FITIS writes to President on business recovery approach for ICT industry

The Federation of Information Technology Industry Sri Lanka (FITIS) has written to President Gotabaya Rajapaksa on the urgent business recovery approach for the crucial ICT industry amidst the COVID-19 crisis.

FITIS noted that novel coronavirus pandemic had caused the greatest economic and social challenge faced in generations and the impact on business was profound.

“As companies navigate this rapidly-developing crisis, ensuring business continuity and saving jobs to secure talent when the window of recovery opens will be paramount,” FITIS has informed President Rajapaksa.

In the letter, having thanked the President and the Government for interim relief for all businesses, FITIS said as the apex body of the ICT industry in Sri Lanka it was its mandate to address all major segments within the ICT industry.

“Our primary focus is to safeguard the IT capabilities of our country and to allow our people to have uninterrupted services during this critical time,” FITIS has stressed.

According to FITIS, the ICT industry represents a workforce standing at above 100,000 with a vision to uphold its contribution to 200,000 direct employment and $ 5 b exports and enabling the launch of 1,000 startups by 2022.

Following are some of the highlights of the issues listed and recommendations made by FITIS in the letter to President Rajapaksa with copies to Prime Minister Mahinda Rajapaksa, Central Bank Governor Prof. W.D. Lakshman, ICTA Chairman Jayantha De Silva and Export Development Board Chairman Prabhash Subasinghe, among others.

 Software development firms

Our software development companies are a key contributor for local and foreign clientele by way of foreign exchange earnings and import substitution. Their contributions have positioned Sri Lanka amongst the ‘Top 15 Global Outsourcing Destinations’ by AT Kearney and ranked among ‘Top 20 Emerging Cities’ by Global Services Magazine. Most of all, they have led to many important initiatives locally. The sector entails a remarkable talent force who will play an active role in supporting the country’s economy resilience. 

Hardware solution providers and system integrators

The hardware solution providers and the system integrators are absolutely vital contributors to enable our vision of building a digital nation. At ‘new normal’ system integrators ensure internal technology is not interrupted. IT systems of our essential services including the Government, banking and finance, telcos and healthcare services are veins that enrich the efforts of social security against the epidemic. Hence the survival of these companies is paramount to ensure servicing and supporting don’t fall short.

The digital transformation efforts by our professionals will continue to not only improve the overall productivity and efficiency of our economy, but also contribute to our conventional exporters to become more productive, cost effective, and efficient, positioning our entrepreneurs and enterprises amidst increasing international competition ahead.

At such challenging times for almost every industry, investments on transformation initiatives may take a slow pace. Yet, the survival of the industries is crucial as we navigate through this difficult time. 

ICT education and training institutions

Previously, an average 12,000 to 12,500 ICT graduates reached the market annually. Catering to the single most limiting factor for higher exports in the ICT industry is highly necessary to support the stability and growth of these professionals in both State universities and private institutions. It will in turn lead to achieving greater momentum in contribution to the economy. However, the ICT education and training institutions must invest in promoting and educating to produce the talent in demand.

Telco operators and service provides

The current connected economy contribution needs no special emphasis herein.

Digital platforms and e-commerce enterprises

We see digital platforms and e-commerce becoming a driving factor of the future Sri Lankan economy. The service providers have been able to show their true colours through supporting many initiatives by the Government to exercise social distancing in order to eradicate the coronavirus breakout in Sri Lanka. 

These include, but are not limited to, Information Technology Enabled Services (ITES) for essential services, telecommunication and ecommerce delivery of essential goods including food, pharmaceuticals and medical equipment and promoting cashless transactions towards safety of the society.

In order for Sri Lanka to recover from this global epidemic and begin our forward march to build our economy, the ICT industry must play a significant role. As a predominantly service industry, the payroll responsibility of the sector annually accounts for about Rs. 6 b. The broad spectrum of areas which the ICT industry will continue to contribute will help companies build resilience and reshape themselves for the next normal. Hence, it is important to safeguard the ICT fraternity to say strong during this turbulent time. It is important to plan for recovery now, not later.

Therefore, we urge the sanctioning of the below measures to help us continue to help our country:

1. Amendments to the labour laws as an interim solution: The liquidity position of businesses has fallen short. Today, we witness many firms across the globe resorting to staff lay-offs to mitigate the losses. Yet, it is our belief that lay-offs would create social unrest resulting in higher unemployment rate in the country. Hence, we are determined that at least a contribution by way of retrenchments (reduction) would help our people secure their employment, whilst contributing to help spearhead during this turbulent time. Hence, it is our humble request to take immediate measures to offer interim amendments to the labour laws to allow for retrenchments whilst ensuring an acceptable amount of pay is received by employees. This will cater to the need of salary/income reductions, pay cuts, reductions and/or non-payment of allowances.



2. Amendments to the laws on social security: With our proposal to allow for retrenchments, a certain percentile of the cash in hand of our people will inevitably reduce. We propose to waive all EPF/ETF contribution from both parties until end financial year 2020-21 and that the ‘employee’ would receive the full benefit of the employer contribution value as well to help mitigate deficiencies experienced in salaries.



3. Government to reimburse 50% of the gross salaries bills of companies who were in operation as at 16 March 2020 until day 0 of the next normal working day. This will support companies to recover a certain amount of funds to their working capital encouraging business continuity and reducing stress on cashflow. 



4. 40% reduction in electricity during the current financial year (2020-21): As nature of ICT businesses, electricity consumption is a significant cost component.  



5. The Rs. 25 m per bank per borrower threshold to be increased to Rs. 40 m. We appreciate the support extended by the Government to support business ease of financial deprecations. However, we understand the 25 m may not be sufficient to address the significantly larger companies. 

 

6. Signing of the World Trade Organization Information Technology Agreement where technology becomes more affordable and available to people.



7. Revision in prices and extension of delivery deadlines: The impact of the sudden increase in exchange rate and conditions of liquidated damages that will have a huge impact on the cost for award/proposals/tenders already received and pending implementation, especially with the factories shutting production particularly affects the IT hardware and peripheral solution suppliers. Therefore, we appeal that the Government allows a revision in prices to accommodate the increase in exchange rates and be flexible on the extension of delivery deadlines in order to ensure uninterrupted supply and execution of pending/upcoming projects.