The average salary in Colombia is about 4,690,000 COP (Colombian Peso) per month. As per the latest exchange rate in May 2023, this roughly amounts to USD 1,029.
That’s significantly less than the highest average salary figures in most other countries.
For example, the average monthly salary of an employee in the USA and Luxembourg is around USD 7,900 and USD 5,385, respectively.
As a result, Colombia is one of the top cost-effective destinations for outsourcing processes like software development.
In this article, we’ll share key stats and trends on the average salary in Colombia, along with the top three reasons to outsource software development to Colombia.
Table of Contents
- Stats and trends for average salary in Colombia
- How does the Colombian wage fare against other countries?
- 3 top reasons to outsource software development to Colombia
Let’s dive in.
Stats and trends for average salary in Colombia
Average salary figures for Colombia are generally a good indicator of how much an average person in the country typically earns.
Employee salaries in Colombia may vary significantly based on:
- The level of education.
- Years of experience.
- Job location.
- Type of work — full-time, part-time, or remote work.
According to Salary Explorer, Colombia’s average annual salary is 56,300,000 COP or USD 12,347 (as per the exchange rates in May 2023).
For an even broader perspective on average income, employers and expats could also look at the average salary range (maximum and minimum salary) in Colombia.
Colombian employees can earn anywhere between an average minimum monthly salary of 1,190,000 COP to an average maximum of 20,900,000 COP.
But what’s the actual cost of an employee in Colombia?
A. The true cost of a Colombian employee
An employee’s gross salary may include benefits and allowances such as housing, health insurance, etc., and is subject to income tax and other mandatory deductions.
Colombia has a social security system that offers benefits related to healthcare, pension, death and labor risk, etc.
Both employers and employees are required to contribute towards these benefits. The employer’s contribution averages between 20-30% of the employee’s base salary, while for employees, it’s around 8% (usually deducted as payroll tax).
Employers may also be obliged to pay additional taxes and compensations such as:
- State tax contribution to institutions like Instituto Colombiano de Bienestar Familiar (ICBF), Servicio Nacional de Aprendizaje (SENA) and the Caja de Compensación Familiar (CCF).
- Transport or connectivity aid to eligible employees.
- 13th salary to regular employees.
Colombian employees are entitled to a 13th salary — a month’s salary that’s paid as a bonus in two installments.
Colombian labor laws stipulate an integral salary for employees with monthly income less than 11,810,838 COP. Such employees receive additional compensations integrated with their monthly salary and aren’t eligible for a separate 13th salary.
The average employer tax in Colombia is about 25% (on top of an employee’s base salary). In comparison, employer taxes in Brazil may reach as high as up to 80%.
As for employees, the actual disposable income (net salary) is their average earnings after accounting for the mandatory payroll tax.
Now, let’s take a look at the median salary in Colombia.
B. Median salary in Colombia
Just like the average salary, the median salary is a way to determine the central point in a set of salaries, say within a country, organization, or department.
It’s the midpoint in a set of salaries arranged in either ascending or descending order.
The median base salary in Colombia is 4,040,000 COP per month. It means that 50% of the Colombian employees earn less than the median salary while the other half earn more.
Unlike the averages, the median is a fixed value and doesn’t change with disproportionate values at either extreme. So an employer can use the median to identify the typical or standard income for employees doing the same job within an organization.
C. Average salary by sector
Here’s a breakdown of Colombian average salary by the type of industry:
|Industry||Average Monthly Gross Salary|
|Information Technology||4,710,000 COP|
|Real Estate||5,310,000 COP|
|Teaching / Education||4,980,000 COP|
|Media / Broadcasting||4,310,000 COP|
D. Average salary by region
Some of the most prominent business centers in Colombia include Bogota, Barranquilla, and Medellin.
While Bogota is the most important center for foreign trade and accounts for around 25% of Colombian GDP, Medellin is a hub for IT and textile companies.
Businesses should finalize a Colombian city for their operations after carefully considering each region’s average salary and industry data.
Let’s check out the average salary in major Colombian regions:
|City||Average Monthly Salary|
E. Salary comparison by education level
Colombian employees with higher educational degrees generally earn more than their peers with a lesser degree for the same type of work.
But how much do salaries in Colombia vary with education level?
According to Salary Explorer:
- Employees with a certificate or diploma earn 17% more than high school graduates.
- Employees with a bachelor’s degree enjoy a 24% salary gain over certificate and diploma holders.
- Professionals with post-graduate degrees have 29% higher average salaries than those with bachelor’s degrees.
- Lastly, Ph.D. scholars earn 23% more than those with a master’s degree.
F. Salary comparison by experience level
Employees with experience between two to five years earn 32% more salary than fresh graduates. There’s an even higher 36% salary gain when employees reach the five-year experience mark.
The subsequent rise in salary at ten, fifteen, and twenty-year milestones is 21%, 14%, and 9%, respectively.
