progam, see www.ispeak.gov.co.

5 Colombia's Ministry of Information and Communications Technologies (May 2010 report submitted to Gartner).

6 "The Global Competitiveness Report, 2009-2010." 7 Colombia Fact Sheet, The 2009 Legatum Prosperity Index, 23 November 2009.

8 Colombia's Ministry of Information and Communications Technologies (May 2010 report submitted to Gartner).

9 "Doing Business, 2010," the World Bank. 10 Colombia: a center of opportunities," Posse Herrera & Ruiz, March 2010.

11 Colombia's Ministry of Information and Communications Technologies (May 2010 report submitted to Gartner).

12 "The Global Competitiveness Report, 2009-2010," the World Economic Forum. The report reveals that Colombia has dropped 12 positions for the quality of its educational system, 10 positions for the quality of the management of its schools and seven positions for the quality of math and science education since the 2008 to 2009 report, which reflects the poor performance of Colombia's educational system.

13 "Colombia Outsourcing Landscape," Tholons, 10 June 2010.

14 PayScale, June 2010.

15 "2010 Quality of Life Index," "International Living." Other Latin American countries have shifts that are shorter by one to three hours.

16 Colombia's Ministry of Information and Communications Technologies (May 2010 report submitted to Gartner).

17 "Colombia, Risk Overview," Factiva, 13 May 2010, reproduced in "Colombia — The Transformation of a Country," Libertad y Orden, 19 May 2010.

18 "2010 Global Peace Index," the Institute for Economics and Peace.

19 "The World Factbook," the Central Intelligence Agency.

20 "Global Competitiveness Report, 2009-2010," the World Economic Forum.

21 Invest in Colombia, presentation, 6 May 2010.

22 "Software Piracy," TradeTalk, "Latin Business Chronicle," 20 September 2010, www.latinbusinesschronicle.com/app/article.aspx?id=4496.

23 "2010 Special 301 Report," United States Trade Representative, 2010.

Note 1 Objective, Methodology and Limitations

Objective

This report is part of Gartner's annual analysis of 30 leading offshore locations, which began in 2007. Organizations seeking an outsourcing arrangement, or those wanting to set up a captive center, should use these reports to evaluate a country's current suitability for offshore service work.

Each report includes key data points and insight to provide a brief, high-level perspective, so organizations can easily compare potential locations. Because each organization will have a different view of which factors are the most important for its needs, the reports aren't intended to rank each country and don't include an overall rating for each country.

Methodology

We applied a rigorous and repeatable methodology to assess each country's state. This involved:

Identifying 10 categories that organizations should consider when looking at a potential location for offshore or nearshore IT or business process services.

Applying the insight, knowledge and experience of Gartner analysts, as well as consulting credible secondary sources, to evaluate the countries against these categories. Rating each category on a 5-point scale, with 1 being poor and 5 being excellent, to provide an at-a-glance view of the status of that country.

Performing a comparative analysis at a regional and global level to ensure balance in the assessments.

Limitations

These reports assess each country's current status. They will not reflect the benefits of investments some countries are making to improve an area of weakness or enhance current strengths, where these investments have not yet visibly come to fruition. For example, investments in English-language education will take some time to demonstrate improvements in the workplace.

Although organizations could apply these reports to applications, business processes or infrastructure, the reports don't address this level of granularity. If organizations were to apply these reports to one specific service line, they may need to adjust some of the ratings (for example, the availability of specific skills in the labor pool).

This research is part of a set of related research pieces. See "Gartner's 30 Leading Locations for Offshore Services, 2010-2011" for an overview.

Publication Date: 9 December 2010/ID Number: G00209136           

© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

THE ROAR OF THE CIVETS

CIVET (pronounced /ˈsɪvɨt/) is a small, lithe-bodied, mostly arboreal mammal native to the tropics of Africa and Asia. Well… not this time. I’m referring to other kind of CIVETS. I’m referring to the Emerging Economic group represented by Colombia, Indonesia, Vietnam, Egypt Turkey and South Africa.

