Sri Lanka - Country Commercial Guide
Telecommunications and Information Technology

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-28

Overview

Telecommunications, computer, and information services are key growth components within the services sector and delivered steady growth in 2019.  The National Export Strategy of Sri Lanka aims to generate $5 billion in revenue, creating 200,000 direct jobs and establishing 1000 Information Technology and Business Process Management (IT-BPM) startups via the IT-BPM industry by 2025.  Total credits from the ICT sector amounted to approximately $1 billion in 2020.  In 2018, the country initiated the process of adopting fifth generation (5G) technology.  U.S. software providers have been successful in selling solutions to private customers and to some public sector agencies.  Sri Lanka is building a national fiber optic network linked to numerous international cables.  This 45,000-kilometer network, built and managed by Sri Lanka Telecom, will serve as the backbone for fixed broadband and mobile services, including 5G. 

The Telecommunications Regulatory Commission (TRC) is planning the first 5G spectrum auction towards the end of 2021.  The market is now preparing to move from 4G to 5G mobile services.  Dialog Axiata and Mobitel conducted pre-commercial 5G trials during 2019, and Dialog has thus far repurposed 20 percent of its LTE antennas for 5G compatibility.

Sri Lanka’s information technology and business process outsourcing sector tripled exports and doubled the workforce in a little over five years, from 2015 to 2020.  The sector grew by 120 percent from 2015 to 2020 with current exports at over $1 billion, making it one of the highest growth areas in the economy and the fifth largest export segment.  The state-owned Information and Communication Technology Agency (ICTA) is at the forefront of driving IT and implementing programs to ensure development of IT in cities as well as rural areas.  The ICTA is involved in a five-pronged strategy of the e-Sri Lanka initiative, which encompasses building information infrastructure and an enabling environment, developing ICT human resources, modernizing government, and delivering citizen services, leveraging ICT for economic and social development, and promoting Sri Lanka as an ICT destination. 

Sri Lanka is also emerging as a global IT Business Process Outsourcing (BPO) destination of choice in several key areas.  Sri Lanka was ranked 25th among the top 50 global outsourcing destinations in 2019 by AT Kearney.  Sri Lanka’s software industry has grown significantly over the past decade.  The software services sector includes telecommunications, banking, financial services, and insurance (BFSI) and software testing.  The BPO sector includes financial & accounting services, investment research, engineering services, and UK-based legal services.  According to the World Bank, Sri Lanka has relatively low labor costs compared to other BPO destinations.  HSBC, RR Donnelley, Sysco LABS, Astron, 3SG, Hellocorp, Innodata, and WNS Global Services have set up call centers or BPO operations in Sri Lanka.  Numerous U.S. companies, many small or medium sized, are developing software in Sri Lanka.  The government seeks to further develop Sri Lanka as a base for information technology, call centers, and outsourcing.

The telecommunications sector in Sri Lanka is one of the country’s most dynamic sectors, contributing significantly, both directly and indirectly, to investment, employment, productivity, innovation, and overall economic growth.  Sri Lanka’s telecommunication market has five mobile operators serving a population of 22 million.  The telecommunications sector in Sri Lanka is responsible for substantial FDI.  Telecommunications use has been rising, and the total fixed line and mobile telephone density has increased to 142 per 100 persons led by an increase in mobile subscribers.   The mobile telephone operators dominate the sector.  The continued expansion in infrastructure has enabled telecommunication services throughout the whole country.  There is significant competition among three fixed-line operators, five mobile phone operators, and 11 Internet service providers.  The U.S. exported approximately $2.4 million of telecommunications equipment to Sri Lanka in 2020.

Sri Lanka is connected to the South East Asia-Middle East-West Europe 4 (SEA-ME-WE 4) and SEA-ME-WE 5 projects, the submarine cable systems linking South East Asia to Europe via the Indian Sub-Continent and Middle East.  The projects aim to take these regions to the forefront of global communication by significantly increasing the bandwidth and global connectivity of users along its route between Singapore and France.  SEA-ME-WE 4 fiber optic cables provide a bandwidth capacity of 4.26 terabits per second, with a 25-year guaranteed lifespan for the technology.  SEA-ME-WE 5 has an increased bandwidth capacity of 24 terabits per second.  This submarine cable system offers Sri Lanka a competitive regional bandwidth advantage and provides the opportunity for Sri Lanka to become a globally competitive business hub.  The proposed South East Asia–Middle East–Western Europe 6 project is expected to supply an additional 12 terabits per second of bandwidth capacity, bringing more capabilities to Sri Lanka’s IT sector.

Leading Sub-Sectors

Telecommunications Equipment and Infrastructure

Software

Mobile applications

Opportunities

Opportunities for digitizing the government procurement system.

There are opportunities for U.S. software and hardware vendors.

There are opportunities for software application (app) development.

There are opportunities for telecommunications equipment.

Resources

Information and Communication Technology Agency           

Sri Lanka Association for Software and Services Companies