Software Sector May 2009

Transcription

1 Software Sector May 2009

2 1. Software industry in Colombia 2. Services to investors

3 Software Industry in Colombia: - Competitive Operational Cost - Human Resources - Industry Maturity - Infrastructure - Business Environment

4 While Colombia IT Market will grow at a 12% rate, the world pace will be only 7% Evolution of Latin America s IT Market (US$ Million) 47% Global IT Market:US$750 billion. Expected growth 7-8% in the next years. LATAM IT Market: US$47 Billion, expected grow 12.6% in 2008 Colombian IT Market: US$2,4 Billion expected growth 11%,. Emerging economies are expected to be important players in the industry. IDC, Business Monitor Evolution of Colombia s IT Market (US$ Million) % Source: IDC Hardware Colombian IT market CAGR 2007 / 2012: 11%. Is projected to be one of the fastest growing IT markets in Latin America over the next few years, Business Monitor Software Services Total IT Source: IDC

5 Software Industry: Main Drivers Competitive Operational Costs Business Environment Human Resources Infrastructure Industry Maturity

6 Competitive Operational Costs: The lowest in Latin America Average building rental costs at competitive prices (US$/m2) Savings up to 284% in Systems Engineers careers Savings up to 80% in Internet cost Savings up to 43% in average building cost Source: Colliers International A+ and A Buildings Average competitive Internet cost per month for 1Mbps (megabytes per second) US$ Peru 81 Chile 60 Venezuela 47 Colombia 45 Argentina 45 Brazil 42 Source: CISCO Barometer The most competitive salaries in Latin America US$ 2007 (monthly wage) Systems Engineering Electronic Engineer Chile 5, , Brazil 3, , Peru 2, , Mexico 2, , Argentina 1.753,40 1, Colombia 1, , Source: Salary Expert - Human Capital

7 Competitive Operational Costs: 50 to 60% more competitive than United States US$/FTE/hour India Colombia USA Labor Facilities IT/telecom SG&A Total Cost structure makes Colombia a low cost provider for developed countries

8 Competitive Operational Costs: The most flexible working shift in Latin America Country Daytime Night Colombia 6 a.m 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. The longest working daytime shift in Latin America Argentina 6 a.m. 9 p.m. 9 p.m. 6 a.m Source: Colombia: Law 50 of 1990 and Law 789 of Mexico: LeyFederal Law of Labour of Costa Rica: Law 2 of Ecuador: Labour Code Argentina: Law of 1933 and of 1976.

9 Competitive Operational Costs: The lowest severance pay dismissal Severance pay dismissal without just cause* (2006) Days of severance pay for each year of service Perú Ecuador Argentina Chile Costa Rica Colombia 1 año 2 años 3 años *This indicator applies to employees with an indefinite-term contract and with a wage equal or larger than ten (10 ) minimum monthly legal wages. Source: Data for Colombia. Labor Code, article 64; data for Argentina: Law Decree 390, 1976; data for Peru: Decree and its regulation approved by Decree TR; data for Ecuador: Labor Code Official Register number162 September 29 th, 1997, article 153; data for Chile: Labor Code article 155; data for Costa Rica: Code Labor article 29. Dismissal costs in Peru are more than double than in Colombia

10 Competitive Operational Costs: Broad band Cost US$/Year Indonesia India Chile Brazil Colombia Mexico United States Cost of E2 is one of the most competitive in the region Source: Mckinsey

11 Human Resource: Highly Qualified and Available 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 3,58 6,28 5,79 5,69 5,23 4,72 4,41 Colombia, leader in information technology engineering and business careers graduates Source: The World Competitiveness Yearbook 2008 Third place in number of professionals in the sector among the main countries in Latin America in Third place in number of universities registered, among the major Latin America countries in Brazil Mexico Colombia Argentina Peru Chile Source: Consejo Superior de Investigaciones Científicas (CSIC), organization attached to the Ministry of Science and Technology of Spain # of Graduates Administration Careers # of Graduates Software Engineers Brazil 55,181 10,766 Mexico 61,813 13,005 Colombia 21,340 6,824 Argentina 18,640 4,047 Chile 8,353 9,205 Uruguay 1, Source: Higher Education Secretariat, Brazil; labor observatory, Mexico; labor observatory, Colombia; ministry of education, Argentina; ministry of education, Chile; ministry of education, Uruguay

