Call Center/BPO Industry in Colombia - Invest in Colombia
Call Center/BPO Industry in Colombia May 2009
1. Call Center/BPO Industry in Colombia • • • • •
Competitive Operational Cost Human Resources Industry Maturity Infrastructure Business Environment
2. Services to investors
Main Drivers Of the services industry
Competitive Operational Costs
Business Environment
Infrastructure
Human Resources
Industry Maturity
Competitive Operational Costs: The lowest in Latin America Average building rental costs at competitive prices (US$/m2)
9Savings up to 284% in Systems Engineers careers 9Savings up to 80% in Internet cost 9Savings up to 43% in average building cost
The most competitive salaries in Latin America US$ 2007 (monthly wage) Source: Colliers International A+ and A Buildings
Systems Engineering
Average competitive Internet cost per month for 1Mbps (megabytes per second) US$ Peru
81
Chile
60
Venezuela
47
Colombia
45
Argentina
45
Brazil
42 Source: CISCO Barometer
Electronic Engineer
Chile
5,574.43
5,674.72
Brazil
3,873.67
3,943.86
Peru
2,944.06
2,997.51
Mexico
2,658.67
2,706.64
Argentina
1.753,40
1,784.93
Colombia
1,452.00
2,064.00
Source: Salary Expert - Human Capital
Competitive Operational Costs: The longest daytime working shift time in Latin America Country
Daytime
Night
Colombia
6 a.m. - 10 p.m.
10 p.m. - 6 a.m.
México
6 a.m. - 8 p.m.
8 p.m. – 6 a.m.
Costa Rica
5 a.m. – 7 p.m.
7 p.m. – 5 a.m.
Ecuador
6 a.m. – 7 p.m.
7 p.m. – 6 a.m.
Argentina
6 a.m. – 9 p.m.
9 p.m. – 6 a.m
Source: Colombia: Law 50 of 1990 and Law 789 of 2002. Mexico: LeyFederal Law of Labour of 1969. Costa Rica: Law 2 of 1943. Ecuador: Labour Code 2005. Argentina: Law 11.544 of 1933 and 20.744 of 1976.
The longest working daytime shift in Latin America
$US/FTE/Hour
•Labor
Competitive Operational Costs: 50 to 60% more competitive than the United States •Data •Voice •Knowledge •6.40
•6.40
•9.90
•24.4
•9.90
•Facilities
•3.1
•2.9
•3.7
•IT/ Telecom
•0.84
•0.95
•0.94
•1.14
•1.14
•1.53
•1.53
•SG&A
•Total
•India
•USA
•11.48
•3.2
•11.40
•15.53
•32.3
•15.30
•9.18
•10.70
•32.90
•19.31
•33.01
Source: Mckinsey Interviews
Compared with United States, Colombia is 50-60% more competitive
•English •Spanish
•57.37
Competitive Operational Costs: The Lowest Labour Costs Costs for Call Center Agent - US$ (per month)
The lowest Labour Costs in LATAM
Country
Basic Wage
Added Cost Direct Costs
Colombia
300
52%
441
Mexico
320
40%
448
Venezuela
280
88%
451
Brazil
267
84%
492
Uruguay
427
36%
582
Argentina
410
47%
601
Chile
470
56%
733
Source: Manpower
Competitive Operational Costs: Broad band
Cost US$/Year Indonesia
233.520
India
73.000
Chile
50.400
Brazil
45.000
Colombia
35.000 30.000
Mexico United States
9.600 ‐
Source: Mckinsey
50.000 100.000 150.000 200.000 250.000
Cost of E2 is one of the most competitive in the region
Human Resource: over 800.000 enrolled people, ready to work in call centers Total of enrolled students in Colombia (2001 – 2006)
Technical ( 2 or 3 years taking courses) Technical ( 4 or 5 years taking courses)
Human Resource: over 676,000 technicians and university graduates Number of university graduates in Colombia (2001 - 2006)
Technicians 21% U. Graduates 79%
676.820 People
9In 2006, up to 50% of the undergraduates obtained a bachelor’s degree in Business and Engineering careers 9Over 60% of the technicians who graduated in 2006 belong to Engineering and Business programs
University Graduates
Number of university graduates in business related careers (2001 - 2006)
Technicians 31% U. Graduates 69%
146.481 People
Technicians
2005
2006
2005
2006
Business Careers
22,450
21,340
7,916
6,545
Engineering and Architecture
25,127
21,119
8,360
7,495
Social Sciences
15,848
15,659
1,178
6,020
Health Sciences
10,270
8,870
594
619
Education Sciences
7,428
7,427
-
-
Others
8,304
8,045
2,368
1,984
89,427
82,460
20,416
22,663
Total Colombia
Source: Ministry of Education of Colombia
Human Resource: Available and Highly Qualified Workers The highest index in Latin America, according to the IMD World Competitiveness Availability of Qualified Labor (10=Fully available qualified work) (9) Colombia Chile Canada Peru Mexico Brazil Argentina
Colombia, leader in information technology engineering and business careers graduates
6,28 5,79 5,69 5,23 4,72 4,41 3,58 0
1
2
3
4
5
6
Third place in number of university graduates in the sector among the main countries in Latin America in 2007
7
Source: The World Competitiveness Yearbook 2008
2.000
1.582
