Sri Lanka Outsourcing Industry 2011 – Forecast 2015

The Sri Lanka IT & BPO industry is projected to grow by 26 % in 2011 with export earnings of $ 392 m in 2010. The industry has set a target of $ 1 b revenue with employment for 100,000 by 2015. This would mean doubling its current earnings of US$ 500 million during the course of the next four years .According to SLASSCOM the total software earnings of USD 294 million are produced by 27,000 people and on the BPO side, 13,000 people produce USD 98 million. There are nearly 300 IT/BPO companies like WNS, RR Donnelly, Amba Research, and HSBC currently operating in the island. The government is keen to provide favorable conditions to outsourcing companies so as to encourage investment, the industry has been granted a 12-year tax holiday. AT Kearney has listed Sri Lanka in its top 50 nations for outsourcing destinations, at 29.

According to ICRA Lanka report, The Information Technology (IT) industry in Sri Lanka includes the hardware manufacturing and software development sectors and the Information Technology Enabled Services (ITES), includes the Business Process Outsourcing (BPO) industry. The total size of the Sri Lanka’s IT market is estimated at US$386 million in 2011, and is expected to grow to US$742 million in next five years. Sri Lanka is not a significant exporter of IT services. The total exports of IT services in 2010 amounted to a little over US$300 million. Sri Lanka’s addressable computer hardware market is estimated at US$265 million in 2011, and is projected to reach around US$489 million in 2015, spending on software remains low, with the estimated addressable market of US$47 million in 2011 to US$98 million in 2015 and IT services spending is estimated to be around US$74 million in 2011 accounting for about 19 percent of Sri Lanka’s total spending on IT to US$155 million in 2015.

Sri Lanka is becoming an attractive location for 'Finance and Accounting Outsourcing' (FAO) with the world’s second largest pool of management accountants and wages lower than India. This according to SLASSCOM which has published an industry report on the FAO sector in Sri Lanka prepared by PricewaterhouseCoopers and sponsored by Association of Chartered Certified Accountants. Sri Lanka has the second largest pool of qualified CIMA (Chartered Institute of Management Accountants) members outside UK. It also has about 80, 000 accountants in training. Global companies, including UK Accounting and Legal Services Center of WNS, Investment Research Center of Amba Research, UK Banking Center of HSBC, and Finance & Accounting Center of RR Donnelley, have set up their delivery centers in Sri Lanka. Also higher education in accountancy is offered by five main professional accountancy bodies, 15 state universities and numerous foreign affiliated private universities operating in the country.

To achieve the one billion dollar target Sri Lanka IT-BPO industry has to improve its infrastructure, and the English-speaking population. Sri Lanka provides a good opportunity to cut costs but there is a shortage of supply of skilled and qualified graduates particularly in the IT field. With the US economic slowdown and European debt crisis, there is a possibility that the IT- BPO industry in the country may slowdown. Most of the work done here is done for US and UK clients. With support from Sri Lankan government the Industry is looking forward to achieve the billion dollar revenue target.