Sri Lanka, renowned for its rich cultural heritage and stunning natural beauty, is quickly establishing itself as a global powerhouse in the Information Technology (IT) sector. This transformation is not merely incidental but is the result of a strategic shift in focus, leveraging the nation’s distinct advantages such as progressive IT policies, a vibrant start-up ecosystem, and a highly skilled and affordable talent pool.
Fostering a Tech-Centric Economy: Government Initiatives
Recognizing the transformative potential of technology, the Sri Lankan government has been proactive in its efforts to foster a tech-centric economy. In a significant move, the President commissioned an AI task force in 2023 with the aim of bolstering the nation’s AI activity. This bold move underscores the administration’s commitment to keeping pace with global technological advancements and leveraging these to boost the country’s economic prospects.
Simultaneously, the government developed a master plan for a digital economy by 2030, along with a comprehensive regulatory policy framework. These initiatives are designed to transform the country into an inclusive digital economy, making technology accessible to all and fostering innovation across various sectors.
Nurturing the Start-up Ecosystem
The start-up ecosystem in Sri Lanka is thriving, largely due to favourable conditions that foster entrepreneurship and innovation. The country offers a start-up-friendly environment that has drawn the attention of international start-ups and investors. New economic zones are being developed to attract foreign investment, with foreign investors allowed to maintain 100% ownership of their investments. These initiatives provide a significant boost to start-ups and foster a climate of innovation.
Adding to this conducive environment is Hatch, a coworking space based in Colombo and Jaffna, which was named the best coworking space in the world at the Global Start-up Awards 2021. This accolade highlights the robust support infrastructure available to budding entrepreneurs in the country, demonstrating that start-ups in Sri Lanka can access world-class resources right at their doorstep.
Building a Skilled Talent Pool
A crucial factor behind Sri Lanka’s rise as an IT hub is its skilled talent pool. The country has undertaken numerous initiatives to strengthen its human resources. These include XpressJobs and ICTA’s initiative to improve start-up recruitment, as well as the University of Moratuwa’s open learning platform, which provides free training in full-stack development. The National Future Talent Initiative provides youth with a guided path to pursue careers in IT and business, ensuring a steady stream of skilled professionals ready to shape the digital future of Sri Lanka.
This focus on talent development is not only about equipping the youth with skills for today but also about preparing them for the technological challenges of tomorrow. This long-term investment in human capital is a strategic move that promises to yield significant dividends in the future.
Attracting Global IT Companies
The results of these concerted efforts are now evident, with large international IT companies recognizing Sri Lanka’s potential. A notable example is HCL Technologies, a leading global technology company, which recently started operations in Sri Lanka. As part of its development strategy, HCL plans to create over 1,500 new local employment opportunities within the first 18 months. This decision to use the local talent pool for global assignments signals a vote of confidence in the skills and capabilities of the Sri Lankan IT workforce.
HCL is also committed to nurturing fresh talent. The company plans to implement its Work Integrated Education Program in partnership with local ICT and engineering institutions. This program focuses on developing and training the local talent pool, offering opportunities.
Sri Lanka’s IT and start-up industry has made significant strides in recent years, and it continues to foster a favourable environment for the growth of tech start-ups. Here are some key elements that are contributing to the rise of the tech industry in Sri Lanka:
- Government Initiatives: The Sri Lankan government has made a significant commitment to support the development of the tech industry. For instance, in April 2023, the President instructed the Ministry of Technology to form an AI task force aimed at increasing the nation’s AI activity. Furthermore, a digital economy 2030 master plan and a regulatory policy framework were developed at DIGIECON 2030 to transform the country into an inclusive digital economy.
- Talent Pool: Sri Lanka has a sizable talent pool that provides international start-ups with affordable resources. There are initiatives to further strengthen this talent pool, such as XpressJobs and ICTA’s initiative to help start-ups improve their recruitment. The University of Moratuwa’s open learning platform provides free training in full-stack development, and the National Future Talent Initiative guides youth to pursue careers in IT and business.
- Start-up-Friendly Environment: Sri Lanka’s geographical proximity to the Indian subcontinent positions it as a gateway to a market of 1.3 billion people. The country is an established offshoring location and has plans for new economic zones to attract foreign investment. Importantly, foreign investors can maintain 100% ownership of their investments in Sri Lanka.
- Support for Start-ups: Sri Lanka provides dedicated support for early-stage technology entrepreneurs, including seed funding, training, networking, and business promotion opportunities both locally and internationally. The Spiralation Start-up Incubator and SPARX Lab are among the institutions offering these services. ICTA’s 10,000 Ideas Start-up Challenge is an innovation program to empower the next generation of tech entrepreneurs, and its partnership with Brandix Apparel will fund 10 selected start-ups.
- Presence of Global Tech Companies: Global tech companies like HCL Technologies have set up operations in Sri Lanka. HCL plans to create over 1,500 new local employment opportunities within the first 18 months of starting its operations. The company’s strategy includes leveraging the local talent pool of Sri Lanka for global assignments. HCL is also planning to implement its Work Integrated Education Program to foster growth by actively cooperating with local ICT and engineering institutions.
- Promising ITO and BPM Market: Sri Lanka is accelerating into an emerging destination of choice for the global Information Technology Outsourcing (ITO) and Business Process Management (BPM) market. The country is considered one of the best destinations for providing offshore services for Information Technology Enabled Services (ITEs) as well as services related to Finance and Accounting, Legal, Insurance, Banking, and Telecommunications.
It’s important to note that while Sri Lanka has made significant progress in the tech industry, it also faces challenges such as the need for further infrastructure development, creating a more inclusive and diverse tech industry, and expanding the talent pool to meet growing demand.