IT sector to grow by leaps and bounds – Survey

By Devin Jayasundera

In an IT export value survey conducted by the Export Development Board (EDB) for the year 2009/2010, it was revealed yesterday that in the year 2010 the IT export industry achieved revenue of USD 250.3 million at a 46% growth compared to 2009.

EDB Chairman Janaka Ratnayaka mentioned the significance of the survey as it is the only industry that the figures are not recorded on the value of its business and its contribution to the national economy due to the nature of its transactions.  

Survey was done by PriceWaterhouseCoopers.

The IT industry in the country is to reach USD one billion by 2015 according to the Mahinda Chinthana.

“If the already attained above 40% growth rate is consistent the industry will achieve this target before 2015 but in realistic terms the industry will grow on compound rate of 25% thus achieving the target in 2015,” stated Ratnayaka.

According to the survey in 2010, 147 companies contributed to the export revenue of the industry. Large companies have contributed to over 70% of the export revenue with medium and small companies making up the balance.

The survey also notes that 62.2% of the cost in the IT export industry is on human resources.

60% of the IT companies are owned by Sri Lankan citizens. The rest is either as a joint venture or as Foreign Direct Investments.

“All this growth is spearheaded by Sri Lankans and therefore it is mainly an organic growth expressed SLASSCOM Secretary General Mano Sekaram. He also noted that in unlike in India where 80% of the industry is in Software services, Sri Lankan companies are building products. This means there is a high value of return.

In respect to the IT export revenue in 2011 Ratnayaka mentioned that even though the exact figure is not available the EDB is confident that the Industry has already achieved a USD 400 million according to its estimates. In the Sri Lanka Information Technology Report forecast the domestic IT market is expected to grow up to USD 742 Million over the next five years.

The survey also noted that Europe, US and South Asia as the top three markets for IT exports.

In the second part of the survey on the ITES sector (Information Technology Enabled Services) which mainly constitutes BPO’s and KPO’s   had a less significant growth when compared to the IT sector where it recorded USD 60 Million.

Sekaram noted the key finding of the survey was that 78% of the companies are quality certified by international standard agencies. “This is a claim that any exporting country in the East cannot claim to have that much of concentration of high quality certified companies. This also indicates that the value proposition of the industry is based on quality.”

The IT export sector is to generate employment from the existing 16,000 to 50,000 in 2015 who are engaged purely on exports.

In regard to the amount of Foreign Direct Investments attracted by the IT industry Ratnayaka implied that it’s not possible to give an exact number for an investment attracted by a specific industry, however he said that several Indian companies are interested in investing in the IT sector.

Sekaram adding to that said, “In time to come there will be major players from the industry coming in to Sri Lanka and establishing their companies which will create a very good image for the country.  

He also insisted that for Sri Lanka to be truly successful in the IT field it should be seen as a value addition player and to put more emphasis on specialising in quality and ethics to differentiate the Sri Lankan IT industry from the competition.