Prepared by Research and Policy Advocacy Department (In consultation with Sector Teams, Eng. Approvals Dept., Env. Dept. & Legal Dept.) October, 2013
Sri Lanka is fast emerging as a top off shoring destination for IT and BPO services globally. The continuous improvement of macroeconomic conditions has enabled the country to be increasingly recognized as one of the leading outsourcing hubs in the region. This has been substantiated by a Global consulting giant, A.T. Kearney's 2011 Global Services Location Index, where the country is ranked at 21 among the top 50 outsourcing destinations and Colombo was ranked among the top 10 emerging outsourcing cities by Global Service Magazine. The country has also placed at the 71 position out of 142 economies in the network readiness index in 2012. IT/ IT Enabled Services (ITES) sector is forecasted to be amongst the most massive gain sector of the country's economy with 20 percent annual growth rate, in terms of revenue. The performances of the sector are encouraging with 34% increase to USD 355 Mn in Gross inflows on account of exports of software, BPO and other ITES in 2011. The industry is considered as the fifth largest foreign exchange earner at present and it is expected to exceed USD 1 billion by 2016. IT/ITES Export Earnings
USD Mn 400 350
355
300 250 200
173
213
230
245
265
150 100 50 0 2006
2007
2008
2009
2010
2011
Source: Export Development Board, Central Bank Annual Report
The IT workforce in Sri Lanka has almost doubled from 34,000 in 2006 to 63,000 in 2011. The number of direct Information Communication Technology (ICT) job opportunities created in the coming years is also estimated to be close to 10,000 per year and Sri Lankan IT/ITES Industry will grow to a 100,000 IT jobs by 2016. Over the past three to four years Sri Lanka has been prominently recognized as an emerging outsourcing destination for key functions and
specialized services. As sited in the A.T. Kearney's Competitive Benchmarking (2012), Sri Lanka is emerging as a hidden gem for IT/Business Process Outsourcing and Knowledge Services Outsourcing. Despite the limited size of the workforce in relation to other large outsourcing players such as India, Sri Lanka possesses highly skilled professionals for niche services in IT testing, finance and accounting, with the highest number of Chartered Institute of Management Accountants (CIMA) graduates in the world outside of the UK, and legal services. Sri Lanka has 23 accredited Universities and numerous private higher education institutes offering full degree programmes in the disciplines relevant to knowledge service Industry. More than 5,500 graduates with IT related degrees and post graduate degrees are now joining the workforce each year. Further, the country produces close to 400,000 English speaking, IT Literate individuals each year. The location of Sri Lanka in terms of time differences allows it to cater to the European, Australian and the American markets. SEA-MEWE 4 project; Sri Lanka's alliance with 15 other international partners has enable the country to have better competitiveness through higher connectivity, better reliability, improved security and enhanced speed with various services being at the same level as those in developed countries. The government has taken a number of initiatives to fast track the development and expansion of the sector by providing fiscal and other incentives. Leading global IT/ITES companies have trusted Sri Lanka for its enabling business environment, qualified talent pool and economic, social and political stability. Some of the reputed IT/ITES firms operating in the industry include; HSBC, WNS Global Services, Industrial & Financial Systems (IFS), Amba Research, RR Donnelley, Virtusa, eCollege, Eurocenter, Valista, Millennium Information Technology, Innodata Isogen etc. All these factors place Sri Lanka in a prime position to establish itself as one of the top outsourcing destinations.
Knowledge Process Outsourcing:
Development Permit (Building approvals)
(if applicable)
Work Permit & Residence Visa
(Ministry of Defense and Dept. of Immigration & Emigration)
SIA: Securities Investment Account FCBU: Foreign Currency Banking Unit for details please refer infrastructure brochure Residence visa can be obtained at any stage of the process
Department of Inland Revenue
Customs Duty, VAT and PAL Exemptions on imports of capital goods (for large scale undertakings) For the importation of project related plant, machinery or equipment, the applicable Customs Duty, VAT and PAL will be deferred/ exempted during the project implementation period, and the said deferment will be treated as an exemption on the fulfillment of the conditions specified by the Board of Investment of Sri Lanka.
Registration Criteria : if turnover of a quarter is Rs. 50 Mn. or more subject to a ceiling of Rs. 30 Mn. Per quarter
(can be set off against income tax)
Telecommunication Levy
On the value of supply services
10%
Computers : Exempted Other -Export Oriented : Differ -Local Market: 12% (for large scale projects VAT will be differed during the project implementation period)
5%
For large scale projects, PAL will be differed for plant, machinery or equipment during the project implementation period
In respect of services provided through Internet /Broad Band
Sri Lanka Customs 40, Main Street Colombo 11, Sri Lanka Tel:+94 11 2445147 Fax:+94 11 2446364 E-mail:
[email protected]
Designed by Chanaka Kumanayaka (BOI Media Dept.)
Printed by Karunaratne & Sons Pvt (Ltd)
October, 2013
