A study recently released by the Export Development Board (EDB) - ICT Advisory Committee indicates that ICT in Sri Lanka has the potential to export over a billion dollars worth of products and services in five to seven years. It further says that, as of 2007, the industry's exports were valued at 213 million dollars, with an annual growth of 28% for IT (Software) while the industry's other major component, ITES (BPO's), grew at a more sluggish 13%. Considering all factors, the study indicates the industry can potentially grow by 23%, a forecast confirmed by Mano Sekaram, Chairman of the EDB's ICT Advisory Committee, who noted that since the report was commissioned the industry has in fact seen approximately 20% growth before being affected by the economic downturn.
Carried out between April 2008 and October 2008 across a pool of 178 companies making up the IT/ITES industry, this study also indicates that the industry is the fifth largest exporter in Sri Lanka, and it has achieved this status in just 15 years. Also, it employs 13,000 IT/ITES personnel, a number which could go as high as 70,000 in seven years. Meanwhile, the industry also features at least 100% value addition between gross and net amounts, while, in terms of Return on Capital Employed, the industry proves to be the leader out of all industries.
Additionally, key findings of the survey revealed that there are 90 small companies, 36 medium sized companies and 11 large companies in the IT industry.
The largest contributors to revenue were the large companies with 48 % of the total industry revenue followed by 36 % by the medium sized companies. ITES industry consists of 22 small companies, five medium sized companies and seven companies. Similar to the IT industry, the largest contributor to revenue with 75 % were the largest within companies.
Referring to what the IT/ITES industry can expect during an economic downturn, Mr. Sekaram suggests that initially, out of fear, all IT expenses by client organisations will be cut by 20% for at least three months as companies adopt a watchful stance and stay away from big capital outlays.
Following this there will be three categories of clients, those that will fail, those who survive (breakeven) and those that thrive. He said that even after the survivors and those that thrive weather the immediate storm, they will still be unwilling to spend on nonessentials. As such, many IT/ITES companies offering unproven and/or nonessential technologies will have to wait out the current climate or fall by the wayside. A glimmer of hope for ITES companies is Mr. Sekaram's prediction that this sector will start growing again by the end of this year as job cuts around the world by companies will result in a trend towards outsourcing to maintain business operations. |
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