1.500
Third place in number of universities registered, among the major Latin America countries in 2007
1.000
343
500
176
104
87
78
Argentina
Peru
Chile
0
Brazil
Mexico
Colombia
Source: Consejo Superior de Investigaciones Científicas (CSIC), organization attached to the Ministry of Science and Technology of Spain
Brazil Mexico Colombia Argentina Chile
# of Graduates Administration Careers 55,181 61,813 21,340 18,640 8,353
# of Graduates IT Engineering 10,766 13,005 6,824 4,047 9,205
Uruguay
1,032
235
Source: Higher Education Secretariat, Brazil; labor observatory, Mexico; labor observatory, Colombia; ministry of education, Argentina; ministry of education, Chile; ministry of education, Uruguay
Human Resources: Multiple development centers •Colombia has multiple medium size cities with available and qualified labor pool •Cities as Manizales are developing their economic strategy attracting call centers Total population in large and medium cities
Source: Mckinsey
Industry Maturity: A growing market The Service Market in Colombia grew 39.5 % between 2005 and 2007 Service Offshore Market Value in Colombia: US$ 1,013 million in 2007 1200 1000 800 600
1013 400
726
839
200 0 2005
Source: IDC
2006
2007
Industry Maturity: IT Services share in Colombia is the highest in Latin America IT Industry share in Latin America (2007)
Only Colombia and Brazil show a clear growing trend in this sector in the region.
11%
Venezuela
24%
Perú
25%
Chile
Services 42%
Colombia
Software Hardware
37%
Brasil 23%
Argentina
29%
LA 0%
20%
40%
60%
80%
100%
LA
Argentina
Brasil
Colombia
Chile
Perú
Venezuela
Hardware
27.383
1.988
9.896
1.187
1.683
638
1.880
Software
6.345
405
3.153
211
257
94
254
Services
13.945
725
7.697
1.013
651
231
270
Total IT
47.673
3.118
20.746
2.411
2.591
963
2.404
Source: IDC
Industry Maturity services grew by 15% in 2007: Outsourcing 31%
32%
Integration and development
Growth in outsourcing due to FDI in Call Centers and BPO
Consulting Education and Training 2%
Deploy and support 12%
23%
2005
2006
2007
Deploy and Support
241,56
275,36
326,23
Outsourcing
227,01
275,64
314,12
Integration and Development
154,64
169,38
228,38
Consulting
85,24
97,32
120,14
Education and Training
17,92
20,94
24,4
Total
726,4
839
1.013,30
Source: ACDCC; Sector Business Idea; Invest in Bogota
Industry Maturity: Positive trends The number of Employees increased by over 100% between 2005 and 2007 Thousands 2005-2008
BPO and Call Center Income has doubled in less than two years US$ Millions 2005-2007
Source: ACDCC; Sector Business Idea; Invest in Bogota Source: ACDCC; Sector Business Idea; Invest in Bogota
Exports grew over 200% between 2005 and 2007 US$ Millions 2005-2007
Source: ACDCC; Sector Business Idea; Invest in Bogota
In only two years, income and employment have doubled, while exports have tripled.
Industry Maturity : Main Call Center in Colombia Atento increased it number of agents in 2006 in 200%. Currently employs more than 6.000 poeple in Bogota and Bucaramanga Sitel employs in Bogota, Barranquilla and Cali more than 3000 agents serving more than 30 clients in Latina America and United States Digitex has almost 3000 agents. The company recently opened a new Call Center in Ibague 250 professional selling high end products to Latin America customers 300 bilingual agents giving technical support and sales to Latin America The bank relocated from Barcelona to Bogota 400 services and sell positions Support services to Banco Santander (Spain) from Bogota. Currently employs more than 400 people, and forecast 600 in mid 2009
Source: CCIT
Industry Maturity : Main Service’s companies The Spanish multinational supplier of technology for the travel and tourism industry, has opened an operation in Bogota to source the Americas From Bogota, the U.S. firm begins to provide design services for its global customers. Since 1986, the pioneer in the world of outsourcing in Bogota serves a wide range of companies from different sectors. Since 2002, this Mexican multinational IT service provider is present in Bogota with its third largest operation in America. In Bogota this multinational expands its global footprint in response to local customers. Launched recently operation center in Bogota, which plans to increase its presence in Latin America and improve the level of customer satisfaction today.
From Bogota, 200 consultants providing IT services to America at the Center for Managed Services largest multinational in this region.
