Potential for IT-BPM Industry to go beyond WP

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This is the second in a four part series pertaining to Sri Lanka’s Information and Communication-Business Process Management (IT-BPM) Sector. It’s based on a joint Sri Lanka Association for Software Services Companies (SLASSCOM)-Norwegian study of this sector and was released on SLASSCOM’s website on 5 May 2022.

While the first, published last week, gave, a broad outline  of Sri Lanka’s IT-BPM sector, this, the second includes the possibility of the sector moving beyond the Western Province, the third, opportunities in the Norwegian market and the fourth, opportunities in the Nordic market as a whole, respectively.

“Given the operating flexibility in the IT BPM industry in Sri Lanka, the opportunity to broad base the growth of the industry beyond the Western Province (WP) exists,” a recent report said.

The document titled ‘Norway – Sri Lanka Tech Industry Climate for Collaboration, Sourcing and Business Report 2022’ released on the Sri Lanka Association for Software Services Companies (SLASSCOM) website on 5 May 2022, further said that a strong startup ecosystem is already evident in the Northern and Uva provinces.

 “There are a number of elements in Sri Lanka that are extremely good for AI development as well as technology companies in general. They are well ranked in South Asia among human capital skills, the quality of the workforce and the growth of new graduates,” the report quoting. Dr. NishaTalagala, CEO, Pyexda AI, said.

“We came across Sri Lanka talent folks to be well educated, that we started acquiring people who are IT as well as non-IT candidates from the local market. We do see that there is reasonably a high level of digital literacy as compared to many of the peer countries,” the document quoting Srimathi Shivashankar, Corporate VP, HCL Technologies, also said.

On the whole, SMEs contribute to 52 per cent of the island’s national GDP and account for 45 per cent of the total employment of the country, the document said.

“The IT BPM sector in Sri Lanka signifies great potential stemming from the launch of prospective techno parks across the country. The Government objective is that these cities will emerge as the next cities of growth for the sector,” it said.

Creating an inclusive startup ecosystem has been a fundamental necessity when building the technology based society envisioned in the Sri Lanka Government’s national policy, the document said. Over the years the Sri Lankan startup ecosystem continued to grow exceptionally with the support of the Government and private sector, it added.

Subsequently the startup ecosystem of Sri Lanka shows evident signs of active expansion, with almost 50 per cent of newly emerged companies stemming from areas of computer science.

Startups

In related developments, Sri Lanka’s startup economy which was valued at USD 29 million in 2018, grew by 355 per cent to USD 132 million by 2021, the report said.

It is observed that several foreign startups have been set up in Sri Lanka to facilitate their global expansion, the report said. These include Daraz, Ikman, Oyo and Carmudi, it added.

 The ability to nurture and witness growth in these startups, by making them popular among local consumers is proof of the growing popularity of Sri Lanka as a destination for foreign business leaders, the report said. The continuity in successful operations in their relevant sectors is indicative of the favourable market conditions the country has to offer for a tech-based consumer market.

The Sri Lankan tech startup ecosystem is benefiting other industries in the country including agriculture, healthcare, transport and tourism, it said.

Several Sri Lankan startups have gained international recognition and acceptance from international investors. International Finance Corporation (IFC) invested US $2.5 million in PickMe, a mobile app which is an on demand personal transport service.

As of 2019, 62 per cent of startups in Sri Lanka offered software solutions, while four per cent focused on hardware alone and 34 per cent focused on providing both, the report said.

Start Up Sri Lanka Spearheaded by SLASSCOM’s Entrepreneurship and Innovation Forum, ‘Start Up Sri Lanka’ accelerator programme primarily focuses on four key strategic developments in the Sri Lankan ecosystem:  Fostering and nurturing startups to become successful internationally, strengthening and creating a cohesive ecosystem to support the startup lifecycle, positioning Sri Lanka as a high skilled – low risk trial hub and transforming young disruptors to become successful entrepreneurs, the document said.

Further, ‘Start Up Sri Lanka’ provides a two year membership for startups whilst extending support to the Startup Sri Lanka Accelerator Programme. The programme is designed to support SLASSCOM’s programme to deliver 1000 startups by the year 2025, it said.

