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Colombia has become a well-positioned country for business entry, remote recruitment, and foreign investment among Latin American nations. However, many companies still don’t know the key factors to take into consideration when creating their expansion strategy.
Expanding business and hiring in Colombia takes a good deal of regulatory compliance and local research. But if done right, this country may become your strategic entrance into Latin America, as well as a good source of cost-effective, talented workforces.
Let’s explore an overview of the country and discover which aspects can be advantages or challenges when hiring in Colombia.
Colombia: Business-Ready Overview
| Economy | Colombia |
| Business Entry | 88.62 |
| Business Location | 72.38 |
| Utility Services | 74.99 |
| Labor | 62.08 |
| Financial Services | 75.19 |
| International Trade | 54.02 |
| Taxation | 57.71 |
| Dispute Resolution | 72.85 |
| Market Competition | 64.84 |
| Business Insolvency | 74.49 |
Colombia is one of the countries listed by World Bank in their B-READY 2024 performance research. The Business Ready analysis helps us assess the business and investment climate worldwide, which can be of great service before entering a new country’s industries.
Overall, Colombia is well-positioned in most of all factors presented by the ranking. It’s the top LatAm country in business entry, business insolvency, and dispute resolution measures. It’s also featured high in utility and financial services, although it scores lower in taxation in international trade.
Analyzing such characteristics, in comparison to other key Latin American countries, can help you make an informed decision on the Colombian market.
10 Key factors to know before hiring in Colombia
Below are all of Colombia’s scores on the 10 axes studied by the World Bank Business Ready, compared to other main Latin American countries also analyzed by the research.
1) Business Entry
(Source: World Bank’s Business Ready 2024)
After a company is officially registered, it gains several key advantages that would otherwise be unavailable. These involve access to legal services and financial resources that support business growth, ultimately creating more job opportunities.
The Business Entry levels are related to the quality of regulations for business entry in the country. It also analyzes the digital public services, the transparency of information, and the operational efficiency.
2) Business Location
(Source: World Bank’s Business Ready 2024)
A well-established regulatory framework and efficient public services play a crucial role in shaping the business environment. These factors can drive private sector growth within an economy as safe property rights encourage investment.
Ensuring transparency in building and environmental permits helps bridge information gaps between public service providers and businesses, offering easy access to regulations, fees, and payment tracking.
3) Utility Services
(Source: World Bank’s Business Ready 2024)
Utilities like electricity, water, and internet services are fundamental to business operations, whether you are opening a new foreign office, or just hiring remote employees. When they are unreliable, inefficient, or expensive, entrepreneurs may encounter challenges in running their businesses.
Governments setting clear performance standards, along with a system of incentives, encourages utility providers to maintain a reliable and sufficient supply of electricity, water, and internet services.
4) Labor
(Source: World Bank’s Business Ready 2024)
An efficient labor market offers opportunities for businesses and safeguards for workers to enhance employment dynamics. Without adequate protections, workers may face lower living standards, leading to an unmotivated and less productive workforce.
Labor regulations and market institutions should aim to balance worker protections with the flexibility needed to create a thriving job market.
5) Financial Services
(Source: World Bank’s Business Ready 2024)
The financial sector of a country is crucial for capital allocation within an economy. A well-developed financial system provides diverse services and fosters economic growth.
Effective financial systems support new business ventures and enable existing companies to expand by reducing external financing barriers. Reliable and timely access to funding and payment services helps businesses scalability and job creation.
6) International Trade
(Source: World Bank’s Business Ready 2024)
International trade drives economic growth by opening access to larger markets and more affordable, high-quality inputs.
The regulatory framework should ensure fairness, transparency, and predictability. This, in turn, facilitates trade, promotes compliance, attracts investment, and enhances competitiveness.
7) Taxation
(Source: World Bank’s Business Ready 2024)
A stable fiscal context supports private sector growth by funding infrastructure, education, and law enforcement. On the other hand, overly complex tax regulations can lead to increased corruption, reduced investment, and lower business formation.
The taxation framework can be measured by the quality of tax regulations, the effectiveness of public services provided by tax authorities, and the overall efficiency of the tax system.
8) Dispute Resolution
(Source: World Bank’s Business Ready 2024)
Commercial disputes are a natural part of any economy, but when they are not properly resolved, they can negatively impact the private sector.
A reliable dispute resolution system strengthens private sector development. When businesses lack confidence in the courts, they may face operational challenges and hesitate to pursue expansion.
9) Market Competition
(Source: World Bank’s Business Ready 2024)
Market competition drives economic growth by fostering innovation and increasing productivity, leading to better products and improved job opportunities.
Although many businesses interpret competition as only negative, a dynamic and competitive market is essential for sustained growth. It benefits consumers, supports small business expansion, and creates Jobs.
10) Business Insolvency
(Source: World Bank’s Business Ready 2024)
The insolvency system helps entrepreneurship, expands the private sector, and strengthens economic stability by enabling the creation of new businesses.
It is also crucial for financial system stability. When nonviable firms are liquidated swiftly and viable ones are restructured sustainably, investor confidence increases, encouraging long-term economic development.
Want to start hiring in Colombia? Work with an Employer of Record
The rates regarding business readiness in Colombia are a good starting point for building your expansion strategy. However, it’s important to do a deep market research concerning your company’s requirements.
In case a company has little to no experience in hiring in Colombia or in Latin America, one great option to optimize its journey is to work with a third party collaborator, such as an Employer or Record.
An EOR in Colombia can offer you local expertise and crucial network contacts. It is also a strong option for anyone looking to quickly and compliantly hire professionals without needing to set up a local entity.
When you work with an employer of record, you can hire qualified talent that will report directly to you, without needing to worry about managing their payroll or dealing with other administrative and compliance issues.
