Your tech start-up wants to expand into Colombia. Here’s what you need to know.

So, you’ve decided to take your tech start-up to Colombia. It’s an exciting move to one of the world’s fastest growing tech hubs. Colombia is home to 2,200 active start-ups and major global success stories such the unicorn delivery app Rappi, valued at USD 5 billion.

Government-led initiatives, such as the ICT Plan - a strategy designed to shift the nation’s focus from basic connectivity towards digital skills, job creation, and technology exports - are helping Colombia strengthen its digital infrastructure, accelerate AI adoption, and develop a skilled technology talent pipeline.

It’s an exciting time to expand into Latin America, so let’s examine everything you need to know about bringing your tech start-up to Colombia in 2027.

Why Colombia is attracting international tech companies

One of Latin America's largest and fastest-growing digital economies, Colombia is home to numerous booming tech sectors, including in Bogotá, Medellín, and Cali.

The Colombian government is investing heavily in its tech sector through MinTIC's national strategies and multi-million-dollar investments, which focus heavily on AI, digital inclusion, and connecting the country’s regions.

Under the National Artificial Intelligence Policy, Colombia is putting COP 479 billion towards transforming industries via missions including launching GovTech initiatives to modernise public services, deploying AgroTech tools to boost agricultural productivity, and implementing HealthTech solutions to improve patient care.

Additionally, the government is aiming to shrink the country's digital divide between urban and rural locations by funding rural fibre-optic expansion and digital literacy programs, while bolstering these advancements with regulatory frameworks like the National Data Infrastructure Plan and updated cybersecurity decrees to foster a secure, tech-driven economy.

As a result, Colombia workforce contains a growing number of tech professionals, hireable at  competitive labour costs when compared with North America and Western Europe.

Access to a growing pool of tech talent

Colombia is home to an enviable tech talent pool, producing thousands of STEM graduates each year. Bogotá serves as the primary national talent hub, accounting for over 57% of the country's software and IT-related graduates, recently seeing over 215,000 software and IT students graduate in a five-year span.

Colombia’s workforce boasts strong expertise in software development, fintech, AI, and cybersecurity, as well as high levels of English proficiency in many technology hubs, while growing remote-working culture creates smooth transitions for international employers.

Key hiring hotspots

As part of Colombia’s recent tech boom, several cities have emerged as major employment and business centres.

Bogotá, the country's capital and largest city, is home to the highest concentration of professional talent – accounting for 46% of Colombia’s tech start-ups and nearly 80% of national venture capital.

Medellín, recently declared Colombia's “most innovative city”, has built a strong reputation for technology and entrepreneurship, attracting both start-ups and global employers. Companies such as Globant have significantly expanded their workforce in Medellín, with more than 5,000 workers in the city.

Cali and Barranquilla are also coming into their own as tech destinations, while the country’s broader appeal is further evidenced by organisations like British tech giant Endava establishing operations there.

What to consider: employment law and compliance

When expanding into Colombia, it’s important to understand that employment law and compliance considerations will be different to those of your home market. Before hiring in Colombia, you need to ensure that you are familiar with the local legislation.

Mandatory benefits and provisions

Employees are entitled to a range of mandatory benefits, including paid annual leave, social security coverage, pension contributions, the prima de servicios (a statutory service bonus equivalent to one month's salary per year), cesantías (severance savings contributions), and annual interest payments on those savings.

Depending on salary levels, it’s important to remember that employers may also be required to provide transport allowances and work clothing. In addition, Colombia has strict regulations which govern aspects such as working hours, overtime, payroll taxes, social contributions, and termination procedures.

Worker classification

Businesses should also take care to correctly classify workers. Treating employees like independent contractors denies your workers their rights and means the correct taxes are not being paid, creating a serious compliance risk that can go very wrong for both the employer and their worker.

South American authorities have intensified their scrutiny of employment practices, with high profile cases including that of delivery giant Rappi, which was fined ARS16.42 million Argentine pesos (approximately USD 168,000 USD at the time of the final ruling).

Should you set up an entity or use an Employer of Record?

When entering Colombia, one of the first decisions you'll need to make is whether to establish a local legal entity or hire through an Employer of Record (EOR). The right approach depends on what you aim to achieve during your time in Colombia, what your hiring timeline is, and what you budget limitations are.

Setting up a legal entity in Colombia

If you are planning to establish a long-term presence in Colombia, setting up a permanent entity may be the most sensible, cost-effective way to go. It means you retain full operational control over every aspect of your Colombia business and means you employ your workers directly.

However, creating a legal entity can be legally complex, costly, and time consuming. It is recommended to partner with a global employment solutions provider like Mauve Group, whose Global Business Expansion service provides everything you need to ensure your expansion is smooth, swift, and compliant.

Using an Employer of Record in Colombia

An Employer of Record (EOR) offers a faster, more flexible route into the Colombian market. By acting as the legal employer on your company’s behalf, an EOR enables you to hire employees without establishing a local entity, while helping manage employment contracts, payroll, benefits, and compliance requirements.

This approach is particularly valuable for businesses looking to test the waters of a new market, build a small local team, or begin operations quickly without dropping significant funds up-front. As your presence grows, you can then decide whether establishing an entity makes sense long-term.

Expanding your tech start-up into Colombia successfully

Deciding to expand your tech start-up into Colombia is an exciting step forward and one that is sure to open doors and facilitate continued growth for your business.

But to make it a success, you must understand local labour laws, budget accurately for mandatory benefits and social contributions, develop competitive hiring strategies, and, most importantly, choose the right operating model for your business.

Fortunately, with 30 years of experience in global expansion, Mauve Group is here to help businesses like yours to compliantly hire talent without setting up a local presence, and, if and when the time comes to set up a permanent presence, Mauve can help with that, too.

Our comprehensive suite of services and decades of experience mean we’re perfectly placed to support you on your expansion journey. Contact us, today.