Microsoft Sri Lanka in collaboration with LinkedIn is doubling their efforts to re-design the workforce in the island by supporting the development of a more inclusive skills-based labour market. The duo are creating alternatives, promoting greater flexibility and accessible learning paths with a vision to enable the connection of resources and open doors to newer job opportunities, which has assisted over 30,000 Sri Lankans with access to digital skills during the COVID- 19 pandemic, it said. Meanwhile, Lanka Angel Networks (LAN) or the Angel Fund, of approximately $539,000 (Rs 100 million) worth, launched in 2020 by the Lankan Angel Network brought in investors from around the world including countries such as Canada, Dubai, Hong Kong, Qatar, UK and the USA to Sri Lanka.

Twenty per cent of investors contributing to the Angel Fund are foreign investors, the report said. The Angel Fund invested approximately $113,000 (Rs 21 million) in Niftron, a blockchain-as-a-service (BaaS) platform.

Niftron aims to simplify blockchain services, while making the service available and affordable to all levels of business. The Angel Fund shortlisted two other startups; namely, Traccular and Medica with promising potential in the IT sector, it said. As of 2022, LAN has channeled investments up to approximately $564,000 (Rs 150 million) cumulatively into four home-grown startups – Niftron, Magicbit, Mintpay and Chakra Suthra – while also helping these companies scale and access new markets both at home and abroad.

In related developments, Ford Foundation in collaboration with LAN will provide a $ 300,000 grant in a deal with the Lankan Angel Network (LAN) to boost Sri Lanka’s startup ecosystem, the report said. This was Ford Foundation’s first financing effort in Sri Lanka. LAN utilised the funds to support the ‘I AM HER’ programme to empower female entrepreneurs through the grant.  Ten startups were shortlisted for funding in 2021 under the “I AM HER” campaign. The funds will also help to launch an “angel fund” and support the annual startup competition venture engine, it said.

Meanwhile,  the Ceylon Chamber of Commerce organised The Sri Lanka Investment Forum (SLIF) 2021 highlighted that Sri Lanka aims to increase its share of venture funds to at least 0.1% of Gross Domestic production (GDP)= US$80 million for the year 2022 / 2023.

Venture Engine founded by BOV Capital provides assistance to early stage startups to find funding. The annual programme attracts investors both local and foreign, who are keen to invest in new technologies emerging from Sri Lanka.” They have continued to support over 1,000+ startups,” the report said.

Zilingo, a Singapore based fashion platform, acquired nCinga Innovations, a Sri Lankan startup software company for $15.5 million in cash and stock in 2019.

oDoc: A funding round of US$1million was at double its previous valuation and was led by existing investor Techhstars along with leading Silicon Valley venture capital firms Hustle Fund and Unpopular Ventures. Other notable investors included CherifHabib (co-founder of Dialogue, a Canadian telemedicine start-up with over $50M in Annual Recurring Revenue (ARR)), VirKashyap (co-founder of Babajob) and LPs Bill & Leonard, the document said.

Seedstars, a global pitching platform consisting of Swiss based private companies is present in “80+32” emerging ecosystems including Sri Lanka, it said.

Utech solutions is the only technology company in Sri Lanka that designs, develops, and manufactures the full IoT (Internet of Things) ecosystem including hardware and software, the report added.

New service areas to be offered by existing BPM companies in the near future including in healthcare data processing, claims processing, supply chain management, legal process outsourcing, financial planning, payroll services, global volunteer support services, compliance and facilities management, it said.

Further, Sri Lanka was ranked as the second best country for digital nomads in 2021 by Club Med, an influential French travel and tourism operator, it said.

A digital nomad is someone who lives a nomadic lifestyle and uses technology to work remotely from outside their home country, it said.

The proven track record of Sri Lanka’s continuous delivery of high quality IT outsourcing services to foreign customers is indicative of being a preferred destination for IT collaboration, the document further said.

According to the EDB, Sri Lankan ICT companies are exporting software products and services to regions such as North America, EU, Australia, East Asia, Middle East, Africa and the Nordic region. Their core competencies include automated application testing, infrastructure outsourcing, high-end Research and Development (R&D), Enterprise Resource Planning (ERP), cloud technology, mobile applications and many other business solutions.

 Sri Lanka also acts as an offshore development centre for several fortune 500 companies from USA, Ireland, UK, Australia, Sweden and joint venture development companies from Sweden, Norway, USA, Japan, etc., the report said.

Sri Lanka aims to position itself as the world’s first Green IT BPM destination. This initiative driven by SLASSCOM in partnership with the United Nations Resident Coordinator’s Office in Sri Lanka will substantiate the country’s commitment to prioritising and championing Environmental, Social & Governance (ESG) strategies across organisations in the industry, it further said.

(Next Week: Transparency, ‘must’ to Gain Norwegian Investor Confidence)

By Paneetha Ameresekere