Medellin, Colombia’s new famous resident

Long before drug kingpin Pablo Escobar made his hometown of Medellín infamous, the Colombian city’s citizens, called Paisas, were already well-known for their business savvy and powers of persuasion. So in 2010, when Palo Alto-based HP started looking for a location for a new global service center, the city leadership set out to woo the technology giant. And they did. The result is a regional service center for Latin America that has become a cornerstone of the city’s plan to transform itself into a major IT and BPO hub.

Photo: RAUL ARBOLEDA

This summer, the center opened the doors of its temporary location on the top floors of the main building of Medellín’s EAFIT University. In mid-2012, HP will become the anchor tenant of Ruta N, a mammoth new privately run not-for-profit complex in the city’s emerging north end. Spearhead by the mayor’s office and city-owned telecom and utility company EPM, Ruta N is intended to be home to an array of technology companies and cutting-edge digital organizations. HP would not disclose the number of people it will employ in the center, which will support customer service and internal company processing in both Spanish and English. But it will occupy an entire building of the complex, about one-third of the entire footprint.

HP has had a presence in Colombia for more than 20 years and already has a 120-employee call center and sales-support office in the capital, Bogotá. But it wasn’t until the last few years — taking note of Colombia’s declining crime rates, improving national security and increasing average incomes — that HP considered expanding there.

“Frankly, we had not given Colombia a lot of attention due to security concerns,” says Andrew Lewis, senior manager of growth markets at HP. “We decided to take a fresh look. We had our security team do an updated analysis of the country and the cities. Through talking to people and organizations there, we decided it would be a good place for us to grow. We believe the US perception of the country is probably 20 years out of date.” (Escobar died in 1993.)

Although the city and state governments provided a number of incentives to lure HP, cash was not one of them.

“We didn’t give away a single coin to HP, so we were amazed,” says Santiago Viera Ochoa, a subdirector with the city’s’ economic cooperation agency, ACI Medellín.

What the city did offer was real estate—at EAFIT and then Ruta N—as well as a customized, cooperative approach.

“The thing that impressed us the most was the partnerships between public and private entities,” says Lewis. For example, the city is the first contact for job applicants and administers the test for English-language skills, relieving HP of some of its HR duties.

The city is also able to offer a talented and well-trained workforce, many of whom speak English. Although there are several international telecom companies located in Medellín, including Spain’s Telefonica and Mexico’s Telmex, there is no company comparable to HP. That gives it first dibs on city’s best and brightest at what Lewis describes as “reasonable salaries.” The local Spanish is also considered fairly neutral; although it will start out serving Spanish-language Latin American companies, Lewis expects it will eventually handle Spain and other countries.

HP’s Ruta N building has also been classified as a Free Trade Zone (FTZ). Although this designation typically decreases costs for companies dedicated to moving products around, in this case, where it’s services on offer, the advantage is reduced taxes.

Having, for the most part, given up the illegal drug business, Medellín has yet another reason for reinventing itself. The landlocked city of about 2.4 million people virtually fills its narrow mountain valley. Long a center of manufacturing (Renault, for example has an assembly plant there), a service- and technology-based economy is the only realistic way to grow the economy, says Juan Pablo Ortega Ipuz, executive director of Ruta N. A team from the city visited Waterloo, Ontario—which had been a dying city until BlackBerry maker Research in Motion opened its doors there in the mid-1990s—to get a sense of how to attract and retain technology talent. They also visited Houston, Texas, which has the second highest number of Fortune 500 companies after New York City, to see how large international companies might impact the city.

“If they can do it in Canada and the U.S., we can do it here in Medellín,” says Ortega Ipuz.