Few years ago, money managers came up with a term to refer to an exclusive group of emerging markets: Brazil, Russia, India and China; and rightfully so. They have shown the world what aggressive economic growth is all about.  But recently as they analyze other emerging economies they found that behind the BRIC group, there was another one rising.  This group has captured the attention of investors around the world as they sustain a GDP growth of an average of 4.5% or more and attract billions of dollars in Foreign Direct Investments.

One of those convinced in the dynamics of these economies is the Investment Management Group Black Rock (BLK). They announced last week the creation of a new ETF (Exchange-Traded-Fund) in Colombia next year. The exact amount has not been disclosed but experts are predicting it will be a significant amount considering that the Wall Street Journal reported that they have $16 Billion dollars available for their new multi investment fund.

Further evidence of the continued growth that Colombia is facing is the creation of several REIT’s (Real Estate Investment Funds) that are targeting mega projects like the construction of the tallest building in Colombia -- the BD Bacata, a multi million dollar (U$181M) project that promises to deliver a high end hotel and residences to Bogota.

The big question is, what does 2011 bring to the world economy? Are the US and the EU going to lead the way? This is yet to be seen, but the truth is that for those looking around for high returns, the place to look is inside the CIVET.

By, Alejandro Tribin

December 12, 2010

   

ROADS OF PROGRESS

Let’s play the role of a Private Investigator. Lets look around the globe for clues about the forces behind those countries that are prosperous and have reached or are close to reaching economic development. You could probably get 100 economists in a room and they would present different hypothesis and models. Truth is that among the different pieces of the puzzle you would find one common factor contributing to the progress and competiveness of a country -- a good road system.

Recently the Mayor of Bogota, Mr. Samuel Moreno, announced an ambitious plan to build a super highway system around the city that will consist of 14 corridors for a total of 110 miles. The plan is to raise the $2.6 billion dollars from investors and give them control of the road system for the next 25 to 30 years. It is expected to take four years to deliver the completed project.

I think we can all agree that the greatest example of economic development in resent history can be attributed to China. When we think of the China from the 80’s we think of a poor, communist country that produced low quality, cheap products.  One of the first major investments China made was in the construction of a massive highway system. They finished building the first one in 1988 and their plan was to build over 35,000kms nationwide by 2020. Now we all know that China is the second economy in the world and is expected to become number one by 2016.  What are they doing that we could all learn from? Well for instance, the people of China are extremely disciplined, but the key to their success lays in a vision that was executed to a t. You can credit that vision and that plan to two simple questions: How can we turn our industry in the most competitive in the world and how is the government going to facilitate this task.

In the case of Colombia, they are starting to ask these questions. The first step that the country needed towards economic prosperity was to take control of security. The second step was to start an aggressive global campaign to change the perception that the world had about the country. The third step was to build the trust of foreign investors and now the next step is to provide Colombia’s industry with the infrastructure to make them more competitive.

As I look ahead, I see a prosperous future for Colombia. I see a country competing with Brazil for economic leadership in the region and I see Colombia as an important player in world markets.

By

Alejandro Tribin

December 11, 2010

LET'S GO TO INDIA?

This was a decision that probably made a lot of sense to companies looking to outsource their customer service and/or data management four years ago.  But something is changing. As the world’s largest Business Performance Outsourcing (BPO) firms target Colombia, opening businesses like Contact and Data Centers, going to India may be decision of the past.

What is causing this phenomenon?

Well let’s see. First and most important, the Colombia of today is nothing like the one from the headlines in the news ten years ago. What changed? Thanks to the two terms of President Alvaro Uribe and his policies on Democratic Security, the country is now a much safer place. This helped stabilized the country to a point were Foreign Direct Investment started flowing in; by 2009 FDI tripled compared to 2003.

Second, Colombia is strategically positioned geographically. It’s only a three-hour flight from Miami and is in the same time zone as the US East coast, making it very manageable by US Companies.  Also the country has a vast bilingual population, which continues to grow as the government invests in new programs to make English available to more people. Still, if a company is looking to serve their Spanish speaking customers, Colombia is known to have the most neutral and well spoken Spanish, according to the Great Royal Academy of Spanish language.

Third, some of the world’s renown BPO players have already opened operations in Colombia including: Convergys (US), Teleperformance (France), Sutherland (India), Flat World Solutions (US), Avanza (Spain), Konecta (Spain), Emergia (Spain) and Telemark (Spain).

