brand logo

Pandemic Information Technology: One sector, two fortunes

01 Sep 2021

  • Intervention by Govt., financial institutions recommended to reach targets
BY Sumudu Chamara  The Covid-19 pandemic is no longer a mere health issue, as it has severely affected almost all aspects of people’s day-to-day lives and businesses. Ridding the world of the pandemic, therefore, has now been identified as a collective endeavour, as opposed to the notion that health experts should take the sole responsibility of doing so. The Government has stated it paid attention to balancing the different aspects of the pandemic’s impacts, including economic impacts, and hence the relaxation of restrictions for business activities. While the impact on some industries has been obvious, the world is beginning to understand how some industries are facing the pandemic as well. Sri Lanka’s information technology (IT) industry is one such industry that experienced a diverse combination of impacts due to the pandemic. According to those who spoke with The Morning, even though some IT-related businesses and companies obtaining IT-related services are going through a difficult time, certain IT-related businesses have in fact benefitted from the environment that was created by the pandemic. According to some industry experts, the information and communications technology (ICT) and business process management (BPM) sector is the fifth highest foreign revenue generator. Even though in 2016 the industry had aimed for an annual revenue of $ 5 billion by 2022, that target had to be revised in 2020 to an annual revenue of $ 3 billion by 2025. However, the pandemic has now affected these goals, according to industry experts. Impact of Covid-19 Information and Communications Technology Association (ICTA) Chief Digital Economy Officer Anura De Alwis said the pandemic has actually helped certain IT-related businesses to grow, and that industries such as IT-related education service providers, financial and banking services, and also IT-related health services have grown exponentially. According to him, the telecommunications industry, among several other industries, has grown rapidly, and some such companies have claimed to have achieved a 40% growth after the pandemic broke out. Adding that the pandemic has helped these industries grow during the pandemic period, he said the reason is that more people are starting to use online services as opposed to offline services that were more prevalent before the pandemic. “As a whole, the impact on the IT industry is not limited to Sri Lanka, and globally, the pandemic has definitely impacted the industry. However, we need to understand that when it comes to the IT industry, there are a lot of different industries coming under the umbrella of the IT industry. Among them are IT-related businesses connected to airlines, hotels and restaurants, telecommunications-related industries, education, health, and agriculture. The use of IT technology has really grown in the last one-and-a-half years, and it is, therefore, a mixed bag,” he added. He noted that the growth of said IT-related businesses has created a lot of opportunities as well. De Alwis noted: “The said decline in the IT industry affected only certain industries. When it comes to IT-related aspects of industries like restaurants and hotels, which depend on customers, they are definitely impacted. However, I believe the overall decline can be managed through the industries that are growing. Essentially, we can make use of the growth in some industries coming under the IT industry. However, in terms of what is preventing us from generating more revenue and bringing foreign direct investment (FDI), I think we have to have improved mechanisms of engaging with investors, who are working very hard. “Also, another problem I would like to point out is the need to vaccinate IT industry employees. Even though a lot of employees can work remotely, vaccination is a must for the industry to continue to generate export revenue and also to ensure the continuous growth of the industry and workforce in order to support the rising global demand. However, when it comes to IT-related businesses like electronic learning (also e-education), since a lot of universities are closed, resulting in increased e-learning demands, we have to look at more ways to generate our workforce.” According to Sanjiva Weerawarana, Chief Executive Officer (CEO) of WSO2, a leading IT-related service provider, the pandemic has accelerated the digitalisation of businesses on a global scale, and it has not had any negative impact on the industry. He added that in a context where businesses have realised that the world has to move on despite the pandemic and do businesses digitally, the IT industry can help those industries that are willing to transform and that one of the ways to overcome the pandemic is going digital. He said that one of the best examples of IT-related businesses that was not affected but rather boomed during the pandemic is the communication software and app “Zoom”. “Zoom was around before the pandemic, and in the recent past, it experienced massive growth, very quickly. Zoom would have reached the level it is at today eventually; however, not at the speed that was reported recently,” he explained. Meanwhile, Association of IT Professionals (AITP) Chairman Eng. Kapila Renuka Perera also expressed similar opinions about certain IT-related businesses experiencing more severe impacts due to the pandemic. He noted that the impact of the pandemic on the IT industry should be understood at the global level, and that clients have started spending less. He added that this has in turn resulted in even larger companies cutting down on their expenses. He noted that the software industry, however, has been thriving during the pandemic, as more clients started using software to continue their work during the pandemic. “As far as Sri Lanka’s situation is concerned, Sri Lanka had considerable infrastructure to work remotely during the pandemic,” he said, adding that in 2020, around 800,000 new internet connections were obtained by internet users. He added that the state of access to the internet, however, is not the same in all parts of the country. Perera said the sudden increase in internet use and work from home concepts was already taking place, even though the pandemic expedited it. Long-term effects and solutions The experts shed some light on the long-term changes the pandemic is likely to cause as far as the IT industry is concerned. Weerawarana noted that according to certain studies, before the pandemic, only 20% of the workforce had claimed that working remotely is possible. However, now, 80% of them claim that it is possible. Also, there are companies that recruit people from Sri Lanka to work for international companies, which again involves working from home or remote working environments. In this context, he added