In consultation with Sector Teams, Eng. Approvals Dept., Env. Dept

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:dgc@customs.gov.lk
Designed by Chanaka Kumanayaka (BOI Media Dept.)
Printed by Karunaratne & Sons Pvt (Ltd)
October, 2013