According to the World Bank, Colombia ranks third in Latin America as the most friendly business climate after Brazil and Chile and ranks 14^th in the world. So in black and white that is why the decision to outsource operations to Colombia is one we will hear more and more often in the coming years.

By, Alejandro Tribin

December 4, 2010

Ecopetrol's new public stock plan

On November 26th, Finance Minister Juan Carlos Echeverry announced the decision by the central government to make public 9.9% of the Colombian state's majority stake in Ecopetrol. After the announcement, Echeverry clarified that the proceeds from this sale will go to the oil company to finance its 2011 investment scheme and not  to government coffers to fund infrastructure projects as the President Juan Manuel Santos had said on earlier remarks.

On 2007, the company announce their decision to go public with an initial sale of 10.1% of its shares, the IPO that also trade as American Depositary Shares on the New York Stock Exchange had an initial offering of $18.50 dollars per share and its trading at $42.38 with a high of $51.59 on November 1, 2010 and a low of $15.20 on November 17, 2008. 

Procter & Gamble Invests $25 million USD in Colombian Distribution Center

Procter & Gamble, the world's biggest consumer-products manufacturer and maker of household brand names, such as Duracell, Pantene and Gillette, is betting on Colombia as a strategic location to help grow its market position in South America with a $25 million USD investment in a new distribution center in the region. The project, which will add 500 manufacturing jobs, is part of P&G’s vision to become the largest consumer goods company in Colombia by more than doubling its business in the country in the next few years.


P&G has been in Colombia for more than two decades and chose Rionegro, Antioquia, for the site of its new distribution facility based on a variety of factors, including proximity to the company’s existing production plant in Medellin, as well as the nearby location of a major highway that runs between Medellin and Bogota, allowing for direct access to the rest of the country. The nearly 500,000-square-foot center is scheduled to open in April 2011 and will accommodate the distribution of P&G staple products, as well as introduce new products to Colombia and nearby countries.

The company’s choice to grow its business in Antioquia extends beyond just strategic location. P&G is also heavily invested in the surrounding community, supporting programs that benefit the region’s citizens, including donating $750,000 USD to be put toward the construction of an aqueduct, giving away 350 computers to increase the quality of education in the area’s public schools, and assisting in building a toy library. It has also helped create a soccer field for local residents to use and has distributed large amounts of drinking water to the region through P&G’s PUR brand.

P&G’s facility was also designed with sustainability in mind. The company plans to install solar panels and energy efficient heaters in the coming months that will reduce its energy consumption by 28 percent each year, as well as fit the building with rainwater collection techniques and devices for treating wastewater, thus reducing sewage system output by more than 50 percent.

FORTUNE, Newsweek and The Huffington Post Report that Colombia is a Country to Watch

The eyes of the world are on Colombia, with its limited debt, growing incomes and young population. Foreign direct investment is flooding into the country. Analysts looking to capitalize on this boom are calling Colombia the “country to watch in the hemisphere” and “a bright star in the Latin American constellation.”

Below are just a few recent stories featuring Colombia’s economy -- ripe for foreign investment -- in the some of the top business outlets in the U.S.:

* In an August 2010 article called, “Snapshots of the Frontier,” FORTUNE says Colombia is among five countries that are “veritable powder kegs of economic growth.” The article says, “A new-found stability, combined with sweeping privatizations in the export sector and the existence of valuable natural resources…translated into GDP growth averaging over 5% per year between 2004 and 2009.” Click here (http://money.cnn.com/galleries/2010/fortune/1008/gallery.frontier_markets.fortune/2.html) to read the full article.

* Newsweek’s July 16, 2010, article headlined, “Colombia Becomes the New Star of the South,” reports that “…against all odds Colombia has become the country to watch in the hemisphere,” adding that the country is…“gaining kudos and clout. Prospering, democratic, and pro-Western – and with a new leader [newly elected President Juan Manuel Santos] known more for his achievements than for his aura – the most conflicted nation in the hemisphere is now coming into its own.” Click here (http://www.newsweek.com/2010/07/16/colombia-becomes-the-new-star-of-the-south.html) to read the full article.

