18.03.2020 Colombia

The internationalization of ICT business – Challenges and opportunities of Colombian SMEs going into the Norwegian market

Nowadays a globalized market pushes companies to expand their business to international markets. It is important for companies who want to dabble into global businesses, to take into consideration that it is necessary to face challenges.

The foreignness and newness of the business is an issue to be bear of, especially if the foreign market has significant dissimilarities to the domestic market (Bell, 1995). Dissimilarities are distances, which are not only related to geographical proximity, it is also about, cultural, economic and political differences (Bell, 1995). At the same time, SMEs have an additional challenge when going abroad, regarding the lack of resources and capabilities for attracting new businesses (Korsakienė, 2012). If the focus is on Colombian SMEs, they must be also prepared to face up the negative image of how the country is perceived abroad. It may mitigate the possibility to obtain foreign investments or effectiveness when doing direct businesses with international firms.

However, that does not mean that Colombian SMEs cannot expand to international markets. It is possible to adopt strategies in order to deal with distances, by implementing, for example, exercise test cases, by delivering generic, simple and adaptable software to foreign markets (in order to avoid the need for technical support),  or by maintaining personal customer contact which has been found essential when exporting software (Bell, 1995). Besides, SMEs have the advantage of leverage their intangible resources, as management vision, willingness to be involved internationally, know-how and so forth (Cariou, 2014). If examining the ICT industry and more specifically small software firms, industry size is not a critical issue. SMEs could compete with high-quality products with export potential. Similarly, Colombian firms can search for partnerships in the foreign target market (as a business landing strategy to “break the ice” when doing business with international firms), and also to build networks which are considered an important strategy for entering global markets (Cariou, 2014).

Colombia has significant opportunities regarding exploring international markets. According to data provided by Procolombia, the country is the 3rd largest IT provider of Latin America. It also is an innovation leader in Latin America, with the creation of 467 start-ups in 2018, such as Rappi (Procolombia), Fitpal and Portal Finance which have dabbled into the Mexican market and aim to reach other countries in Latin America. When it comes to markets, the USA and Canada are the two main destinations of Colombian IT and digital content exports (Procolombia, n.d.). Among the factors that had influenced the growth of the ICT industry in Colombia are the talent availability (graduates from specialized technology courses such as systems engineering and telecommunications) government incentives as ViveLabs and Apps.co, which encourage the digital entrepreneurship in the development of apps, software, and digital content.

Moreover, Colombian companies who are seeking foreign markets to sell their products should pay attention to opportunities in the Norwegian market. Colombia and Norway have had a closer relationship for several years. The Norwegian government has been a peace facilitator in Colombia for over two decades (NOREF), also being involved in social investment and economic development. To give an example, The Norwegian Agency for Development Cooperation (NORAD) has been a generator of different projects in Colombia such as BICTIA, which was created as a partnership between NORAD, Probogota, IDN, Oslo Innovation Hub, and McKinsey &  Company, and aims to provide assistance, training,  and funding to ICT Colombian start-ups.

Norway is ranked 9 worldwide for doing business (Group, 2020). Furthermore, Colombian software and ICT SMEs can find opportunities in diverse Norwegian industry sectors.  Innovation Norway pointed out that the Norwegian market gives especial importance to new business ideas and contributions for sectors such as oil and gas, maritime and aquaculture, electric mobility, data centers, energy and cleantech, healthcare, manufacturing industry, and tourism. Even though Colombian software and IT products have been oriented mostly to fields such as finances, telecommunications, government, mass consumption, and manufacturing (Procolombia, n.d.), Colombian firms have the chance of use their experience and innovation skills in those sectors and start exploring in the most attractive Norwegian industry sectors, and use the available government and international support offered to SMEs.

Author: Angela Alvarez Diaz


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