12 Human Resource: over technicians and professionals graduated in engineering Share of IT technicians and university graduates* ( ) People An average of people per year, graduated in IT careers between in Colombia Technicians Professionals 46% 54% Total software engineering University Graduates Total Technical IT *IT careers include Software, Electronic and Electric disciplines University Graduates: 5 years of studies; Technical Graduates: 2 3 years studies TOTAL IT Source: Ministry of Education of Colombia

13 Colombia has multiple medium size cities with available and qualified labor pool Human Resources: Multiple development centers Total population in large and medium cities Source: Mckinsey

14 Second in terms of software growth between (21,6%). IT Industry share in Latin America (2007) Industry Maturity: IT market value is almost US$ 2,5 billion Venezuela Perú Chile Colombia Brasil Argentina LA 11% 10% 10% 10% 15% 13% 13% Software Services Hardware 0% 20% 40% 60% 80% 100% IT Market Value in Latin America (2007) LA Argentina Brasil Colombia Chile Perú Venezuela Hardware Software* Services Total IT Source: IDC * Only licensing

15 Colombia s Software Industry : Strong Infrastructure Segment for Security Software developments Total Software Market Value in 2007: US$ 210 Million Development 39,65% Infrastructure 20,50% Market Value: US$ 53 Million Colombia, fastest growing country in LATAM for the Security Software market, Total sales increased 40% in 2007 Source: IDC

16 Colombia s Software Industry : Development Segment specialized in data managment Total Software Market Value in 2007: US$ 210 Million Applications 39,85% RDBMS and ORDBMS represent 66% of the Development segment market. Growth rate of 40% in the last couple years Infrastructure 20,50% Development 39,65% Market Value: US$ 74 Million Source: IDC

17 Colombia s Software Industry : a growing market for Applications Total Software Market Value in 2007: US$ 210 Million Enterprise resource management aplications biggest share of applications software, due to SME investment in technology Applications 39,85% Source: IDC Market Value: US$ 84 Million

18 Industry Maturity: A growing market Software Industry has grown 26% between 2005 and 2007 Market Value in Colombia: US 270 Million* *Software licenses+ software services 12,59% (US$ million) Source: Fedesoft

19 Industry Maturity: A growing market The country will double the number of CMMI certified companies in 2010* The number of jobs increased 40% *Program developed by SENA, Colciencias and Proexport to support 60 companies to create CMMi certification Company Level PSL CMMi 5 Open Systems CMMi 4 Heinsohn, Red Colombia, Avansoft, Asesoftware CMMi 3 Softbolivar, Intergrupo,Servinte CMMi Exports increased 15% (US$ Million) Source: Fedesoft - Proexport

20 Industry Maturity: Shifting to a higher value added level 36% of the software market in Colombia is application development software Colombian Software Market (U$ Million) App Development and Deployment Applications Infraestructure

21 IT Industry Maturity Level: Startups, Challengers and Up-and-Comers Due to Colombia s maturity in IT, we are considered as a region Challenger Mexico Colombia Dominican Republic Puerto Rico Panama Venezuela Source:Gartner Peru Chile Argentina Brazil Uruguay Up and comers Challengers Startups

22 Infrastructure: Major investor in Latin America 1.56% in Telecommunications investment, as a percentage of the GDP (2008) Colombia Brazil 0,6% 1,6% US$ 4 billion, will be the investment in telecommunications in In FDI, Colombia has accumulated U$ 2.5 billion in the past six years. Argentina Peru Mexico 0,6% 0,5% 0,5% 6 submarine cables, which have enabled an outlet bandwidth of 220 Gbps. It will be upgraded to 7 shortly with CANTV-ETB. Chile 0,40% 10 times more Internet users in the past seven years. 0,00% 0,50% 1,00% 1,50% 2,00% Third country in terms of Internet users Millions (2007) Brazil 43 Source: The World Competitiveness Yearbook Internet World Stats Argentina Colombia Peru 7 Chile 7 Venezuela Submarine cables in Colombia