* The Huffington Post featured a July 6, 2010, piece written by Colombia’s Minister of Commerce, Industry and Tourism Luis Guillermo Plata Paez, titled “Colombia’s New Economic Reality.” In it, Paez outlines 10 things that American investors might not know about Colombia’s economy and business atmosphere, including that the “country expects to see a record 10 billion in total foreign direct investment in 2010...” Click here (http://www.huffingtonpost.com/luis-guillermo-plata-paez/colombias-new-economic-re_b_636384.html) to read the full article.

* On July 2, 2010, a Newsweek article titled “Colombia Unleashes the Civets,” said, “…it’s no accident that Colombia gets lead billing [among the CIVETS countries]. In the past eight years, the Andean nation has gone from dud to dynamo: foreign investment has risen 250 percent. Its stock index is up 15 percent this year, and 35 percent (versus Brazil’s 14 percent) over the decade.” Click here (http://www.newsweek.com/2010/07/02/colombia-unleashes-the-civets.html) to read the full article.

McKinsey Quarterly Showcases Colombia’s BPO Sector as a Model for Emerging Countries

In a recent article in McKinsey Quarterly, McKinsey & Company’s business journal, the publication highlights Colombia’s success in helping its business process outsourcing (BPO) sector become more globally competitive in a case study titled, “Colombia’s lesson in economic development.” As part of the country’s Productive Transformation Program begun in 2007, Colombia aims to assist not only traditional commodity-based industries, but also value-added sectors, such as BPO.

For the BPO industry, the program promoted the formation of public-private partnerships, as well as government reforms and initiatives that will help the sector go head-to-head with other countries looking to service Spanish-speaking markets, such as Colombia’s domestic market, Spain, Hispanic consumers in the U.S. and multinational companies operating in Latin America.

After studying various countries with comparative opportunities and examples, McKinsey concluded that Colombia offered lower costs for business processing outsourcing than other Latin American countries and could thus “serve the U.S. Hispanic market and multinationals in the region competitively.” These analyses also revealed that BPO could potentially account for roughly 300,000 jobs in the country before 2020.

McKinsey says that initial results from the Productive Transformation Program for the BPO seem to show that system is working and could serve as a model for other emerging markets, thanks in part to some of the steps that have been taken in Colombia with regard to this sector. McKinsey Quarterly reports several examples, such as:

* Developing the country’s human resources: Colombia has worked with the BPO industry to create a national registry for certified speakers of the English language (www.ispeak.gov.co) to make it easier for companies to find qualified employees; and the city of Bogotá, in partnership with several companies, has created a program to finance English-language education for call center employees.

* Reforming Colombia’s taxes and regulation: In May 2010, the country eliminated the value-added tax on BPO service exporters, getting rid of a disincentive to create offshoring services in Colombia. The country is also expected to approve a new data protection bill that would align Colombian law with stricter European and U.S. data security requirements, making the country a more attractive BPO destination. Colombia also adopted International Financial Reporting Standards, an important step; because financial accounting is one of the processes developed countries are offshoring.

* Promoting the industry within the country: Colombian executives in the sector have established a local chapter of the International Association of Outsourcing Professionals—the first in Latin America—which will help managers stay connected to their peers abroad and keep up-to-date on global trends.

* Increasing BPO infrastructure: Local governments are developing two free-trade zones near Bogotá and Medellín, specializing in BPO. State-of-the-art infrastructure and services will be available to companies that settle there. In addition, the government has already granted free trade–zone status to three new BPO facilities, and three others are under consideration.

Colombia Real Estate gets its share of Investor’s Attention

Bogota, Colombia - August 30, 2010 -- International Real Estate Listings.com was keenly watching and analyzing the real estate in Colombia for the last two decades. With the internecine wars between cocaine smugglers and the government coming to an end and the growth rate of Colombia being quite impressive, International Real Estate Listings.com decided to launch a separate website to assist the Colombia property owners, real estate agents, and developers in selling, renting, or exchanging their properties in the Colombian and international real estate markets. It came as no surprise that the Colombia real estate stakeholders responded immediately in large numbers to utilize the golden opportunity provided by the new website. They have been opening accounts and posted multiple listings of properties to get local and international exposure for profitable deals without the hassle of middlemen.

