Why Medellin? New Investors Highlight the Advantages

Medellin is well on the way to achieving its ambition as LatAm's hot new technology hub, but what experiences have IT companies had in setting up operations there?

Known by Colombians as ‘The City of the Eternal Spring,’ Medellín’s rich culture and impressive strides in urban development have served to reinvent the city as a haven for foreign technology companies, progressing its ambitions as the next big hub for IT services in Latin America.

In 2013, Medellin was voted as the most innovative city in the world, beating out fellow finalists New York City and Tel Aviv, after a string of investments in urban development, technology and research, transportation, logistics and education. As a result, IT companies have taken notice and are heading to the city to reap the benefits.

Today, the city is emerging as a specialist in life sciences, energy, construction, software testing and security testing, the design and build of specialized software, and ITO advanced services. Furthermore, other cities and companies from other regions are purchasing innovation consultation services from companies in Medellín.

To get a sense of what IT companies are experiencing on the ground in Medellín, Nearshore Americas spoke to Grant Wickes, Principal of Marketing and Business Development at Growth Acceleration Partners (GAP), and Ilya Vinogradsky, Founder and Board Member at Astound Commerce, both of whom took the plunge in this burgeoning technology hub this year.

Why Medellin?

Grant Wickes from Growth Acceleration Partners
Grant Wickes from Growth Acceleration Partners

GAP has been in the business of agile software development for nearly ten years, with development centers primarily based in Costa Rica. As demand from US clients grows, GAPs vision is to expand beyond Costa Rica and have multiple development centers across Latin America. While the company has had one or two operations set up in Argentina, Peru and Lima, all fingers pointed to Colombia as the best place for the next big center.

Practically speaking, Medellin was a logical choice for GAP because it kept the nearshore time zone proximity with US clients, being on central time, and it is also conveniently close to Costa Rica, which allowed more value and support to be pulled from the company’s flagship center. “I think Medellin will help us to accelerate the firm and I’m happy we can be one of the early US-based nearshore outsourcing arrivals in the city,” said Wickes.

Ilya Vinogradsky from Astound Commerce
Ilya Vinogradsky from Astound Commerce

Astound Commerce is an eCommerce solutions provider that has been operating on a global scale for more than 15 years. Most of its technical staff is in Eastern and Central Europe, so the decision to set up in Medellin was a strategic move to gradually build up a team that could support its US customers, which are currently being supported out of Eastern Europe.

Astound Commerce chose Medellin in order to avoid any typical locations where its competitors were based. “Everybody is talking about Mexico, particularly Guadalajara, which is where a lot of our Eastern European competitors are based,” said Vinogradsky. “I wanted to find a place where I could hand pick the right people, train them, and retain them long term so there is less competition in finding people.”

Talent abundance or talent scarcity?

For GAP, Medellin’s attraction was primarily driven by the quality and attitude of the city’s talent. “I’m blown away by how passionate these guys are about learning and wanting to work with US clients,” said Wickes. Within its client base in the US B2B market, the company is seeing a growing interest in the .NET practice area, making knowledge and skills in this discipline vital. Since setting up in Medellin in March 2016, the company already has over 25 hires and expects to exceed the 50 target laid out for the year before fall.

“We’ve been able to find a great pool of talent in Medellin with the right abilities, both backend and frontend under the Microsoft stack, along with good knowledge of AngularJS,” said Wickes. Wickes and his company primarily hunt for skills in .NET, ASP, Visual Studio, SQL and other Microsoft enterprise tools, but also look out for frontend skills in Angular and a little bit of QA testing. “There is no inferior talent in Medellin, so there are no qualms about putting these guys on the biggest and best projects.”

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In almost direct contradiction of this experience, Vinogradsky cited the search for talent as Astound Commerce’s biggest challenge, stating that it has been difficult to find any individuals that can meet the company’s standards. The company has been in the process of hiring for a couple of months, working with a number of recruitment firms to find qualified candidates. “We are looking for people who have web development or QA experience, with a strong understanding of web technologies and web applications such as Javascript, HTML, and CSS,” said Vinogradsky. “The resumes we’ve been receiving don’t display the amount of experience that we need, but I know there are people available, we just haven’t been able to reach them.” Vinogradsky’s goal is to start off with 10 people who can train others as they come on board, which is why it’s important for him to find the right individuals from the get-go.

Local government support and agencies

Both companies have utilized the resources of a local agency called Ruta N, an initiative created by the city of Medellín, UNE and EPM that provides integration services for new companies in the city, as well as offering a shared office space to get the ball rolling. “We could have either spent months trying to find offices or locations ourselves, or rent space with this agency to accelerate our ability to get up to speed,” said Wickes.

As well as Ruta N, Astound Commerce worked with another government-funded program, ACI Medellín (Agency of Cooperation and Investment), in order to organize the initial visit. “We had regular communications with ACI who helped us draw up an agenda for the three-day visit, recommended who to talk to, and helped us with translation when required,” said Vinogradsky. “We’ve also established relationships with a local law firm, a local accounting firm, and a local HR and payroll processing firm, all of whom have been very accommodating.”

Challenges of Medellin Integration

One of the biggest challenges for Wickes was overcoming the city’s reputation as a drug cartel town, highlighting the psychological stigma that the word “Medellin” still hasn’t fully dropped. However, after a number of visits to the city, his colleague’s impression changed and he, along with other team members, now considers it a very safe place. “When talking to the staff, they view Medellin as a cool town and are excited by the prospect of more like-minded people moving there,” said Wickes.

As a new introduction to Colombia, Astound Commerce’s main challenge has been the aforementioned talent search, but in terms of the administrative setup, things have been relatively easy. “Overall, my outlook is positive and I hope to have the first 10 people hired by the end of this summer,” said Vinogradsky. “Our company is rapidly growing, so I envision that we’ll grow to around 100 people in the next 18 months, if everything goes well. In terms of the city itself and of the people, everyone has been very friendly and very open with us, so I’m happy with the selection of the location, we just need the right people.”

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