Data Centers Drive Colombia’s Tech Industry Growth

Data centers are at the heart of Colombia’s technological industry and ecosystem growth. Over the last few years, Colombia has rapidly emerged as a significant player in Latin America, now ranking as one of the most attractive countries for investments and new ventures for data center development and expansion. The country’s investments and growth in IT infrastructure, paired with favorable policies, have established it as a key regional hub.

Data centers are facilities that accommodate IT infrastructure, which includes the storage, management, and processing of digital data. These centers are essential for the technological revolution and global digitalization, offering a range of digital services from cloud computing to website hosting.

The industry surrounding data centers is experiencing rapid growth throughout Latin America, with forecasts indicating an increase in market size from approximately US$5.51 billion to US$8.81 billion by 2028. Colombia is a standout in this booming market, with its data center market expected to surge from US$560 million in 2023 to US$890 million in 2029.

Colombia’s attractiveness for data center investors

Colombia represents roughly 10 percent of Latin America’s data center market, alongside Chile, Mexico, and particularly Brazil, which alone account for over 40 percent of the regional market, marking them as the major players in the data center sector. The allure of Colombia for major technology corporations has significantly contributed to this growth.

Notable investors in the country’s sector include the American giant Equinix, Brazilian leaders ODATA and Ascenty, French Etix Everywhere, Chilean Gtd, Mexican KIO Networks, and Argentinian Cirion Technologies. Owing to these global and regional players, Colombia has been placed on the world map of data center services, with US tech giants IBM, HP, Oracle, Dell, and Huawei Cloud among the top IT infrastructure providers in the country.

The Colombian government has actively encouraged investment in data centers in recent years, notably through the establishment of 120 Free Trade Zones across the country, offering several benefits to new investors, such as tax cuts and income tax reductions. Currently, Bogota is at the forefront of Colombia’s data center expansion, hosting over 80 percent of the country’s facilities and ranking second in Latin America as the fastest-growing data center hub. Exemplifying this, Bogota is expected to host the first Amazon Web Services (AWS) in Colombia.

However, other major cities are also present in the data center rush, like Barranquilla, which received a US$20 million investment from Chilean company Gtd for a new data center, and Cali, home to the only Tier IV data center outside of Bogota, operated by Etix Everywhere.

Colombia’s growing tech environment

Colombia’s rise in the data center sector is part of a broader tech revolution, with data centers serving as the backbone for digital storage, processing, and management. The importance of these facilities is only set to grow, with progress constantly being made in digitalization and artificial intelligence.

Due to their complexity, these digital warehouses require significant electrical power and a stable climate for efficient operation. In this respect, Colombia boasts top-tier advantages, as it is located in a climatic zone that offers an almost constant climate throughout the year. Colombia also has access to reliable high-speed internet, thanks to a network of 10 submarine cables, the second largest network in Latin America after Brazil.

Additionally, Colombia benefits from energy stability, with no national blackouts in the last 30 years, and a commitment to sustainability. For instance, Bogota’s HostDime Tier IV Data Center was the first data center in Latin America to receive an Excellence in Design for Greater Efficiencies certificate, an award given by the World Bank’s International Finance Corporation to honor buildings with high water and energy efficiency.

With these key advantages, Colombia is expected to play an increasingly significant role in the data center industry in the coming years. Indeed, this rapidly expanding market in Latin America is driven by several factors, according to Arizton, a US market research company. These include the advent of 5G networks, the Internet of Things, cloud computing, gaming, video streaming, and underwater cables. In addition, the rise of the digital economy, characterized by increasing digital payments, internet usage, and digital banking, is also contributing to the expansion of the data center market in Colombia.

Although 5G Internet has only been available in Colombia since February 22, 2024, it is expected to cover over 50 percent of the Colombian population by 2026. This technological progress coincides with the growth in digital nomadism in the country, another phenomenon contributing to the surge in data center capacities.

Entertainment is another key component of Colombia’s digital growth. With around 10 million active console, mobile, or PC players, the Colombian gaming industry market is worth over US$300 million and ranks as the fourth largest in Latin America, behind Brazil, Mexico, and Chile. Similarly, the video streaming market is also significant, with an estimated value of around US$360 million.

Perhaps the most impressively growing digital market is digital banking, a sector in which Colombian startups have proven to be regional leaders. Nequi, Colombia’s biggest digital bank, has nearly 18 million users, of whom 3.5 million have made Nequi their primary bank account. Traditional banks like Bancolombia have also developed 100 percent digital applications, as has Rappi, the leading Colombian delivery app, which has also diversified into digital banking.

Colombia has fully embraced digitalization. With the country’s entrepreneurial culture and promising startup environment, the tech industry is set on a promising trajectory, with data center development serving as both a consequence and a driver of this technological and digital surge.