Sri Lanka is one of the fastest growing IT markets in the region although 9 out of 10 software packages in use are pirated and the country ranks low in terms of risk/rewards ratings.
"Sri Lankan IT market growth is expected to moderate in 2013, as the Sri Lankan Central Bank hits the brakes on an overheating economy, which through the rising cost of credit could have an impact on IT investment," Business Monitor International (BMI), a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 175 countries and 22 industry sectors in a special report on Sri Lanka’s IT industry.
"Sri Lankan IT market growth is now forecast at 10 percent in 2013, but a projected 2013-2017 CAGR of 12 percent makes Sri Lanka one of the fastest growing markets in the region, albeit from a low base. The IT market has considerable latent potential and the restoration of peace and improvements in security have helped to release enterprise demand for IT solutions as companies look to boost efficiency," BMI said.
"Headline expenditure projections computer hardware sales: US$296mn in 2012 to US$321mn in 2013, +8 percent in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors, but as basic infrastructure improves in areas outside Colombo, there is potential for strong growth in the north and east.
"Software sales: US$54mn in 2012 to US$61mn in 2013, +8 percent in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors, one restraint being the high level of software piracy, with nine out of 10 packages in use believed to be unlicensed.
"IT services sales: US$85mn in 2012 to US$95mn in 2013, +12 percent in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and analyst adjustment ; with the government, finance and telecoms sectors accounting for at least half of the total services spend.
"Risk/Reward Ratings: Sri Lanka’s score was 27.7 out of 100.0. The country ranked last place in our Asia region RRR table and had the lowest or joint lowest score in each ratings category, including IT market and country risk. Despite this, the country’s status as a frontier market with high growth potential should see it rise up the rankings over time," BMI said.