Colombia’s 4G auction keeps it on the map

Colombian-PhoneWhen I spoke to Ovum telecom analyst Peter Ryan earlier this year, one message came through loud and clear: Colombia is doing well when it comes to building its nearshore capabilities. Part of that story is the country’s imminent 4G auction, promising future network data transfer rates at five times 3G.

Now, Mr. Ryan and Ovum are also saying that the city of Barranquilla is emerging as Colombia’s new CRM outsourcing hub. Ovum analysts have found that Barranquilla, as a secondary outsourcing location, is benefitting from investment from abroad as well as from within Colombia. So far, Barranquilla has managed to keep up with the strong pace of growth, and can handle the overflow from Bogota. That said, Ovum did note that industry saturation is a risk – at least short-term – and that vendors need to work closely with government officials on the ground.

During our conversation, Ryan told me he was sold on Medellin, too, saying that it was “fantastic for mindshare, addressable markets, labor, technology, while also being multi-lingual,” adding that “the infrastructure is second to none.”   

Colombia does have solid transportation networks and reliable hydro, as well as an impressive telecom backbone. In  early May the country accepted offers from six telcos interested in its 4G cellular auction. Whoever wins the bid will be responsible for transforming Colombia’s airwaves – and putting at least $250 million into the federal government’s coffers.

So far, top contenders are: Empresa de Telecomunicaciones de Bogota (ETB) and Tigo, a consortium controlled by Millicom; Claro, owned by Mexico's America Movil; Colombia Telecomunicaciones, which is co-owned by the Colombian government and Spain's Telefonica; a consortium of companies led by Mexico's Azteca 4G; and DirecTV.

The Colombian government says that a short-list for the 4G auction will be announced on June 26. The winner will be expected to be able to provide 4G coverage to the entire nation of 46 million, a tall order given that much of Colombia is remote mountain and jungle. And the candidate won’t only have to pony up a quarter of a billion dollars: it will also be required to donate 500,000 tablets to schools, and provide 4G services to the Colombia’s military.

All of which should bode well for Barranquilla and its two million inhabitants. Ovum believes that the city’s size and assets put it on a footing to compete with regional BPO centers with similar profiles, such as Guadalajara, Mexico, and Managua, Nicaragua. Importantly, and always a concern with smaller cities, Barranquilla is supported by a number of universities and technical colleges that, so far at least, are producing enough skilled bi-lingual agents to meet demand.

Ovum also noted that, after talking to vendors on the ground, attrition was somewhat lower in Barranquilla than in Bogota. This is an interesting observation, given that concerns in Tier 2 and Tier 3 centers in Mexico are that workers might switch up to better-paying jobs in Mexico City. But the truth is that many workers in Latin America – and around world – appreciate being in modest-sized municipalities and, of course, close to family.

Ovum found that the ongoing success of existing deployments argued for Barranquilla being well-placed to serve an expanding nearshore market in the Americas, so long as things don’t get over-saturated, though there are no imminent signs of a shrinking labor pool. Importantly, government incentives in Barranquilla are focussing as much on retaining business as getting it, which argues for long-term growth supported by social and economic stability.

“Colombia represents more than a call center opportunity,” says Ryan. “There are also long term opportunities in application service management, back office functions, HR, knowledge processing, and accounting. These are high value.”

And that's good news for secondary markets like Barranquilla, particularly when 4G come to town.