Sri Lanka IT-BPO exports underreported amid policy gaps
COLOMBO, SRI LANKA — Sri Lanka’s IT and business process outsourcing (BPO) export revenue is falling short of its true potential, with a significant portion of earnings recognized abroad or misclassified as personal remittances rather than export income.
In a report from Economy Next, the discrepancy highlights structural policy challenges that could be limiting growth in one of the nation’s most promising sectors.
Offshore relocations mask true Sri Lanka IT earnings
The shortfall is partly due to firms that relocated operations abroad following Sri Lanka’s 2022 financial crisis. Some IT companies set up entities in Singapore and Dubai, invoicing clients from those locations rather than Sri Lanka.
“There is a bit of a discrepancy in what is reported by the Central Bank,” Shehani Seneviratne, Chairperson of the Sri Lanka Association of Software and Service Companies (SLASSCOM), told a forum in Colombo.
Because these companies recognize revenue in other locations, the funds do not officially register as Sri Lankan export revenue, even if they eventually enter the economy as employee salaries or remittances.
“So, they invoice and recognize revenue in other locations so that revenue doesn’t actually come into Sri Lanka,” Seneviratne said, underscoring how official statistics underrepresent the sector’s true earnings.
Policy and forex constraints stifle Sri Lanka IT-BPO growth
Over the past two years, the gap has been additionally compounded by an expanding community of freelancers.
Seneviratne attributed the discrepancy to “certain foreign exchange issues and policy constraints.”
Unlike hubs such as Dubai and Singapore, Sri Lanka does not maintain an open Capital and Financial account, a restriction dating back nearly 70 years.
This limitation, combined with periodic exchange controls and profit repatriation restrictions, has created obstacles for global IT and BPO firms operating in the country.
Despite these challenges, the sector continues to show promise. Official data from the Export Development Board reports that information and communications technology (ICT) and business process management (BPM) export revenue grew 8.8% in 2025 to US$1,645 million.
Yet Seneviratne believes the actual potential is far higher.
“The IT BPM industry I think has a lot of potential, especially because it’s one of the most value-added industries, because the only input is the talent and probably the laptops, the hardware that we use,” she said.
The IT and BPO sector of Sri Lanka can experience significant expansion through the combination of policy barrier elimination and foreign exchange procedure enhancement.
With minimal input requirements beyond skilled talent and technology, the industry is poised to become a key driver of export earnings, foreign investment, and high-value employment in the country, while also positioning Sri Lanka as a competitive player in the global IT-BPO market.
