The global appetite for tech talent is insatiable, with projections predicting a shortfall of over 85 million skilled workers by 2030.
Fierce competition for tech workers has resulted in a talent shortage and astronomical salary requirements. To fill the talent gap in a hypercompetitive US market, tech companies are looking to Latin America.
Colombia has stepped up to meet the growing demand, emerging as a compelling global resource for highly skilled, English-speaking IT workers. The up-and-coming tech hub has attracted a wave of international companies looking for qualified candidates outside the costly, competitive confines of the US.
Why hire workers in Colombia? A quick summary
- Tech talent: Colombia is home to over 150,000 tech professionals, with major universities churning out fresh STEM graduates every year.
- Cost-effective salaries: Colombia's cost of living is significantly lower than in the US, giving employers access to senior-level developers at competitive rates.
- Time zone overlap: Colombia's time zone allows real-time collaboration and project management for companies in the US.
- Cultural alignment: Colombians share professional values with their US teammates, emphasizing communication, hard work, and creativity.
Colombia's tech boom
From a country once plagued by civil war and drug violence, Colombia has transformed to a thriving tech hub and the fourth-largest important economy in South America. The country's booming tech ecosystem rivals longstanding Latin American tech veterans such as Argentina, Brazil, and Mexico.
The country's meteoric rise in the tech world has unfolded over the last decade, driven by government investment in tech and innovation. Government initiatives have introduced free trade zones, tax incentives, mentorship, and funding programs to Colombia and expanded internet access nationwide.
The country's efforts have attracted tech giants like Microsoft, Oracle, and IBM, as well as a wave of startups. Colombia's startup ecosystem grew at an annual rate of 28% between 2019 and 2023, thriving in areas like fintech, medtech, and e-commerce.
A growing tech talent pool
With more than 150,000 tech professionals, Colombia boasts the third-largest tech talent pool in Latin America. The pipeline continues to grow, with local universities generating over 13,000 STEM graduates annually. With the Colombian government investing in tech education, this number is set to soar in the coming years.
As the pipeline of skilled Colombian IT professionals expands, so do their skill sets. Many engineers hold advanced degrees and experience in in-demand sectors like AI, ML, cybersecurity, and data analytics.
Colombia's elite tier of tech talent is also affordable. Due to a favorable exchange rate and lower coster of living in Colombia, the average salary for software engineers in Colombia is significantly lower than that of devs of the same calibur in the US.
Time zone and geographical advantage
One of Colombia's most compelling advantages is simple geography. The country is a few hours away from the US, with direct, nonstop flights to Bogota leaving daily from hubs like New York, Miami and Houston.
Unlike traditional offshoring destinations like Asia, Colombia's time zone overlaps with the US. The country either aligns with Eastern Standard Time (EST) or Central Standard Time (CST) depending on the time of year.
Cultural compatibility
English proficiency is rising, particularly in major cities like Bogotá and Medellín. English speaking is especially common among Colombia's educated IT workforce.
How to hire workers in Colombia
Hiring in Colombia is a smart move for companies that want to tap into a talented, culturally compatible, time zone-aligned workforce. US companies have three main options for hiring workers in Colombia:
Open a legal entity in Colombia
The traditional (and clunkiest) way to hire in Colombia is to establish a local entity. Setting up an entity in Colombia lets you operate legally and hire local workers directly. However, creating a Colombian entity requires a significant investment of time and resources, and the expense is prohibitive for most small and midsize companies.
Hire contractors
Hiring independent contractors is a quicker way to engage with Colombian workers. Independent contractors are freelancers who work on a project-by-project basis. Contractors often have several clients at a time, and tend to cost less than a traditional employee since you only pay them for hours worked.
Keep in mind: The line between an employee and a contractor can be blurry in Colombia, and the penalties for misclassification can be steep. If you choose to hire contractors, you should ensure that they are classified correctly to avoid fines, back taxes, and other legal penalties.
Use an Employer of Record (EOR)
The simplest way to hire in Colombia is to partner with a local employer of record (EOR). An EOR acts as the legal employer of your Colombian employees, letting you hire in Colombia without the hassle and high cost of setting up a local entity. An EOR handles all HR, payroll, and compliance functions while dramatically reducing legal liability — think of it as a bonus HR department for your brand on the ground in Colombia.
