Boston, MA -- (ReleaseWire) -- 04/09/2014 -- We believe the conditions are in place for Sri Lanka to be a regional outperformer over the medium term. Strong economic growth and low penetration of PCs, enterprise software and services will combine to boost spending growth as Sri Lanka catches up with other markets in the region after a long period of conflict. We forecast a CAGR of 15.5% for 2014-2018, with the market increasing to a value of LRK123bn in 2018. As well as strong domestic demand the local IT industry is also developing, with a vibrant local software and BPO industry. It is also becoming a hub for PC manufacture and assembly to service the local market and wider region. Another area where we expect strong growth is the cloud computing market, with vendors entering the market and low penetration of on-premises deployments.
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Headline Expenditure Projections
- Computer Hardware Sales: LKR46.2bn in 2014 to LKR78.3bn in 2018, CAGR of 14.2% in local currency terms. Vendors are tapping into the potential of low household PC penetration by targeting the first-time buyer and upgrade/replacement market.
- Software Sales: LKR9bn in 2014 to LKR17.3bn in 2018, CAGR of 17.9% in local currency terms. Although software piracy remains a drag on growth, investments in enterprise software are driving growth as enterprises modernise.
- IT Services Sales: LKR14.1bn in 2014 to LKR27.4bn by 2018, CAGR of 18.2% in local currency terms. IT services forecast to be the outperforming vertical with cloud computing service adoption the fastest area of growth.
Key Trends And Developments
- The cloud computing market is beginning to gain real momentum in Sri Lanka - and BMI identifies medium term potential due to low penetration of on-premises enterprise software and servers. The opportunity has attracted global vendors, for instance Amazon Web Services (AWS) - the leading global cloud hosting provider - officially launched in Sri Lanka in December 2013 with its local implementation and consulting partner Saberion. Software-as-a-Service providers have also targeted Sri Lanka, with Momento launching its pay-as-you-go ERP suite to target the vast underpenetrated SME market.
- Sri Lanka's PC manufacturing industry also has great potential. In July 2013 EWIS began production at the first facility in the country to be accredited as a Microsoft OEM partner. The 25,000ft2 plant will produce desktops, notebooks and tablets for the local market, and it is targeting sales across the region over the coming years. In addition to the EWIS plant there have also been several investments in tablet production facilities by Chinese companies as the development of the manufacturing sector accelerates.
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