IT sector grows by 31% in 2008 – Central Bank

By Azhar Razak
Sri Lanka’s IT sector has grown remarkably by around 31 % to US dollars 230 million in 2008 from US dollars 175 million in 2007. However, this sector is likely to experience a slowdown in the coming years due to the economic slowdown in the top markets, namely, United States and Europe, the Central Bank 2008 Annual Report pointed out.

‘The significantly increasing lay-offs in these markets over the last few months and the protectionist measures that may be taken by the US Government to protect local production rather than off-shore outsourcing may however hinder the demand for ITES in Sri Lanka,’ the 2008 Annual Report noted.

According to the report, Sri Lanka is emerging as a favourite offshore outsourcing destination for specialised services such as software development, Information Technology Enabled Services (ITES) including Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) and other Information Technology (IT) related services.

‘Although, the top markets for Sri Lanka’s software and ITES exports are Europe and North America, the potential exists to expand the market share in the African and Middle Eastern regions. Competitive operational costs, enhanced IT infrastructure facilities, availability of skilled workforce, price competitiveness due to concessions on service tax and the delivery of quality service facilitated the sustenance of the industry growth trend amidst the global financial turmoil,’ the Annual report stated.

According to the Report, during 2008, several initiatives were taken by the Ministry of Enterprise Development and Investment Promotion to create a more conducive environment for IT and ITES sectors by improving IT infrastructure along with creating dedicated IT zones and appointing a Presidential Task Force on IT and English.

‘The established IT Service Parks expanded its landscape through assisting or ITES operations, other than providing IT facilities for software development companies. Specialised training in the areas of KPO in both accountancy and law can be utilised to enhance the quality of ITES providers who are already equipped with well qualified professionals to exploit industry opportunities emerging with the official declaration of the year 2009 as ‘The year of Information and Communication Technology and English,’ the Report stated.