At Howdy.com, helping tech companies find, hire, onboard, pay, manage, develop, and take care of international teams is what we do best. Our Colombian EOR functions like your strategic partner, with a team of local legal and HR experts who help make hiring in the country a breeze.
Build a Colombian team without the legal and logistical hoops. Book a demo now to learn more.
Key considerations for hiring in Colombia
The next section of this guide will summarize the key considerations for US companies when hiring in Colombia.
Labor laws in Colombia
Governed by Código Sustantivo del Trabajo (Substantive Labor Code), Colombian laws set clear standards for employment contracts, working hours, compensation, and employee benefits. The law prioritizes protecting workers’ rights, and non-compliance can result in significant penalties.
Employment contracts in Colombia
Employment contracts in Colombia are mandatory and must be in writing. Contracts can be fixed-term, indefinite, or for specific tasks or services. Each type of contract has distinct rules regarding duration, termination, and renewal. Fixed-term contracts cannot exceed three years but can be renewed indefinitely.
Working hours in Colombia
The standard workweek in Colombia is 48 hours, typically divided into six eight-hour days. Employers can implement flexible hours as long as they comply with the maximum weekly limit. Night shifts and work on Sundays or public holidays may carry additional pay.
Overtime in Colombia
Overtime is permitted in Colombia but capped at two hours per day and 12 hours per week. Overtime pay rates depend on whether the extra hours occur during the day, night, weekends, or holidays. Typically, daytime overtime is paid at 125% of the normal rate, while night, Sunday, and holiday overtime are paid at higher rates.
Employment taxes in Colombia
Employers in Colombia must make several contributions, including social security (covering health, pensions, and professional risks) and payroll taxes. These contributions can total around 30% of an employee’s salary. Income tax withholding may also apply, depending on the worker’s earnings.
Benefits and leave in Colombia
Employees are entitled to several benefits, including paid annual leave (15 days per year), maternity and paternity leave, and severance pay. Additionally, there are mandatory contributions to employee health insurance and pension funds.
Termination in Colombia
Termination of employment can occur with or without just cause. Dismissal without just cause requires severance payments, which vary based on the type of contract and length of employment. Colombian law protects workers against unfair dismissal, and failure to follow procedures can result in costly legal disputes.
Want to skip all the red tape that comes with hiring in Colombia? We got you. Howdy.com lets you hire, pay and take care of your global and diverse team members, seamlessly. We manage everything from cross-border payments to local compliance, so you can focus on building your world-class global team. Book a demo to learn more.
FAQs for hiring in Colombia
How do you pay workers in Colombia?
US companies paying workers in Colombia typically use international payroll solutions or local employment partners to ensure compliance. Payment can be made directly through local bank accounts or via cross-border payment platforms. Employers must also comply with Colombian social security and payroll tax requirements.
What is the minimum wage in Colombia?
The minimum wage is COP 1,300,000 ($330 USD) per month, plus a mandatory transportation allowance.
What are the working hours in Colombia?
The standard workweek is 48 hours, typically divided into six eight-hour days.
How is overtime paid in Colombia?
Overtime is capped at two hours per day and 12 hours per week. Daytime overtime is paid at 125% of the standard rate, while night, Sunday, and holiday overtime are paid at higher rates.
What are the employment taxes in Colombia?
Employers must contribute to social security and payroll taxes in Colombia. Employment taxes total around 30% of an employee’s salary.
What benefits are required for employees in Colombia?
Mandatory benefits include paid annual leave, maternity and paternity leave, and severance pay. Employers also contribute to health insurance and pension funds.
What are the rules for terminating an employee in Colombia?
Termination can occur with or without just cause, but dismissals without just cause require severance payments.
Hire in Colombia the easy way with Howdy.com
As a Colombian EOR, Howdy.com has your back. Our in-house experts handle everything from managing local laws, tax systems, and payroll. We do the heavy lifting so you can focus on what matters: Building your Colombian dream team. Book a demo to get started today.
