Colombia Information Technology Report Q1 2011
Business Monitor International, February 2011, Pages: 57
The Colombia Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's information technology industry.
Colombian IT spending is projected to grow at a CAGR of 11% during 2011-2015 as the market continues to mature. In 2010, vendors reported that demand was up in both consumer and large company segments. The retail PC market surged in the first three quarters of the year, with sales of computers up 60% in September 2010 compared with the same period of the previous year, based on data from Colombia’s statistics bureau.
IT spending is projected to grow 17% in 2011, with growth in both consumer and business segments. Private credit growth has started to pick up, and this could mean an increasingly bright outlook for household consumption. The election in 2010 of perceived business-friendly Juan Manuel Santos should boost business confidence. The government’s Vive Digital ICT development plan should help to underpin IT market expansion over the forecast period.
The government sees increased information and communication technology (ICT) spending as a key means to advance its central strategic goal of helping the country reintegrate disaffected groups. Per capita IT spending is projected to rise by 45% from US$55 in 2011 to US$80 by 2015, while PC penetration has exceeded expectations and could pass 20% within our forecast period.
In October 2010 the Colombian government launched a new ICT policy, named Vive Digital ICT, which is intended to drive Colombia’s IT development over the next four years. The main elements of the plan are initiatives to broaden internet access and to develop the country’s digital infrastructure.
The government has invested around US$3mn so far and will set up a technology board, led by the president, to guide the plan. Of direct interest to IT vendors are proposals under the Services component to make connection devices more affordable to the public by eliminating customs tariffs, and by making access to credit for the purchase of such terminals more flexible.
The Ministry of Communications assigned a COP1.5bn budget for the national plan for ICT (PNTIC) for 2008-2010, with the money channelled through the Communications Fund. The 2008-2010 PNTIC set out a number of targets for 2010, including boosting the percentage of municipalities with broadband access to 70% and increasing the number of households with broadband access to 40%. Competitive Landscape One significant local market growth area is SAP-related consulting. In April 2010, Chilean IT consultancy ActualiSAP announced that it was expanding into the Colombian market and would open a Colombian office this year. Meanwhile, HP has partnered with SAP on its online solution ‘Business AllColombia in-One Fast-Start’, while Neoris has expanded its operations by establishing a new unit in Colombia that offers IT consulting, systems integration, business operations and outsourcing services.
Colombia has a growing domestic software sector, and software firms have strengths in a number of areas including financial applications, digital animation and mobile and web applications. Major local vendor Productura de Software Latin America (PSL) counts among its key clients Colombia’s state oil company Ecopetrol, cosmetics company Avon, and Colombia’s largest bank, Bancocolombia.
In H110, US vendor Citrix Systems was one vendor to report growing interest in virtualisation from Colombia’s public sector and it launched a new subsidiary in the country to take advantage of the potential opportunity. Meanwhile, the official launch of Indian IT firm Tata Consultancy Services (TCS)’s new Colombia office highlighted the growing opportunities in the local financial services sector, which accounts for around 50% of TCS’s regional revenues.
PC sales are projected at US$1.1bn in 2011, consolidating strong growth in 2010, and should reach US$1.6bn by 2015. Retail PC sales surged in 2010, according to official data, supporting projections of a market bounce-back in 2010 in line with private consumption.
Colombian PC penetration reached 12.8% as of mid-2009, surpassing the government’s previous 2010 target of 10.8%. The main long-term drivers of growth in the Colombian PC segment are lower prices and greater affordability. Business investment is expected to trend upwards, with more foreign investment encouraging more spending on technology.
Software Colombia’s software market is projected to be worth US$445mn in 2011 and software CAGR for 2011- 2015 is forecast at about 11%. Software has opportunities for growth over the next few years although, in the near term, strong economic headwinds will lead some companies to defer system updates. Software piracy was estimated to account for 56% of software in 2008, down considerably from the rate a few years ago. Vendors reported strong business software demand growth in H110, particularly among larger and medium companies. Most demand in the near term will be for basic solutions, such as enterprise risk management (ERM) and supply chain management systems.
Colombia’s IT services spending is projected at about US$935mn in 2011, with 9% growth compared with 2010. The percentage of IT market revenues generated by services is currently around 39%, high by emerging market standards and above the regional average. The majority of demand, around 75%, still comes from the large company sector.
In Colombia, several sectors have particular potential, including financial services and utilities, with Isagen and Empresa de Energia de Cundinamarca awarding some large tenders. In the last year or two, there has been a trend towards bigger managed service and outsourcing deals.
Executive Summary
SWOT Analysis
Colombian IT Sector SWOT
Colombian Telecoms Industry SWOT
Colombia Political SWOT
Colombia Economic SWOT
Colombia Business Environment SWOT
IT Business Environment Ratings
Latin America
Table: Regional IT Business Environment Ratings
Latin America IT Markets Overview
Colombia Market Overview
Background
Hardware
Software
Services
Industry Developments
Industry Forecast Scenario
Table: Colombia’s IT Industry (US$mn Unless Otherwise Stated)
Country Context
Table: Rural/Urban Breakdown, 2005-2030
Table: Consumer Expenditure, 2000-2012 (US$)
Internet
Table: Internet – Historical Data And Forecasts
Macroeconomic Forecast
Table: Colombia – Economic Activity, 2008-2015
Competitive Landscape
Hardware
Software
IT Services
Internet Competitive Landscape
Company Profiles
IBM (Colombia)
Dell (Colombia)
HP (Colombia)
Country Snapshot: Colombia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
IT Industry
IT Ratings – Methodology
Table: IT Business Environment Indicators
Weighting
Table: Weighting Of Components
Sources
- IBM (Colombia)
- Dell (Colombia)
- HP (Colombia)
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