Source: CCIT
Infrastructure: Major investor in Latin America 1.56% in Telecommunications investment, as a percentage of the GDP (2008)
Colombia Brazil Argentina Peru Mexico Chile 0,00%
9US$ 4 billion, will be the investment in telecommunications in 2010. In FDI, Colombia has accumulated U$ 2.5 billion in the past six years.
1,6% 0,6%
96 submarine cables, which have enabled an outlet bandwidth of 220 Gbps. It will be upgraded to 7 shortly with CANTV-ETB.
0,6% 0,5%
910 times more Internet users in the past seven years.
0,5% 0,40% 0,50%
1,00%
1,50%
2,00%
Third country in terms of Internet users Millions (2007)
Brazil
43
Argentina
16
Colombia
10
Peru
7
Chile
7
Venezuela
5 0
10
20
30
40
Source: The World Competitiveness Yearbook 2008 - Internet World Stats
50
Submarine cables in Colombia
Growth in terms of total connections December 2005 - December 2006 Over 13 million broad band connections are estimated to exist in Latin America
Infrastructure: We doubled connections to broad band With a 114.1% increase, Colombia was the Latin American country undergoing the highest increase in the total number of connections between December 2005 and December 2006. 3,500,000 is the number of connections estimated by IDC for Colombia in the year 2010.
Source: Cisco Barometer
Broad Band Connections Total Connections Type of Connection Technology
The total growth of broad band connections in Colombia has undergone a marked dynamism, exceeding global and regional growth.
Internet lines ADSL, Modem Cable, Fixed Wireless Other Connections: Satellite, etc. Total broad band
Source: IDC
December 2006
June 2007
4,981.00
6,801.00
617,781.00
827,012.00
5,353.00
5,376.00
628,115.00
839,189.00
Stability of the Regulatory Framework (higher score = greater consistency)
Business Environment: Reliability for Industry
Colombia stands out for its achievements in regulatory stability, being located among the countries with the highest index of consistency
Data Protection (1 = poor, 5 = good) Colombia maintains a good level in terms of data protection, can be found at the same level of countries like Mexico and India
Source: Office of Mckinsey business technology; Spanish Agency for data protection; WCY Address government policy
Business Environment: Attractive investment incentives Competitive Free Trade Zone Regime 9
9
9
*ZF Approved ZF Being processed
9
15% corporate tax tariff and allows sales to the local market No customs duties are levied or paid (VAT and TARIFF) on finished goods, supplies, and raw materials that enter through these zones, whether from the national customs territory or from other countries. Possibility of exporting services from the free trade zone, both to the national territory and to other countries. Exports from the free trade zone to other countries benefit from international agreements.
• In 50 years (1958 - 2007) only eleven free trade zones were created 2007 - 2008 • 37 new Free Trade Zones approved since April 2007 • 7 Free Trade Zones being processed
Business Environment: Attractive investment incentives
VAT Exemption for Services provided abroad •
The service exports from Colombia can be exempt of the VAT if they meet the following requirements: – The service is provided from Colombia. – The service is provided to a consumer (company) that has no type of operation within Colombia. – Register the service provision agreement before the Colombian Industry, Commerce and Tourism Ministry.
Business Environment: Attractive investment incentives
Special Import – Export Mechanism •
This tax benefit allows the investor to import capital goods that will be used to export services, with complete or partial exemption of custom duties and postpone the payment of VAT.
•
This tax benefit requires that the investor exports 150% of the FOB value of the productive assets imported under the Especial Import – Export Mechanism.
•
The investor must provide an insurance policy or global bank guaranty o 20% of the FOB value of the productive assets imported under the Plan.
Business Environment: Attractive investment incentives Special Import – Export Mechanism •
•
•
The services related with research and technology that can apply to the tax benefit are the following: – Computer services and other related – Research and development services – Telecommunication Services The Division of Especial Programs will approve or reject the “Especial Import – Export Mechanism” tax benefit program within 10 days from the filing of the application and will notify the applicant. Colombia through the Law 170 of 1994, adopted the Agreement that created the World Trade Organization WTO and with it the General Agreement on Trade in Services (GATS).
Business Environment: Attractive investment incentives Investors can subscribe Legal Stability Contracts with the Colombian Government Objective
Guaranteeing the legislation and administrative interpretation considered as a determining factor for the investment project. Investments over USD 1,900.000
Conditions
Investor must pay a premium to the Government equivalent to 1% of the investment made.
Period Admission
From 3 to 20 years maximum.
Technical report
Evaluation and approval of the application
* These contracts exclude rules regarding the social security system, the obligation to report and pay taxes levied by the government under a state of emergency, indirect taxes (i.e., the VAT or the tax on banking transactions), prudential regulations of the financial system and the utility rate system.
Final evaluation
Business Environment: Attractive investment incentives
Other tax benefits •
Tax deduction of 40% of the value of the Fixed Productive Assets acquired.
•
Tax deduction of the 100% of the Industry and Commerce Tax and the Real State Tax, paid in the corresponding tax year and which have direct relation with the taxpayer.
