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Local IT industry battles  mass mid-level migration 

27 Oct 2022

 
  • Industry says taxes fuel migration for better economic conditions
  • Cybersecurity advisor Asela Waidyalankara says rate higher than before
  • SLASSCOM to meet Finance Ministry to seek relief
  • FITIS warns industry might have problems in the long run
  By Imesh Ranasinghe  Sri Lanka’s Information Technology (IT) sector is battling heavy labour migration in its middle management, and the sector’s apex bodies are trying to reach some consensus with the Government over taxes to avoid problems in the long run, sector leaders revealed. Speaking to The Morning Business, cybersecurity advisor Asela Waidyalankara said that the rate at which people in the IT industry are leaving the country is quite high in comparison to the past few years. He said most of his staff have said that there are a lot of opportunities for them abroad and they are worried about the economic conditions and how quickly the country will recover. In Sri Lanka, he said that IT sector employees in the middle management level have started to leave the country, starting from senior developers, the level at which the most experienced employees work in an IT company. Due to this, he noted that most of the companies have problems with replacing their employees, as in some cases, their replacements also leave, while even the junior-level employees have also started to leave the country. “This basically means the A, B, and C teams are leaving companies,” he added. For example, when looking at one of the job sites in Sri Lanka such as topjobs.lk, you could find about 300 vacancies posted in the past week alone for middle management job opportunities from senior developers, senior software engineers, and others. The IT sector has set a target to earn $ 5 billion annually, up from its current level of $ 1 billion in export revenue, by 2025. Sri Lanka Association for Software Services Companies (SLASSCOM) Chairman Ashique Ali said that they are planning on meeting the Ministry of Finance to see whether the Government has any room to accommodate any changes, as, he said: “From what we hear, the taxes are already a done deal.” The increase in Personal Income Tax to 36% has been the main reason for the labour migration as export IT companies are still exempt from the corporate tax, while only IT companies catering to the local market are subject to a 30% tax rate. Ali said that SLASSCOM is trying to see if individuals can get deductibles for the Personal Income Tax rate, which is the biggest concern for the employees leaving the country. “We are seeing whether we can get deductibles which can reduce the tax burden on individuals, especially with regard to a Car, property or education loan that the individuals may be repaying,” he said. He added that if these loans could be deducted from the PIT to have a net tax rate, it could be a retention factor as employees are leaving abroad as they want to own a home, or vehicle or further their education. Moreover, speaking to us, Dr Prasad Samarasinghe, Chairman of the Federation of Information Technology Industry Sri Lanka (FITIS) said that the requirement of the IT sector in Sri Lanka before the huge labour migration was 250,000 but the availability was 170,000 where 50,000 is for local business and the rest for exports. He said that the annual requirement was about 20,000 and about 11,000-12,000 graduates are recruited annually, “but the current setup is worsening the story as a whole,” he added.  Dr Samarasinghe noted that the only solution is to start creating more resources and allow a conversion programme where degree holders of other fields are permitted to enter the IT sector after a rapid course of about 6-12 months. However, he said that the employers cannot stop all the employees from leaving the country due to the situation in the country.  Moreover, he said that, unlike other industries, the IT industry needs quality people otherwise there will be problems with the end products. “The current tax and the setup are not encouraging that (quality end products)  at all and the industry might have problems in the long run,” he added.  


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