For the first time, Sri Lanka has been featured in United Nations Conference on Trade And Development’s (UNCTAD) Information Economy Report – 2012 as country that has a software industry with a high export market penetration, a position shared with IT services offshoring giant, India.
The report which analyzed the software industry in developing countries, considered English language skills as a contributing factor to the success of countries such as Sri Lanka, India, Israel and the Philippines.
However UNCTAD cautioned the high focus on foreign markets could lead to crowding out the software needs of the domestic market.
For the first nine months in 2012, the software & IT made US $ 315.1 million worth export earnings against the US $ 315 million earnings for the whole of 2011. Meanwhile The Sri Lanka Association for Software and Service Companies (SLASSCOM) forecasts the industry to generate US $ 700 million in revenues by 2015.
“Many governments see export of software & IT services as a way to generate foreign exchange, reduce trade deficits, reduce job creation and transfer technology,” points out UNCTAD while urging governments to maintain the correct mix between local sales and exports as domestic use of software could be instrumental in improving the competitiveness of enterprises and the welfare of society.
According to the report, the domestic market for software & IT services is estimated to be only one sixth at US $ 48 million in 2011. Nevertheless the industry has contributed expertise and products for government projects such as eSriLanka program, the School Net project and the Nenasala program by Information and Communication Technology Agency (ICTA) with combined effort to uplift computer literacy from 16 to 20 percent among people aged 5-69 during 2006-2009.
However UNCTAD is of the view that higher level of mobile phone penetration (with the rapid growth in mobile broadband) has increased the demand for software in the country.
“Increased ICT use among the youth is also creating potential demand for software applications in Sri Lanka. In 2012, there were 1.3 million Facebook accounts in Sri Lanka. Although global websites (Facebook, Google, Youtube and Wikipedia) have the greatest number of visits, several local sites are also among the top 20 most popular ones nurturing demand for domestic software solutions.”