•
Tax deduction of the 25% of the financial operations tax withholding, regardless the economic activity of the taxpayer.
Success Story CITIBANK “The talent, preparation and skills for customer service that distinguishes Colombians, have been fundamental for us to feel comfortable to move our customer service and collection operations to Colombia” Sergio de Horna, Citibank President Spain
•
From Bogotá, Citibank shared services operation provides: – Outbound • •
Collection Product sales
– Inbound • •
• •
Product support for clients Customer service
Provides services to 12 different countries Overall Citibank's operation employees over 2.000 people
Success Story UNISONO - SANTANDER “"Colombia is one of the countries with big potential due to it’s economic growth, labor cost and government support to the sector. Now we have an additional motivation: We are special trade zone” Ana Isabel Iglesias, Unisono President Colombia • •
From Bogotá, Unisono provides services for Banco Santander (Spain) with more than 600 agents who attend corporative and customers from Spain. Outsourcing of sales and customer service operation
Key qualitative factors in IT Services • • •
Service oriented people Macroeconomic and political stability better than other countries in Latin America Neutral accent
WHY COLOMBIA • Cheaper than Mexico • Better service attitude than Argentina • Is not saturated as Costa Rica or Uruguay
Value Proposal Colombia is the best option for Call Center services investors who are looking for service oriented labor pool, cost competitive location, and a strategic location for services supply to Americas and Spain
Competitive Operational Cost
Cheapest agents in the region
Human Resource
One of the most qualified and service oriented labor pools in LATAM: More than 800.000 enrolled university students
Industry Maturity
Growing market of US$ 1 billion: almost 42% in the last three years
Infrastructure
Second lowest E2 cost in LATAM: US$ 35,000/year
Business Environment
Free Trade Zone regime, specially designed for IT services companies: 50% off Corporate Tax and sales to the local market
Value Proposal Colombia is the best option for Call Center services investors who are looking for service oriented labor pool, cost competitive location, and a strategic location for services supply to Americas and Spain Up and comers
Strategic Geographic Location
Challengers Startups
IT Engineers and Business Graduates ( #)
74,818
Labor Cost (US$/month)
2,658
Internet Cost (US$/year)
30000
Ranking - Doing Business
44 (-3)
Share IT Services
Flight Times
Los Angeles
Bogotá
8.30 H
Miami
New York
Houston
Madrid
3.40 H
6.00 H
5.15 H
10.22 H
4.25 H
Lima
8.35 H
5.30 H
7.47 H
6.30 H
11.30 H
5.45 H
Buenos Aires
15.00 H
9.15 H
14.50 H
10.30 H
12.15 H
9.25 H
México City
4.00 H
3.00 H
4.35 H
6.00 H
10.15 H
Santiago
11.30 H
8.45 H
10.50 H
12.25 H
12.55 H
Los Angeles
New York
-3 hours
Same time Same time
Miami
8.30 H
Houston
México City
Santiago de Chile
Buenos Aires
Madrid
-1 Hour
-1 Hour
+2 Hours
+2 Hours
+6 Hours
IT Engineers and Business Graduates ( #)
28,164
IT Engineers and Business Graduates ( #)
65,947
Labor Cost (US$/month)
1,452
Labor Cost (US$/month)
3,873
Internet Cost (US$/year)
35000
Internet Cost (US$/year)
45000
Share IT Services
-
Time Zone
NA
Ranking - Doing Business
Mexico City
Ranking - Doing Business
66 (17)
Share IT Services
44%
IT Engineers and Business Graduates ( #)
IT Engineers and Business Graduates ( #)
42%
22,687
17,558
Labor Cost (US$/month)
1,753
Labor Cost (US$/month)
5,574
Internet Cost (US$/year)
NA
Internet Cost (US$/year)
50400
Ranking - Doing Business
Ranking - Doing Business
33 (-5)
Share IT Services
Share IT Services
33%
122 (-8)
109 (-8) 24%
1. Call Center/BPO Industry in Colombia • • • • •
Competitive Operational Cost Human Resources Industry Maturity Infrastructure Business Environment
2. Services to investors
Financial support for investors
Bancoldex as Colombia’s EXIM Bank provides development multi-bank integral solutions. •Working capital. • Investment in fixed or deferred assets •Substitution of debts (except liabilities with partners) •Total or partial purchase of companies related to the foreign trade sector. •Including creation of new companies, acquisition of shares or equity quotas. Amount: Up to 100% of the investment, always provided if the amount requested does not exceed the total amount of exports and / or projected imports or invoicing during the credit term. Duff & Phelps: AAA. Standard & Poor’s BB+/stable
Proexport: Investment Promotion Agency offers world class services to foreign investors
9Tailor made information request 9Contacts with public and private sectors 9Set up of agendas when investors decide to visit to Colombia 9Aftercare services for investors that are already established in the country 9Assessment and improvement of business climate
Proxeport’s overseas offices
1. Call Center/BPO Industry in Colombia • • • • •
Competitive Operational Cost Human Resources Industry Maturity Infrastructure Business Environment
2. Services to investors
Main Drivers Of the services industry
Competitive Operational Costs
Business Environment
Infrastructure
Human Resources
Industry Maturity
Competitive Operational Costs: The lowest in Latin America Average building rental costs at competitive prices (US$/m2)
9Savings up to 284% in Systems Engineers careers 9Savings up to 80% in Internet cost 9Savings up to 43% in average building cost
The most competitive salaries in Latin America US$ 2007 (monthly wage) Source: Colliers International A+ and A Buildings
Systems Engineering
Average competitive Internet cost per month for 1Mbps (megabytes per second) US$ Peru
81
Chile
60
Venezuela
47
Colombia
45
Argentina
45
Brazil
42 Source: CISCO Barometer
Electronic Engineer
Chile
5,574.43
5,674.72
Brazil
3,873.67
3,943.86
Peru
2,944.06
2,997.51
Mexico
2,658.67
2,706.64
Argentina
1.753,40
1,784.93
Colombia
1,452.00
2,064.00
Source: Salary Expert - Human Capital
Competitive Operational Costs: The longest daytime working shift time in Latin America Country
Daytime
Night
Colombia
6 a.m. - 10 p.m.