G. Minimum wages
A minimum wage is the lowest remuneration (based on a fixed hourly rate) that an employer must pay its workers. The Colombian government regulates these rates and protects an hourly wage worker with a minimum guaranteed income for each hour of work.
As of January 2023, Colombia’s legal monthly minimum wage is 1,300,606 COP. This roughly amounts to USD 285/month.
H. Annual salary increment rate
According to Salary Explorer, a Colombian employee gets a pay hike of around 7% every 19 months on average. In comparison, the world average is a 3% salary increase every 16 months.
The annual salary increment rate in Colombia stands at 4%.
1. Average annual increment by industry
Here are the average increment rates (2020) for employees within specific industries.
|Industry||Average Annual Increment|
|Teaching / Education||5%|
2. Average annual increment by work experience
The average annual increment rate varies with experience level as follows:
|Experience Level||Average Annual Increment|
I. Average income for top professions
The salaries for a job title generally depend on the demand for that specific skill.
For example, Colombia is witnessing a growing demand for qualified English-speaking professionals for its thriving IT sector.
In such a scenario, a software engineer, an English teacher, or any teaching job in the technical space may attract good salaries.
Here’s the data on monthly average income for some popular job titles in Colombia:
|Profession||Average Monthly Salary|
|Software Engineer||4,680,000 COP|
|Project Manager||5,100,000 COP|
|Web Developer||4,140,000 COP|
|ESL Teacher||4,160,000 COP|
|University Teacher||6,610,000 COP|
|Civil Engineer||4,340,000 COP|
How does the Colombian wage fare against other countries?
As per Statista, the minimum wage in Colombia ranks in the top five among Latin American countries.
It’s higher than other major economies in South America, like Brazil and Mexico, but lower than Chile — which sits at the top of the table.
However, it’s still significantly lower than in OECD (Organisation for Economic Co-operation and Development) countries such as Luxembourg, Switzerland, and the USA.
But despite low salaries and wages, an average person in Colombia can enjoy a convenient lifestyle due to the lower cost of living. In fact, Colombia is one of the most inexpensive (cheaper than 91% of countries in the world) countries in the world.
Note: The salary figures mentioned in the article are taken from various salary surveys, and the actual figures may vary with location, job titles, employee experience, etc.
3 top reasons to outsource software development to Colombia
In the last decade, Colombia has emerged as a highly cost-effective outsourcing destination for IT (information technology) services. In 2021, the total IT market in Colombia is valued at USD 6.6 Billion and has the fifth largest market share in Latin America.
Its proximity to the USA makes it a near-shoring haven for American companies and has significantly increased US investments in the sector.
Let’s explore some key benefits of outsourcing software development to Colombia.
The Colombian IT outsourcing industry offers top-notch services at affordable costs.
Foreign clients usually have to spend much less on hiring software developers here than in stronger economies like the USA.
Moreover, Colombian software developers offer high-quality services at lower salaries than their American or European counterparts.
With growing foreign investments and the government’s backing, the industry’s morale is at an all-time high. It may lead to more innovations and optimizations, bringing the operating costs further down.
2. Business-friendly economy
Colombia’s economic policies in recent years have helped transform its image from a country with extreme poverty to a rising tech power.
The most notable initiatives involve creating a solid software and IT services infrastructure.
New IT ventures get access to grants, seed funds, and business incubators backed by the Colombian government to kickstart their operations.
Additionally, perks like tax exemptions, free trade zones (FTZs), and specialized training programs further attract foreign clients and promote innovation within the sector. For example, foreign businesses enjoy a 50% discount on the country’s Industry and Commerce tax (ICA).
Moreover, being an OECD country (2018) and a member of the Pacific Alliance (alongside Chile, Mexico, and Peru), Colombia enjoys enhanced trade cooperation globally and regionally.
So it’s no surprise that Colombia is home to more than 5,000 tech companies today and growing.
Now the Covid-19 pandemic affected the Colombian economy just like other Latin American countries. Its GDP shrunk by 6.8%, as against the OECD average of 5.5%.
However, the good news is that due to several timely and decisive economic measures, the Colombian economy is showing signs of revival. In fact, OECD estimates the Colombian GDP to register a growth of 8.1% in 2022 to 1.2% in 2023.
3. Top-class IT talent
Foreign companies need a skilled local workforce for their IT operations, and the Colombian education system delivers well on that front.
As per the Colombian Ministry of Education, around 6,90,491 students graduated from IT-related programs between 2001 to 2018.
Colombian tech professionals are known for their programming skills and rank well on the global level. They generally have bilingual proficiency in English along with Spanish.
And with over 64,000 active software developers, thriving tech communities in major Colombian cities fuel the ecosystem and lead innovations.
Colombia has shown tremendous potential as an outsourcing and nearshoring destination for tech companies around the world.
Low average salaries and cheaper living costs present a win-win situation for both the incoming foreign companies and the Colombian employees.
But before you take the plunge, you must do a thorough cost-benefit analysis to maximize your profitability. You can use the average salary reports and trends shared in this article to understand how much you need to spend on your Colombian workforce.