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Sri Lanka Information Technology Report Q1 2013
Business Monitor International, December 2012, Pages: 63
BMI View: BMI expects Sri Lankan IT market growth to moderate in 2013, as the Sri Lankan Central Bank is poised to hit the brakes on an overheating economy, which through the rising cost of credit could have an impact on IT investment. Sri Lankan IT market growth is now forecast at 10% in 2013, but a projected 2013-2017 CAGR of 12% 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.
Headline Expenditure Projections
Computer hardware sales: US$296mn in 2012 to US$321mn in 2013, +8% 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% 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% 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.
Key Trends & Developments
- The government is supportive of initiatives to increase PC penetration in rural areas. As basic infrastructure improves in areas outside Colombo, there is the potential for strong growth in the north and east. The development of better credit availability from banks and other financial institutions, as well as from vendors and retailers, will play a part in market growth. In 2012, the education ministry announced a pilot programme to issue laptops to every student in 13 primary schools selected to represent the whole country.
- Computerisation has only just started in many areas of government and the Inland Revenue Department, for example, is required to be fully automated by 2013. Growth in IT spending will be stimulated by the ongoing modernisation of Sri Lanka's banking sector, which should provide opportunities for IT vendors. The tourism industry is also projected to grow rapidly and technology is a key part of plans to assist the sector to improve efficiency and cope with increasing demand. Liberalisation and more competition in the telecoms sector should have a multiplier effect with regard to demand for IT.
- In H212, the Sri Lanka Government Information Infrastructure (LGII) launched what it said was Sri Lanka's first-ever cloud computing platform, the 'Lanka Cloud'. The platform will allow any government organisation to put up their data on it so that it is easily accessible to other government organisations and the public. According to LGII, over 50% of government eresources are currently under-utilised, and so the cloud will enable processes to be streamlined and made more efficient. Services such as revenue licensing and the police will be available to the public via the cloud.
Executive Summary 5
SWOT Analysis 7
Sri Lanka IT Sector SWOT 7
Sri Lanka Political SWOT 8
Sri Lanka Economic SWOT 9
Sri Lanka Business Environment SWOT 10
Asia Pacific IT Risk/Reward Ratings 11
Table: Asia Pacific IT Risk/Reward Ratings, Q113 14
Asia Pacific IT Markets Overview 15
IT Penetration 15
IT Growth and Drivers 17
Sectors And Verticals 19
Market Overview 23
Government Authority 23
End-User Analysis 31
Industry Developments 32
Industry Forecast 37
Table: Sri Lanka IT Sector - Historical Data & Forecasts, 2010-2017 40
Industry Forecast Internet 41
Table: Sri Lanka Telecoms Sector - Internet - Historical Data And Forecasts, 2009-2016 41
Competitive Landscape 43
IT Services 48
Dialog Telekom 50
Macroeconomic Forecast 53
Table: Sri Lanka - Economic Activity, 2011-2016 53
Company Profiles 54
Country Snapshot 55
Table: Sri Lanka's Population By Age Group, 1990-2020 ('000) 56
Table: Sri Lanka's Population By Age Group, 1990-2020 (% of total) 57
Table: Sri Lanka's Key Population Ratios, 1990-2020 58
Table: Sri Lanka's Rural And Urban Population, 1990-2020 58
BMI Methodology 59
How We Generate Our Industry Forecasts 59
IT Industry 59
IT Ratings – Methodology 60
Table: IT Business Environment Indicators 61
Table: Weighting Of Components 62