10 p.m. - 6 a.m.
México
6 a.m. - 8 p.m.
8 p.m. – 6 a.m.
Costa Rica
5 a.m. – 7 p.m.
7 p.m. – 5 a.m.
Ecuador
6 a.m. – 7 p.m.
7 p.m. – 6 a.m.
Argentina
6 a.m. – 9 p.m.
9 p.m. – 6 a.m
Source: Colombia: Law 50 of 1990 and Law 789 of 2002. Mexico: LeyFederal Law of Labour of 1969. Costa Rica: Law 2 of 1943. Ecuador: Labour Code 2005. Argentina: Law 11.544 of 1933 and 20.744 of 1976.
The longest working daytime shift in Latin America
$US/FTE/Hour
•Labor
Competitive Operational Costs: 50 to 60% more competitive than the United States •Data •Voice •Knowledge •6.40
•6.40
•9.90
•24.4
•9.90
•Facilities
•3.1
•2.9
•3.7
•IT/ Telecom
•0.84
•0.95
•0.94
•1.14
•1.14
•1.53
•1.53
•SG&A
•Total
•India
•USA
•11.48
•3.2
•11.40
•15.53
•32.3
•15.30
•9.18
•10.70
•32.90
•19.31
•33.01
Source: Mckinsey Interviews
Compared with United States, Colombia is 50-60% more competitive
•English •Spanish
•57.37
Competitive Operational Costs: The Lowest Labour Costs Costs for Call Center Agent - US$ (per month)
The lowest Labour Costs in LATAM
Country
Basic Wage
Added Cost Direct Costs
Colombia
300
52%
441
Mexico
320
40%
448
Venezuela
280
88%
451
Brazil
267
84%
492
Uruguay
427
36%
582
Argentina
410
47%
601
Chile
470
56%
733
Source: Manpower
Competitive Operational Costs: Broad band
Cost US$/Year Indonesia
233.520
India
73.000
Chile
50.400
Brazil
45.000
Colombia
35.000 30.000
Mexico United States
9.600 ‐
Source: Mckinsey
50.000 100.000 150.000 200.000 250.000
Cost of E2 is one of the most competitive in the region
Human Resource: over 800.000 enrolled people, ready to work in call centers Total of enrolled students in Colombia (2001 – 2006)
Technical ( 2 or 3 years taking courses) Technical ( 4 or 5 years taking courses)
Human Resource: over 676,000 technicians and university graduates Number of university graduates in Colombia (2001 - 2006)
Technicians 21% U. Graduates 79%
676.820 People
9In 2006, up to 50% of the undergraduates obtained a bachelor’s degree in Business and Engineering careers 9Over 60% of the technicians who graduated in 2006 belong to Engineering and Business programs
University Graduates
Number of university graduates in business related careers (2001 - 2006)
Technicians 31% U. Graduates 69%
146.481 People
Technicians
2005
2006
2005
2006
Business Careers
22,450
21,340
7,916
6,545
Engineering and Architecture
25,127
21,119
8,360
7,495
Social Sciences
15,848
15,659
1,178
6,020
Health Sciences
10,270
8,870
594
619
Education Sciences
7,428
7,427
-
-
Others
8,304
8,045
2,368
1,984
89,427
82,460
20,416
22,663
Total Colombia
Source: Ministry of Education of Colombia
Human Resource: Available and Highly Qualified Workers The highest index in Latin America, according to the IMD World Competitiveness Availability of Qualified Labor (10=Fully available qualified work) (9) Colombia Chile Canada Peru Mexico Brazil Argentina
Colombia, leader in information technology engineering and business careers graduates
6,28 5,79 5,69 5,23 4,72 4,41 3,58 0
1
2
3
4
5
6
Third place in number of university graduates in the sector among the main countries in Latin America in 2007
7
Source: The World Competitiveness Yearbook 2008
2.000
1.582
1.500
Third place in number of universities registered, among the major Latin America countries in 2007
1.000
343
500
176
104
87
78
Argentina
Peru
Chile
0
Brazil
Mexico
Colombia
Source: Consejo Superior de Investigaciones Científicas (CSIC), organization attached to the Ministry of Science and Technology of Spain
Brazil Mexico Colombia Argentina Chile
# of Graduates Administration Careers 55,181 61,813 21,340 18,640 8,353
# of Graduates IT Engineering 10,766 13,005 6,824 4,047 9,205
Uruguay
1,032
235
Source: Higher Education Secretariat, Brazil; labor observatory, Mexico; labor observatory, Colombia; ministry of education, Argentina; ministry of education, Chile; ministry of education, Uruguay