The Republic of Colombia is situated in the northwestern region of South America. Colombia is the second largest country in South American after Brazil and the fourth largest in Latin America in economic terms. Bogota is the capital of the country and the official language is Spanish. Official data reveal that around 46% of the population has been estimated to live below poverty line, with about 17% classified as extremely poor. Still, the recent economic growth of Colombia has been quite impressive, with the rate rising to 8.2% in 2007. The growth rate has been among the highest in Latin American countries. The frequent wars between the government and the cocaine warlords have been discouraging tourists and foreign investors for several decades but the situation has changed at present. In 2006, Lonely Planet ranked Colombia among the top ten tourist destinations in the world. The ecotourism industry has been thriving enormously in recent times, providing indirect boost to the Colombian real estate market development and international real estate investment in Colombia.

The analysis of the Colombian real estate market was done by the veteran international real estate specialist, Mr. Taylor White, PHD, who has create, a global platform to bring together property holders, developers, agents, and international real estate investors together. His aim was to cut across the linguistic, economic, and cultural barriers between various countries and facilitate real estate transactions across borders. During our discussion with him, Mr. White stressed that the launch of the new website for Colombia was an important stride in his efforts to integrate the global real estate industry. He revealed the major features of the website in promoting Colombia real estate listings, Colombia real estate for sale, Colombia rentals, and enabling international property transactions and exchanges.

Can it Get Any Hotter in Colombia? Convergys Commits to Bogota

Nearshore Americas has learned that global contact center giant Convergys, which serves half of the Fortune 50, is setting up a BPO service center in Bogota after receiving clearance to operate in a new free trade zone in the northern part of Bogota.
As many as 2,500 seats will occupied at the center within three years, according to two reliable sources. The center, which should be operational in June, will also offer financial back-office support services.
Colombia is without question one of the hottest outsourcing destinations in Latin America, and its transformation has been one of the biggest stories to hit the headlines in the Nearshore community in the last several months.
Convergys spokesperson John Pratt declined to comment late today on our report.
“This does not come as a surprise, really,” says lead BPO and call center analyst Peter Ryan, of DataMonitor, commenting on the development. “There is a lot of capacity in Colombia and the country has the potential to become the next big thing in South America,” said Ryan, comparing its rise to Chile and Argentina, which have become globally recognized outsourcing centers.
Pace of Growth: A Critical Question
Another major global BPO player to jump into the Colombian market is Teleperformance, which recently acquired Teledatos, which generated about $75 million in 2009. Teledatos operates six delivery centers in Bogotá and Medellín, employing over 5,000 workers.
The big question facing Colombia over the near term is whether BPO growth will come as a deluge or grow incrementally. If there is a huge spike in demand for call center services, for example, Ryan says this could trigger inflationary wages pressures. “It would be better if the growth is spread over the next 24 months,” he says.
The other question confronting the growing Colombia BPO sector is whether cities such as Medellin and Cartegna will be able to produce sufficient quantities of bi-lingual workers, says Ryan.
Convergys Retrofits
Convergys recently downsized in Canada, cutting over 800 workers, and shuttling those positions reportedly to the Philippines. The Cincinnati-based company says it expects to hire at least six thousand employees this year in the Philippines. The company employs over 20,000 workers in 12 sites in the Philippines.
Finally, Convergys also landed recently in Gartner’s Magic Quandrant, recognized for its service delivery in the CRM/Contact Center space.
“We believe that Convergys’ position in the Leaders quadrant for CRM Contact Center BPO providers is a positive validation of our leadership, execution abilities, and investments in our customer solutions portfolio. Our solutions, which include agent-assisted care, automation, self-service, and analytic services, enable our clients to stand ahead of their competitors based on the quality and consistency of the customer experiences we help them provide, and the customer intelligence we bring to them.” said Andrea Ayers, President, Customer Management, Convergys.

Source: Newsweek by KIRK LAUGHLIN.
http://bx.businessweek.com/global-outsourcing/view?url=http%3A%2F%2Fwww.nearshoreamericas.com%2Fexclusive-hotter-in-colombia-convergys-commits-to-bogota%2F2412%2F