The Foreign Trade Agency of Costa Rica identifies potential for the ICT sector of Costa Rica in Colombia

• In 2021, Colombia was the sixth largest economy in Latin America and the Caribbean.
• Colombian GDP growth was 10.6% last year.

San Jose, November 4^th, 2022. The study “ICT sector prospecting in Colombia (focus on commercial alliances)”, carried out by The Foreign Trade Agency of Costa Rica (PROCOMER), identified potential for Costa Rican information and communication technology (ICT) companies through business alliances with Colombian firms, which would allow meeting the current demand in that country for various services.

According to the study, Costa Rican companies must assess four different segments for the realization of the commercial alliances, which are aligned with the axes promoted by the Colombian authorities to bring investment to their country, these segments are:

• Development of technologies such as software and applications (apps) for different verticals such as agritech, fintech, blockchain and other 4.0 technologies (IoT, Machine Learning, big data), as well as in health, logistics, energy and electronic commerce, with a focus on specialized niches.
• Development of apps, educational platforms, software and digital content, taking advantage of the support provided by the Colombian government through programs such as Apps.co.
• Alliances with local ICT companies for research and development (R&D), distribution, service development or marketing, in order to take advantage of the Colombian human capital that is complemented by Costa Rican talent.
• Maintenance of software applications in sectors such as tax and payroll, as well as remote management of infrastructure for companies from different industries, mainly retail, banking and finance, education and health.

According to Marta Esquivel, Director of Planning and Commercial Intelligence at The Foreign Trade Agency of Costa Rica, for the national exporter, a commercial alliance works as an interdependent relationship with its Colombian counterpart, but always under a win-win approach. “The objective of these alliances will always be to obtain market positioning, reduction of operating costs, exchange of experiences, management of the client portfolio and institutional articulation”, she added.

In 2021, Colombia was the sixth largest economy in Latin America and the Caribbean with a record of prudent fiscal and macroeconomic management, which allowed it to face the COVID-19 crisis despite structural problems such as informal work, poverty and inequality.

The previous year, the growth of the Colombian GDP was 10.6% (versus 7.6% in the case of Costa Rica), specifically in its economy, the ICT subsector represented 3% of the total (with an annual growth in 2021 of +10% compared to 2020). This sector is in the process of reactivating after the pandemic emergency, in which the Government is investing more than $200 million in digital transformation, training and connectivity improvement related projects.

Bogotá, which is the department with the largest number of companies in the ICT sector, is characterized by offering software engineering services with competitive costs, volume, quality and multiple delivery formats; as well as an increasing use of 4.0 technologies to improve its operational efficiency. Currently, this sector is committed to reach the strategic Business Process Outsourcing (BPO) offer focused on the management and delivery of information for decision making. Hence, the commercial alliances that are going to be developed by Costa Rican companies must be in line with the expected evolution of this type of activities in the market.

Enrique Ulloa, analyst in charge of the study, highlighted some recommendations that Costa Rican companies should consider when choosing this model when entering the Colombian market:

• Quote your services preferably in Colombian pesos.
• Personal relationships are essential for access to customers, hence the management of the business partner in this line is essential.
• They must see the Colombian company as a business ally (win-win relationship), not as competition.
• It must be considered that the retention rate is 20% for services sold from Costa Rica, therefore a competitive price becomes essential.
• Think about regionalization, as business development can be expanded beyond Bogotá to other cities like Medellín and Cali.
• It is very important to provide support to customers, whether from the Colombian market or from Costa Rica.