Human Resources: Multiple development centers •Colombia has multiple medium size cities with available and qualified labor pool •Cities as Manizales are developing their economic strategy attracting call centers Total population in large and medium cities
Source: Mckinsey
Industry Maturity: A growing market The Service Market in Colombia grew 39.5 % between 2005 and 2007 Service Offshore Market Value in Colombia: US$ 1,013 million in 2007 1200 1000 800 600
1013 400
726
839
200 0 2005
Source: IDC
2006
2007
Industry Maturity: IT Services share in Colombia is the highest in Latin America IT Industry share in Latin America (2007)
Only Colombia and Brazil show a clear growing trend in this sector in the region.
11%
Venezuela
24%
Perú
25%
Chile
Services 42%
Colombia
Software Hardware
37%
Brasil 23%
Argentina
29%
LA 0%
20%
40%
60%
80%
100%
LA
Argentina
Brasil
Colombia
Chile
Perú
Venezuela
Hardware
27.383
1.988
9.896
1.187
1.683
638
1.880
Software
6.345
405
3.153
211
257
94
254
Services
13.945
725
7.697
1.013
651
231
270
Total IT
47.673
3.118
20.746
2.411
2.591
963
2.404
Source: IDC
Industry Maturity services grew by 15% in 2007: Outsourcing 31%
32%
Integration and development
Growth in outsourcing due to FDI in Call Centers and BPO
Consulting Education and Training 2%
Deploy and support 12%
23%
2005
2006
2007
Deploy and Support
241,56
275,36
326,23
Outsourcing
227,01
275,64
314,12
Integration and Development
154,64
169,38
228,38
Consulting
85,24
97,32
120,14
Education and Training
17,92
20,94
24,4
Total
726,4
839
1.013,30
Source: ACDCC; Sector Business Idea; Invest in Bogota
Industry Maturity: Positive trends The number of Employees increased by over 100% between 2005 and 2007 Thousands 2005-2008
BPO and Call Center Income has doubled in less than two years US$ Millions 2005-2007
Source: ACDCC; Sector Business Idea; Invest in Bogota Source: ACDCC; Sector Business Idea; Invest in Bogota
Exports grew over 200% between 2005 and 2007 US$ Millions 2005-2007
Source: ACDCC; Sector Business Idea; Invest in Bogota
In only two years, income and employment have doubled, while exports have tripled.
Industry Maturity : Main Call Center in Colombia Atento increased it number of agents in 2006 in 200%. Currently employs more than 6.000 poeple in Bogota and Bucaramanga Sitel employs in Bogota, Barranquilla and Cali more than 3000 agents serving more than 30 clients in Latina America and United States Digitex has almost 3000 agents. The company recently opened a new Call Center in Ibague 250 professional selling high end products to Latin America customers 300 bilingual agents giving technical support and sales to Latin America The bank relocated from Barcelona to Bogota 400 services and sell positions Support services to Banco Santander (Spain) from Bogota. Currently employs more than 400 people, and forecast 600 in mid 2009
Source: CCIT
Industry Maturity : Main Service’s companies The Spanish multinational supplier of technology for the travel and tourism industry, has opened an operation in Bogota to source the Americas From Bogota, the U.S. firm begins to provide design services for its global customers. Since 1986, the pioneer in the world of outsourcing in Bogota serves a wide range of companies from different sectors. Since 2002, this Mexican multinational IT service provider is present in Bogota with its third largest operation in America. In Bogota this multinational expands its global footprint in response to local customers. Launched recently operation center in Bogota, which plans to increase its presence in Latin America and improve the level of customer satisfaction today.
From Bogota, 200 consultants providing IT services to America at the Center for Managed Services largest multinational in this region.