23 Infrastructure: Eight Technology Parks Technology Park of Antioquia: - Energy - Cibercenter - Information Technology - Free software Manizales: -Software Industry La Umbria: - Logistics - Bioenergy - Research Lab Software Parquesoft: - Research and Development Centers - Computer Shopping Center - Business Technology Park of the Caribbean: - Electronics - Teleinformática - Software Carlos Velez Pombo: Park Project - Logistics - Petrochemicals - Software Guatiguara: - Energy -Bioenergy - Research Lab Software Technology Park of Sabana: Park Project - Biotechnology - Information Technologies - Software -Technology-Agribusiness Source: Mckinsey

24 Growth in terms of total connections December December 2006 Infrastructure: We doubled broadband connections Over 13 million broad band connections are estimated to exist in Latin America 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 Source: Cisco Barometer 3,500,000 is the number of connections estimated by IDC for Colombia in the year Broad Band Connections The total growth of broad band connections in Colombia has undergone a marked dynamism, exceeding global and regional growth. Total Connections Type of Connection Technology December 2006 June 2007 Internet lines 4, , ADSL, Modem Cable, Fixed Wireless 617, , Other Connections: Satellite, etc. 5, , Total broad band 628, , Fuente: IDC

25 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

26 Business Environment: Attractive investment incentives Competitive Free Trade Zone Regime 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. *ZF Approved ZF Being processed Exports from the free trade zone to other countries benefit from international agreements. In 50 years ( ) only eleven free trade zones were created new Free Trade Zones approved since April Free Trade Zones being processed

27 Business Environment: Special incentives for Software companies Corporate Tax Exemption For new software developed in Colombia granted by Colciencias. 125% Corporate tax deduction Over investments in scientific and technological development

28 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. Conditions Investments over USD 1, Investor must pay a premium to the Government equivalent to 1% of the investment made. Period From 3 to 20 years maximum. Admission Technical report Evaluation and approval of the application Final evaluation * 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.

29 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.

30 Value Proposal Due to high skills, available labor force and short flight distances to the U.S., Colombia offers an export platform capable to provide offshore high end projects with competitive costs. Competitive Operational Cost Human Resource Industry Maturity Infrastructure Business Environment One of the lowest cost for software engineers in LATAM: US1,452/month One of the largest labor pool in LATAM: An average of IT graduates per year Gartner considers Colombia as a Challenger in the region and Datamonitor as a Tier 2 country in LATAM Second lowest E2 cost in LATAM and computer prices under US$1,000 without VAT National Government program to enhance competitiveness and development in this specific industry

31 Value Proposal Due to high skills, available labor force and short flight distances to the U.S., Colombia offers an export platform capable to provide offshore high end projects with competitive costs. Up and comers Challengers Startups IT Engineers ( #/2006) Labor Cost (US$/month) 1 Internet Cost (US$/year) Ranking - Doing Business 44 (-3) Software Growth 06/07 (%) NA IT Engineers ( #/2006) Strategic Geographic Location Flight Times Los Angeles Miami New York Houston Madrid Mexico City Bogotá 8.30 H 3.40 H 6.00 H 5.15 H H 4.25 H Lima 8.35 H 5.30 H 7.47 H 6.30 H H 5.45 H Buenos Aires H 9.15 H H H H 9.25 H México City 4.00 H 3.00 H 4.35 H 6.00 H H - Santiago H 8.45 H H H H 8.30 H Time Zone Los Angeles New York Miami Houston México City Santiago de Chile Buenos Aires Madrid -3 hours Same time Same time -1 Hour -1 Hour +2 Hours +2 Hours +6 Hours Labor Cost (US$/month) Internet Cost (US$/year) Ranking - Doing Business 66 (17) Software Growth 06/07 (%) 21,6% IT Engineers ( #/2006) Labor Cost (US$/month) Internet Cost (US$/year) Ranking - Doing Business 122 (-8) IT Engineers ( #/2006) Labor Cost (US$/month) Internet Cost (US$/year) Ranking - Doing Business 33 (-5) Software Growth 06/07 (%) 14% Software Growth 06/07 (%) 28,0% IT Engineers ( #/2006) Labor Cost (US$/month) Internet Cost (US$/year) NA Ranking - Doing Business 109 (-8) Software Growth 06/07 (%) 0

32 1. Software industry in Colombia 2. Services to investors

33 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

34 Proexport: Investment Promotion Agency offers world class services to foreign investors Tailor made information request Contacts with public and private sectors Set up of agendas when investors decide to visit to Colombia Aftercare services for investors that are already established in the country Assessment and improvement of business climate

35 Proexport s overseas offices

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