Sri Lanka IT-BPO Sector Enters Post-Crisis Pay Reset

Sri Lanka’s technology services industry spanning information technology (IT), business process management (BPM), and tech-enabled services is moving into a phase of salary normalisation after several years of crisis-driven wage escalation. According to the SLASSCOM Compensation and Benefits Survey Report 2025, companies are gradually stepping away from emergency-era pay hikes and refocusing remuneration policies on productivity, skills, and performance.

The survey, which covers a broad cross-section of IT and BPM firms, indicates that incremental salary budgets are stabilising at more sustainable levels. This marks a shift from the aggressive compensation adjustments seen during the economic crisis, when firms struggled to retain talent amid currency depreciation, high inflation, and large-scale labour migration.

While demand for specialised digital skills remains intense, employers are increasingly selective, rewarding high-impact roles rather than across-the-board increases.

This recalibration is taking place against a challenging global economic backdrop. Between July 2019 and September 2025, the US Consumer Price Index for All Urban Consumers (CPI-U) climbed from 255.21 to 324.36 points an increase of roughly 27 percent. Inflationary pressures surged particularly in 2021 and 2022 following sharp interest rate cuts under the US Federal Reserve’s floor system.

 Rising inflation has since become a politically and socially sensitive issue in the United States, coinciding with growing economic nationalism, tighter immigration policies, and increased import tariffs.

Global inflation has had cascading effects on public finances worldwide. High and volatile cost environments have complicated budgeting processes, turning long-term projects into fiscal risks as costs continuously outpace original estimates. Economists note that in earlier low-inflation eras, fiscal deficits could often be corrected through modest tax adjustments.

In contrast, sustained inflation now forces governments to rely on complex statistical modelling as expenditures chase rising revenues.

Sri Lanka has not been immune to these dynamics. Persistent currency depreciation since the early 1980s has undermined fiscal stability, particularly as global inflation cycles diverged from domestic monetary conditions. These structural vulnerabilities have indirectly shaped the operating environment for export-oriented sectors such as IT-BPO.

Despite these pressures, the sector remains one of Sri Lanka’s most resilient foreign exchange earners. Computer and IT/BPO-related services exports reached US$671.6 million in the first ten months of 2025, according to the Central Bank of Sri Lanka, though this represented a 3.8 percent decline compared to the same period in 2024. For the full year 2024, export earnings stood at US$848 million, reflecting a 6.7 percent annual increase.

Industry analysts say the current wage normalisation reflects a maturing sector adjusting to global cost realities rather than a contraction. Firms are prioritising efficiency, automation, and value-added services, signalling a strategic shift aimed at preserving competitiveness while navigating tighter global margins.