that one of the long-term changes the IT industry is facing is more people tending to work from home or remote areas. He said this situation will also lead to more foreign and international companies to compete with local companies to hire people from Sri Lanka, and that it is going to be a huge change. “So, I think that there are certain changes that are going to come out of this pandemic situation, which are mostly related to the work environments. What was considered not possible before is now considered perfectly normal, and this will have a significant impact on the industry. As far as the clients’ side is concerned, we now have people who were not familiar with online services before now tending to use online services. Our grandparents and parents have started buying things online, and this trend among them was not there before. They had no choice due to the pandemic, and they have somehow figured it out. Such developments are going to accelerate all aspects of e-commerce, as all such transactions are digital. Such practices are going to continue and attract more attention.” Speaking of the long-term changes, De Alwis reiterated that the pandemic is more likely to affect certain IT-related businesses, not all industries, and that those industries will take a certain limited time to recover. “Some industries had a slow growth during this period, and a decline can clearly be seen in IT-related businesses related to airlines, restaurants, and hotels. But at the same time, there are opportunities in other related industries such as telecommunications, education, and health. We need to find a way to shift our workforce and focus more on industries that are rapidly growing.” He noted that secondly, Sri Lanka needs to look at gaining access to new markets, and that relevant interventions from various parties is necessary to achieve that. “We need to find more business opportunities and interventions to find new markets. This is a golden opportunity for investors. New companies we call small and medium-scale companies, or start-ups or scale-ups, also bring forward products that can be sold internationally. So, in a nutshell, there is a decline in certain IT-related businesses. But if we can shift our focus to the industries that are growing, and create opportunities for them, it is going to be a huge opportunity for the country to grow and prosper and access new markets.” Meanwhile, Perera added that even though the overall global IT industry is booming, due to the pandemic, Sri Lanka’s IT industry has had to face certain issues, especially when obtaining imported equipment due to foreign exchange-related matters. He noted that this has placed the IT industry in a very difficult situation, as most of the equipment they require has to be imported. Support Almost all industries that were affected by the pandemic have in the recent past pointed out the importance of the Government and financial institutions as well as investors extending their support to revive the businesses. The experts The Morning spoke to also expressed similar sentiments and said that financial support for IT-related businesses that were affected by the pandemic would help the revival of those industries. Speaking in this regard, De Alwis said: “One of the main concerns we hear from local industries is working capital requirement, particularly for midsized to small-sized businesses. That is one thing the industry really requires. Some of the start-ups and scale-ups require financial support to go to their next stage of growth. In addition, the ICTA, the Board of Investment (BOI), the Export Development Board (EDB), and industry bodies working together to create market access for our industry is important, and those are the ways the Government and the industry bodies can support local industries to grow during the pandemic. We need to get a lot of support from financial institutions; there is, therefore, a need to look at better funding opportunities, and financial institutions need to be friendlier with start-ups and scale-ups in order to support the latter’s growth.” He also underscored the importance of vaccinating those in the IT industry, in a context where most of them are young people, adding: “Everyone has to get vaccinated, because the industry is relatively a young industry in Sri Lanka. You would be surprised that a majority of the people working in the IT industry are below 30 years.” Meanwhile, Weerawarana added that the IT industry is a broad industry, and that even though certain companies were not affected due to the pandemic, there are a lot of companies connected to the IT industry who might need external assistance to get back on their feet. Weerawarana said: “Some of the companies were affected during the first year of the pandemic; but, from 2021 onwards, the impact was not as intense. However, there are other aspects of the IT industry which involve people who bring and sell equipment and provide various services for companies, and a lot of them would be negatively affected. So the part of the IT industry that is focused on the Sri Lankan market definitely has had a significant negative impact. Some people who provide various services, including IT services, are getting zero income. Companies that are focused on the Sri Lankan market are going through multiple economic challenges at the moment. However, we cannot lose those companies, and we need those companies to continue to be able to provide services. “I am of the opinion that those companies will need some assistance to stay around and to be able to keep doing what they are doing; otherwise, we will have a situation where all of our best capabilities are sold outside the country. That will retard our entire economy, because we will not be able to go digital as far as the economy is concerned because we will not have the capability it requires. Those companies selling their services or products outside the country is a viable move aimed at survival. But we cannot ignore the fact that we need the companies who work in the Sri Lankan market as well. I don’t have a quick fix answer for that, and it is certainly not easy. I think that the Government has a role in providing some assistance to these companies.” As industry experts pointed out, even though some IT-related businesses have in fact benefitted from the increased use of online services among the people and businesses, some are hanging by a thread. The worrying fact is that these affected businesses have the potential to affect unaffected businesses in the long run, especially due to Sri Lanka being a country that imports equipment necessary for the IT industry. This is another industry that requires the Government’s support, as it is an industry with a huge potential which was booming before the pandemic, and necessary steps have to therefore be taken before it is too late.

Kapruka

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!


More News..