Your best bet, given the rising inflation in your nation, is to invest in Sri Lanka’s IT sector.
People might think it’s crazy investing (especially starting an IT firm) in Sri Lanka amid its economic crisis. Every bad thing will carry some good stuff. Let’s look at the possibilities through problems to enhance business profitability. Approaching to take business decisions during tough times is also a tough decision. These business decisions reward the best outcomes. Entrepreneurs are creative and innovative. They are inbuilt to find solutions to problems rather than complaining.
The world is moving ahead with various calamities, including Russia’s invation of Ukraine and boiling tension between US and China over Taiwan. Our future will be built with so many challenges. Therefore, we must get ready to face future challenges constructed by today’s circumstances. Hence, this is the right time to restructure your business.
In principle, I advise my clients that whether your business is small or large, it requires restructuring every five years. Business restructuring should be carried out regularly because internal and external forces might have affected your business over the past. Look at today how external environmental factors are impacting your business. The escalating inflation is the most hindering external environment impact on our business. We should not wait until Economists fix the economy in our favour or until nature takes its turn to fix it. I foresee the impact of these external environmental issues will persist for an inconsiderable time; thus, rather than being shortsighted, it’s the right time to change your business environment to match the future economic climate.
In the current world economic context, escalating costs and a shortage of skilled labour are reasons you should look for extraordinary strategies to overcome these challenges. Therefore, changing the business’s geographical location could be the best strategy. You might wonder how it can be done overnight. It does not mean that the parent company should be closed its business operations. But for example, your technical operations can be started in another country parallelly to your existing operations.
As I began writing this blog mentioning that Sri Lanka is the best location for IT start-ups, you can start your tech operation parallelly or as a fresh start-up. Let’s look at it analytically. Why should you pick this option to establish your tech operation in Sri Lanka amid its economic crisis? This economic crisis in Sri Lanka is simply a severe deficiency of forex (USD). The local currency (Rupees) is severely depreciated. Let’s take the advantage of the problems to your benefit. In this case, There are two problems; the first problem is inflation in your country might slow down business growth. On the other hand, there is another country that faces a severe forex crisis; the local currency depreciates harshly. The local currency depreciation dramatically benefits a person/company who earns/possesses forex. Let’s assume an employee’s salary is Rs 100 in Sri Lanka. The amount of USD you should bring to pay that employee’s salary would be approximately USD 0.28.
I suggest you look at critically business repositioning in Sri Lanka. You can virtually or physically relocate your administrative office, including your treasury operations. Thanks to COVID-19, many professionals in Sri Lanka got used to Work Form Home. Suppose I take the rapidly growing IT industry as a specific industry. The Board of Investment of Sri Lanka says that “the industry is adamant on compliance with global labour and environment standards. A highly skilled talent pool combined with the cost-effective operational ability (low priced real estate, wage scale and living) makes Sri Lanka’s ICT Industry one of the most profitable industries to date”.
If your concern is inflation and labour cost, Sri Lanka is the best place to operate your cost centre. Not only that, right now IT and IT-enabling services are entirely tax-free. The physical presence is not required to incorporate your company in Sri Lanka. It is fully digitalized. When you meet the right people, it might be easy to commence your business operation in an unknown country. Sri Lanka is a friendly nation with intellectuals. Its natural beauty is a treasure as well as its highly skilled labour force.
If you’re thinking of expanding your business operations to Sri Lanka, we’re happy to help you establish your company seamlessly in a matter of days.
You are welcome to Sri Lanka.
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Author: Dr Chamara Bandara
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By Team SCB Corporate