Everything you need to know about IT Outsourcing to Sri Lanka

The Hidden Secrets of IT Outsourcing to Sri Lanka

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IT Outsourcing, or Software Outsourcing as it is sometimes known, is the practice of hiring a third-party IT company to do your software development work or other IT tasks on behalf of your company. Shopping for an IT outsourcing company to partner with as can be just the same as shopping in any supermarket or techno mall. You need to consider budget, features offered, discounts, reputation of the brand, etc. As such offshore IT outsourcing, which involves outsourcing in a country far from your own, often offers the best advantages for the most competitive price.

What is Offshore Software Development?

Offshore Software Development is the method of outsourcing software development projects cross-border to distant countries with high IT expertise and low living costs. The target is to access a bigger pool of talent than is usually accessible at very cost-effective rates.

Most would have heard of India as a giant in IT Outsourcing, but IT outsourcing to Sri Lanka isn’t as well known. However, the truth remains that many large organizations that are well-known use Sri Lanka for their offshore IT outsourcing solutions.

Sri Lanka is somewhat of a hidden persona in the global landscape of IT Outsourcing as many of its clients are large on a global scale, even while the smaller and medium clients remain in the open. What this means is that these major clients are very secretive about their outsourcing operations to prevent data breaches. As such, despite offshore IT Outsourcing companies in Sri Lanka contracting with global giants to offer top-quality services, they remain hidden in the shadows of ironclad Non-Disclosure Agreements. In addition, a number of large international billion-dollar IT companies have their tech hubs in Sri Lanka, and state they never regret the decision they made to choose the island nation.

But why would these companies choose Sri Lanka for offshore software development? The biggest reasons are cost-effectiveness and high data security. However, there are other factors that are unique to the Sri Lankan IT talent pool which is not visible to analytics: such as the right culture, access to education, progressiveness to change, the enthusiasm and ambition to learn and succeed in technology, and most importantly, something that can make or break a project – the resilience to adversity. It can be understood that it is definitely within reason that Outsourcing to Sri Lanka is a popular option for many major corporates, having so many known and unknown advantages to offer.

Here are the most important analytical advantages which is why Software Outsourcing to Sri Lanka is an attractive opportunity.

1.Top Cost to Quality Ratio

“According to the World Bank, Sri Lanka has relatively low labor costs compared to other BPO destinations” - Sri Lanka - Country Commercial Guide Official Website of the International Trade Administration, USA

While many countries offer low-cost software development, Sri Lanka offers one of the best cost-to-quality ratios by offering quality IT solutions - even for Global Standards. With living costs being comparatively low IT Outsourcing to Sri Lanka can be a very lucrative option for businesses regardless of size.

2. Legal Support from the Government

The Sri Lankan government is fully supportive of secure software development as this brings in much foreign income to the country. As of 2022 Sri Lanka implemented a comprehensive legal framework for privacy and data security to support outsourcing to Sri Lanka, becoming the first country in Asia to do so. The Personal Data Protection Act, No. 9 of 2022 applies to the processing of personal data where the processing of personal data takes place wholly or partly within Sri Lanka or where the processing of personal data is carried out by a controller or processor who is incorporated or established under any written law of Sri Lanka and ensures that personal data is processed only for specified; explicit; and legitimate purposes and such personal data shall not be further processed in a manner which is incompatible with such purposes.

3. Growing Software Industry in Sri Lanka

Offshore software development in Sri Lanka is a growing industry in Sri Lanka with the government aiming to make it the number one foreign exchange earner of the country as part of Vision 2025. They target US$ 5 billion in annual revenue from the ICT industry, with 200,000 additional direct jobs and 1,000 new start-ups by the year of 2025. As it is currently, ICT exports have reported a growth rate of 13% as at 2019 with revenue over US$ 1 billion. Numerous U.S. companies, many small or medium sized, are developing software in Sri Lanka. By the year of 2024 it is believed that the country will enter another wave of digital transformation, with 750 tech companies, 1,000 IT start-ups, and 500 other technology-related start-ups. The Ministry of Technology in Sri Lanka estimates that this expansion will boost export revenue from ICT to $3 billion.

