Sustaining global recognition in the IT industry

 The UNCTAD has released a study on the software industry with particular reference to developing countries and one of the case studies deals with Sri Lanka’s software industry. The report identifies Sri Lanka as one of the most rapidly-growing software export industries in the world during the last decade with only Costa Rica and Ireland having a higher ratio of software exports to software spenders.

Among the developing countries, the study shows that Sri Lanka is among those with the lowest level of software spending in relation to both GDP and overall spending on ICT. The report also notes that in a number of developing countries including Sri Lanka, computer software and IT export services exceed the value of spending on domestic computer software and services.

Software spending, being very small relative to the size of the economy, the report states that domestic software needs might be crowded out by overseas demand. Now, apps are also emerging in the domestic market with the move from PC-driven software to one linked to mobile phones, broadband, and smart devices creating new demand for applications.

Showing that the software industry is among the most progressive growth areas in Sri Lanka and offering high value addition by becoming the fifth largest export revenue earner in 2010 after apparel, tea, rubber, and tourism, proving the great strides taken by the industry in just over a decade, when in the 1990s Sri Lankan software companies were mainly providing sales, installation, and maintenance service related to imported proprietary software.

Increased ICT use among the youth in the last few years has also created potential demand for software applications. Computer usage having risen, internet users have also risen, creating more demand for software. The report points out that Sri Lanka has also got more opportunities in the mobile apps area where a thriving developer community is emerging with Sri Lanka being featured in 2008 among the global top 10 countries in the Google Summer of Code.

While noting that electronic payment gateways represent a bottleneck for the future growth of the Android eco system as these gateways which are operated by local banks are not set up to support entrepreneurs such as web and app developers, the report states that the software industry in Sri Lanka can continue to expand and contribute to the economic development of the country. With the diversity in terms of services and products, number of companies and export markets, the report notes that the industry is likely to see sustained growth.

Awareness raising and advocacy activities by software associations and their interaction with key government institutions are recommended to sustain the industry’s capacity and to respond to fast changing demand from export markets. In the future, it may even be possible to upgrade and diversify software-related activities by expanding the range of services offered.

The importance of the software export industry to Sri Lanka can be gauged by its benefits, some of which are elaborated in the report. It has relatively low capital barriers to entry enabling SMEs to venture into the field. It helps firms to manage their resources better, access relevant information, lower the costs of doing business and reduce time to market.

Software expertise could help develop innovative applications with tailored solutions. It provides employment opportunities, particularly for skilled youth. It generates foreign exchange, reduce trade deficits, enables transfer of technology and can accelerate the integration into global value chains and contribute to economic diversification. It is also an area for South-South cooperation.

It is indeed a matter of pride that Sri Lankans have used their intelligence, innovative capabilities, and education to achieve global recognition in the IT industry. It is up to policymakers to ensure that necessary support is given continuously and the industry kept encouraged to sustain their global success.



(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)