While the Latin American outsourcing and offshoring industry is largely dominated and overshadowed by Argentina, Brazil and Mexico, and, Colombia is emerging as a major challenger. Global and local companies are expanding their operations to mid-sized cities in the country. There is also some evidence that the Colombian outsourcing industry is slipping into a higher gear and moving towards high-value, data and knowledge based services. In this paper, we examine formal and informal institutions and the factors associated with economies of agglomeration in the Colombian outsourcing and offshoring industry.