4. Highly Educated and Experienced Full-Time Developers

Sri Lanka is ranked number one in UNDP's human development index in South Asia and number one for the most affordable talent in the Asia Pacific Region. With Sri Lanka's current IT literacy rate and literacy rate being around 93% as at 2023, the number of experts in the IT industry continue to grow with over 113,000 IT professionals as at 2019. The talent pool in Sri Lanka almost solely consists of experienced college educated full-time developers, unlike other countries using temporary hires from bootcamps, who while having surface level programming skills (and possibly v high technical skills) lack in-depth knowledge. Notably the Google Summer of Code ranked the premier Sri Lankan technology university, University of Moratuwa for nine consecutive years, in its list of institutions contributing the greatest number of successful developers for the challenge.

5. Social Engineering and Data Security

Companies in Sri Lanka understand the importance of Data Security. The chances of hires being temporary hires who are freelancers and/or technical trainees with no experience or reputation from bootcamps are extremely low. Software development companies in Sri Lanka are more stringent in properly vetting their hires and ensuring they work on secure devices in a good working environment to prevent social engineering.

Sri Lankan laws support this and state that “every controller shall ensure integrity and confidentiality of personal data that is being processed, by using appropriate technical and organizational measures including encryption, pseudonymization, anonymization or access controls or such other measures as may be prescribed so as to prevent the – (a) unauthorized or unlawful processing of personal data; and/or (b) loss, destruction or damage of personal data”. Else penalties shall be imposed depending on “the nature, gravity and duration of the contravention taking into account the nature, scope or purpose of the processing concerned as well as the number of data subjects affected and the level of damage suffered by them”. (Source: PERSONAL DATA PROTECTION ACT, No. 9 OF 2022, PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA,)

6. Faster Internet and Telecommunications

The country has a 95% 4G connectivity which is only continuing to increase, while there was a mobile penetration of 165.5% as at 2023. According to the Digital Report of Sri Lanka(Source)Internet penetration was at 66.7% as at Jan 2023 with 14.58 million users within the country, while there were 7.2 million (32.9%) social media users in 2023. Meanwhile, the ongoing South East Asia–Middle East–Western Europe 6 (SEA-ME-WE 6) project laying out a new submarine cable system is expected to supply an additional 12 TB/s of bandwidth capacity, bringing more capabilities to Sri Lanka’s IT sector. The ICT market of Sri Lanka is preparing to move from 4G to 5G soon. Two main telecommunications service providers in Sri Lanka have already tested 5G services in 2019 and 2022 becoming the first country to trial 5G in South Asia, in addition to being the first country to have launched a 4G-LTE network commercially.

7. Sri Lanka is the Perfect IT Outsourcing Destination

Sri Lanka was awarded the ‘Destination of the Year’ title in the Global Sourcing Association’s ‘Strategic Sourcing Awards (2019).Sri Lanka IT/BPM: State of the Industry 2019/20, SLASSCOM,The same year, the country was ranked among the Top 25 among the top 50 global outsourcing destinations as listed by A.T Kearney. In 2021, Sri Lanka was ranked as a leader in Kearney’s research report on the Global Services Location Index (GSLI) being in the Top 25 for ‘Digital-centric Scenario’ category, for which digital resonance is key, while being listed 22nd out of the Top 60 for the location assessment for being a Digital Hub.

According to the US Department of Commerce, Sri Lanka is emerging as a “global IT Business Process Outsourcing (IT BPO) destination of choice” in many key areas, including Software Testing, Telecommunications Equipment and Infrastructure, Software Development and Mobile application development.Sri Lanka - Country Commercial Guide Official Website of the International Trade Administration, USA

So, what are you waiting for? The ultimate experience in innovation, efficiency, and quality awaits you as you IT Outsource to Sri Lanka. We, at Era Biz, embody all the best qualities of outsourcing to Sri Lanka. We understand that handing over responsibility to outsourcing can be a daunting prospect. We are here to support you through the process and provide you with full confidence. Book your free consultation with Era Biz right away for your IT project!