Source: CCIT
Infrastructure: Major investor in Latin America 1.56% in Telecommunications investment, as a percentage of the GDP (2008)
Colombia Brazil Argentina Peru Mexico Chile 0,00%
9US$ 4 billion, will be the investment in telecommunications in 2010. In FDI, Colombia has accumulated U$ 2.5 billion in the past six years.
1,6% 0,6%
96 submarine cables, which have enabled an outlet bandwidth of 220 Gbps. It will be upgraded to 7 shortly with CANTV-ETB.
0,6% 0,5%
910 times more Internet users in the past seven years.
0,5% 0,40% 0,50%
1,00%
1,50%
2,00%
Third country in terms of Internet users Millions (2007)
Brazil
43
Argentina
16
Colombia
10
Peru
7
Chile
7
Venezuela
5 0
10
20
30
40
Source: The World Competitiveness Yearbook 2008 - Internet World Stats
50
Submarine cables in Colombia
Growth in terms of total connections December 2005 - December 2006 Over 13 million broad band connections are estimated to exist in Latin America
Infrastructure: We doubled connections to broad band With a 114.1% increase, Colombia was the Latin American country undergoing the highest increase in the total number of connections between December 2005 and December 2006. 3,500,000 is the number of connections estimated by IDC for Colombia in the year 2010.
Source: Cisco Barometer
Broad Band Connections Total Connections Type of Connection Technology
The total growth of broad band connections in Colombia has undergone a marked dynamism, exceeding global and regional growth.
Internet lines ADSL, Modem Cable, Fixed Wireless Other Connections: Satellite, etc. Total broad band
Source: IDC
December 2006
June 2007
4,981.00
6,801.00
617,781.00
827,012.00
5,353.00
5,376.00
628,115.00
839,189.00
Stability of the Regulatory Framework (higher score = greater consistency)
Business Environment: Reliability for Industry
Colombia stands out for its achievements in regulatory stability, being located among the countries with the highest index of consistency
Data Protection (1 = poor, 5 = good) Colombia maintains a good level in terms of data protection, can be found at the same level of countries like Mexico and India
Source: Office of Mckinsey business technology; Spanish Agency for data protection; WCY Address government policy
Business Environment: Attractive investment incentives Competitive Free Trade Zone Regime 9
9
9
*ZF Approved ZF Being processed
9
15% corporate tax tariff and allows sales to the local market No customs duties are levied or paid (VAT and TARIFF) on finished goods, supplies, and raw materials that enter through these zones, whether from the national customs territory or from other countries. Possibility of exporting services from the free trade zone, both to the national territory and to other countries. Exports from the free trade zone to other countries benefit from international agreements.
• In 50 years (1958 - 2007) only eleven free trade zones were created 2007 - 2008 • 37 new Free Trade Zones approved since April 2007 • 7 Free Trade Zones being processed
Business Environment: Attractive investment incentives
VAT Exemption for Services provided abroad •
The service exports from Colombia can be exempt of the VAT if they meet the following requirements: – The service is provided from Colombia. – The service is provided to a consumer (company) that has no type of operation within Colombia. – Register the service provision agreement before the Colombian Industry, Commerce and Tourism Ministry.
Business Environment: Attractive investment incentives
Special Import – Export Mechanism •
This tax benefit allows the investor to import capital goods that will be used to export services, with complete or partial exemption of custom duties and postpone the payment of VAT.
•
This tax benefit requires that the investor exports 150% of the FOB value of the productive assets imported under the Especial Import – Export Mechanism.
•
The investor must provide an insurance policy or global bank guaranty o 20% of the FOB value of the productive assets imported under the Plan.
Business Environment: Attractive investment incentives Special Import – Export Mechanism •
•
•
The services related with research and technology that can apply to the tax benefit are the following: – Computer services and other related – Research and development services – Telecommunication Services The Division of Especial Programs will approve or reject the “Especial Import – Export Mechanism” tax benefit program within 10 days from the filing of the application and will notify the applicant. Colombia through the Law 170 of 1994, adopted the Agreement that created the World Trade Organization WTO and with it the General Agreement on Trade in Services (GATS).
Business Environment: Attractive investment incentives Investors can subscribe Legal Stability Contracts with the Colombian Government Objective
Guaranteeing the legislation and administrative interpretation considered as a determining factor for the investment project. Investments over USD 1,900.000
Conditions
Investor must pay a premium to the Government equivalent to 1% of the investment made.
Period Admission
From 3 to 20 years maximum.
Technical report
Evaluation and approval of the application
* These contracts exclude rules regarding the social security system, the obligation to report and pay taxes levied by the government under a state of emergency, indirect taxes (i.e., the VAT or the tax on banking transactions), prudential regulations of the financial system and the utility rate system.
Final evaluation
Business Environment: Attractive investment incentives
Other tax benefits •
Tax deduction of 40% of the value of the Fixed Productive Assets acquired.
•
Tax deduction of the 100% of the Industry and Commerce Tax and the Real State Tax, paid in the corresponding tax year and which have direct relation with the taxpayer.
