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Outsourcing advancing full speed ahead in Colombia

June 27, 2017

With its double-digit growth, outsourcing has established itself as a key industry in generating employment and contribution to GDP. What is the outlook for this business?

The contact center and business process outsourcing (BPO) industry has seen remarkable growth in recent years and although the dynamics are expected to be weaker in this present period, the sector has good prospects since an increasing number of customers are outsourcing their services in the development of their operations.

This sector, which moves more than COP 6 trillion a year and contributes 1.2% to GDP, is the key to job creation, with 350,000 jobs in the entire industry, including contact centers, BPO, KPO (Knowledge Process Outsourcing) and ITO (Information Technology Outsourcing), among other services, according to ANDI.

However, the outlook is not all bright, because regulatory and policy issues in the country may put a damper not only on the growth of companies engaged in this activity, but on the arrival of further investment.

Santiago Pinzón, ANDI’s VP of Digital Transformation, is of this opinion and mentions five alerts that may impact the normal development of the sector.

The first is the implementation of the tax reform, whose results will be reflected at the end of the year; the second has to do with overtime, a project that was approved last week and will hit industry figures because BPO companies are intensive employers, and many firms provide services to other countries in different time zones.

"The impact is negative to the extent to which the country becomes costlier in terms of operations with a night-time surcharge, because an extra 35% affects the calculations, both for the companies already operating and those that are planning to move in,” he explains.

Another aspect that worries the entrepreneurs is the circular issued by Superindustria establishing a list of countries it identifies as safe in terms of data protection, one of which is the United States, which could have a negative effect on Cloud storage services.

Then there’s the shortfall in the numbers of bilingual personnel, where the national policy on the issue has not been systematic and finally, increased training is required in the skills demanded by the fourth industrial revolution.

Pinzón believes that the hostile decisions made in policy and regulatory matters will tend to slow the growth of the sector, even though Colombia offers more than just one city to settle in and it enjoys a strategic position in the region.

 

Action plan

Yet despite these concerns, entrepreneurs remain optimistic, seeing in the local market a great opportunity for growth, since Colombia is located within the 20 most attractive countries for outsourcing services. Between 2015 and 2016 it rose three places in the AT Kearney consultants’ ranking.

The BPO & O (Business Process Outsourcing and Offshoring) sector has an action plan that seeks to position the country as one of the top 25 international providers of high-value outsourced services by 2032, contributing a 3.4% share of GDP, exporting USD 2.5 billion and generating 580,000 high-quality jobs.

Today this industry is highly concentrated in Bogota, although there are other cities that have taken relevance, such as Armenia and Pereira, as well as Cali, Medellin and Barranquilla.

Invest in Bogota’s data indicate that the capital is home to almost half of the outsourcing companies in the country, with 47%, then comes Medellin, which has 31%, Cali has 8% and Barranquilla represents 6%.

Within the outsourcing sector in Bogota, BPO enjoys the greatest participation, with 41% of all registered companies. Juan Gabriel Pérez, CEO of Invest in Bogota, believes that the BPO sector has significant potential for growth in the Bogota Region and is prioritized within the city’s smart specialization strategy.

The capital, with 48.74% and Medellin, with 19.34%, have the largest share of the people employed, but other regions have been gaining ground, as is the case in the Coffee Belt, Atlántico, Valle del Cauca and Santander.

Manizales, for example, concentrates 6.63%, Barranquilla 3.72%, Cali 8.23% and Bucaramanga 2.4%; although, according to Ana Karina Quessep, CEO of the Colombian Association of Contact Centers & BPO, a dynamic expansion of the sector is expected towards intermediate cities such as Ibague, Monteria and Quibdo, among others.

As for demand for services, about 80% is related to contact centers. Of these, customer services in Spanish is the most demanded, with 54%, followed by telesales, with 12.1%, a similar dynamic to the rest of Latin America, says Quessep.

The growth and dynamism of this sector is there despite the economic situation of the country. For entrepreneurs, Colombia is strategic in the region for the development of the outsourcing industry.

Fernando Rodríguez, CEO of Unison Colombia, believes that Colombians’ understanding of the business and open attitude towards the exterior have facilitated the process of implementation and consolidation of his company in the local market.

This company has two operations centers in Bogota and generates about 1,000 direct jobs. This year growth is projected to be 20%.

The situation is similar at Convergys, a multinational that has two operating centers in Bogota and is to open one more in August, in order to consolidate its export services. Néstor Castillo, director of Convergys Colombia, indicates that the new operation will create about 1,000 jobs, to complete about 3,000. Initially 400 people will be hired and in 2018 another 600.

The company exports all its services in English, French, German, Italian and Spanish to the United States and Europe. For now, operations will only be in Bogota, but Castillo doesn’t rule out a future opening in other regions of the country.

For now, employers want to continue consolidating the country as a competitive hub, where conditions are ripe for further development of the sector.

 

 

*Some inputs were given by Invest in Bogota. Published in: http://www.dinero.com/edicion-impresa/negocios/articulo/tercerizacion-de-servicios-en-colombia-2017/246830

*Photo taken from: dinero.com