•
Tax deduction of the 25% of the financial operations tax withholding, regardless the economic activity of the taxpayer.
Success Story CITIBANK “The talent, preparation and skills for customer service that distinguishes Colombians, have been fundamental for us to feel comfortable to move our customer service and collection operations to Colombia” Sergio de Horna, Citibank President Spain
•
From Bogotá, Citibank shared services operation provides: – Outbound • •
Collection Product sales
– Inbound • •
• •
Product support for clients Customer service
Provides services to 12 different countries Overall Citibank's operation employees over 2.000 people
Success Story UNISONO - SANTANDER “"Colombia is one of the countries with big potential due to it’s economic growth, labor cost and government support to the sector. Now we have an additional motivation: We are special trade zone” Ana Isabel Iglesias, Unisono President Colombia • •
From Bogotá, Unisono provides services for Banco Santander (Spain) with more than 600 agents who attend corporative and customers from Spain. Outsourcing of sales and customer service operation
Key qualitative factors in IT Services • • •
Service oriented people Macroeconomic and political stability better than other countries in Latin America Neutral accent
WHY COLOMBIA • Cheaper than Mexico • Better service attitude than Argentina • Is not saturated as Costa Rica or Uruguay
Value Proposal Colombia is the best option for Call Center services investors who are looking for service oriented labor pool, cost competitive location, and a strategic location for services supply to Americas and Spain
Competitive Operational Cost
Cheapest agents in the region
Human Resource
One of the most qualified and service oriented labor pools in LATAM: More than 800.000 enrolled university students
Industry Maturity
Growing market of US$ 1 billion: almost 42% in the last three years
Infrastructure
Second lowest E2 cost in LATAM: US$ 35,000/year
Business Environment
Free Trade Zone regime, specially designed for IT services companies: 50% off Corporate Tax and sales to the local market
Value Proposal Colombia is the best option for Call Center services investors who are looking for service oriented labor pool, cost competitive location, and a strategic location for services supply to Americas and Spain Up and comers
Strategic Geographic Location
Challengers Startups
IT Engineers and Business Graduates ( #)
74,818
Labor Cost (US$/month)
2,658
Internet Cost (US$/year)
30000
Ranking - Doing Business
44 (-3)
Share IT Services
Flight Times
Los Angeles
Bogotá
8.30 H
Miami
New York
Houston
Madrid
3.40 H
6.00 H
5.15 H
10.22 H
4.25 H
Lima
8.35 H
5.30 H
7.47 H
6.30 H
11.30 H
5.45 H
Buenos Aires
15.00 H
9.15 H
14.50 H
10.30 H
12.15 H
9.25 H
México City
4.00 H
3.00 H
4.35 H
6.00 H
10.15 H
Santiago
11.30 H
8.45 H
10.50 H
12.25 H
12.55 H
Los Angeles
New York
-3 hours
Same time Same time
Miami
8.30 H
Houston
México City
Santiago de Chile
Buenos Aires
Madrid
-1 Hour
-1 Hour
+2 Hours
+2 Hours
+6 Hours
IT Engineers and Business Graduates ( #)
28,164
IT Engineers and Business Graduates ( #)
65,947
Labor Cost (US$/month)
1,452
Labor Cost (US$/month)
3,873
Internet Cost (US$/year)
35000
Internet Cost (US$/year)
45000
Share IT Services
-
Time Zone
NA
Ranking - Doing Business
Mexico City
Ranking - Doing Business
66 (17)
Share IT Services
44%
IT Engineers and Business Graduates ( #)
IT Engineers and Business Graduates ( #)
42%
22,687
17,558
Labor Cost (US$/month)
1,753
Labor Cost (US$/month)
5,574
Internet Cost (US$/year)
NA
Internet Cost (US$/year)
50400
Ranking - Doing Business
Ranking - Doing Business
33 (-5)
Share IT Services
Share IT Services
33%
122 (-8)
109 (-8) 24%
1. Call Center/BPO Industry in Colombia • • • • •
Competitive Operational Cost Human Resources Industry Maturity Infrastructure Business Environment
2. Services to investors
Financial support for investors
Bancoldex as Colombia’s EXIM Bank provides development multi-bank integral solutions. •Working capital. • Investment in fixed or deferred assets •Substitution of debts (except liabilities with partners) •Total or partial purchase of companies related to the foreign trade sector. •Including creation of new companies, acquisition of shares or equity quotas. Amount: Up to 100% of the investment, always provided if the amount requested does not exceed the total amount of exports and / or projected imports or invoicing during the credit term. Duff & Phelps: AAA. Standard & Poor’s BB+/stable
Proexport: Investment Promotion Agency offers world class services to foreign investors
9Tailor made information request 9Contacts with public and private sectors 9Set up of agendas when investors decide to visit to Colombia 9Aftercare services for investors that are already established in the country 9Assessment and improvement of business climate
Proxeport’s overseas offices
