- Around 17,000 tech graduates a year entering a market with little room to absorb them
- Youth unrest risk flagged as graduates seek US$ 1,000 monthly salaries
- Service export tax seen deterring global IT firms from scaling up
Sri Lanka is producing some 17,000 technology graduates every year without jobs to absorb them, a mismatch that risks breeding unrest among young people unless the country pivots decisively to the new economy, Standard Chartered Bank Sri Lanka Chief Executive Officer Bingumal Thewarathanthri warned.
Thewarathanthri raised the concern on a panel at the 49th Annual Meetings of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), hosted by DFCC Bank in Colombo this week. He argued that the country’s education pipeline had outpaced its capacity to create high-value jobs.
“We are expecting something like 17,000 graduates in the tech space every year and we don’t have a space to deploy them,” he told the gathering.
Left unaddressed, he cautioned, the mismatch could leave a generation of qualified young people with expectations the domestic market is ill-equipped to meet. A US$ 1,000 monthly salary translates to roughly Rs.330,000 at current exchange rates.
“You will have a huge youth unrest, depressed youngsters with a tech degree demanding a thousand-dollar salary, and we don’t have a place to deploy them,” he remarked.
However, the industry’s own data has for years pointed in the opposite direction. As per ICTA data from 2019, annual demand for IT-BPM graduates stood at 21,216, more than twice the supply of 9,076. As recently as 2023, SLASSCOM maintained that the sector required 25,000 graduate-level recruits a year. If Thewarathanthri’s estimate holds, graduate output has nearly doubled from 2019 levels. Yet employers continued to report difficulty in finding technically skilled staff in a 2024 SLASSCOM survey, which raises the question of whether the gap lies as much in skills as in numbers.
Unemployment among those aged 15 to 24 stood at 19.5 percent in 2025, five times the national rate of 3.9 percent, while the rate for those aged 25 to 29 was 10.6 percent, as per Department of Census and Statistics (DCS) data. The issue of unemployment among educated youth across Asia was also highlighted in a recent IMF article, as reported earlier by Mirror Business.
Contrasting Sri Lanka’s trajectory with those of India, China, Malaysia and Thailand, all of which he described as having done well in the new economy, Thewarathanthri argued that the growth model that carried the country thus far would not carry it further.
“The new economy is not the traditional crop exports we did, or the graphite exports we did, of course apparel, and the labor force who sent us money to buy the cars. It’s very different from what we have done so far, so what got us here will never get us there,” he observed.
Tech Industry Trends and Policy Impacts
Industry 4.0 technologies, AI, data centres and tech exports, he contended, are where Sri Lanka should direct its attention if it is to put its graduates to work.
Meanwhile, he traced part of the lost momentum to tax policy, recalling that the arrival of HCL had once signaled a wider opening for global IT firms.
“There was a huge opportunity for Sri Lanka when companies like HCL came here, and there were other companies looking at Sri Lanka. We then put a tax on it and they kind of slowed down in terms of the number of desks,” he pointed out, adding that the matter needs to be negotiated with the IMF.
The tax took effect in April 2025, when income from service exports, previously exempt, became taxable at 15 percent, half the standard corporate rate of 30 percent. HCL itself, which entered Sri Lanka in 2020, enjoys tax concessions under Strategic Development Project status. Under terms gazetted in 2022, it was expected to employ 2,424 locals by March 2026 and 5,325 by March 2032. The company currently lists around 2,000 employees at its Colombo hub, roughly 83 percent of the 2026 milestone and under two-fifths of the 2032 target.
Even so, ICT and BPM export revenue rose 8.8 percent to US$ 1,645 million in 2025, as per Export Development Board (EDB) data. It grew a further 17.63 percent year-on-year to US$ 885.42 million in the first half of 2026, though Thewarathanthri’s remarks suggest the growth has yet to translate into jobs on the scale needed.
Beyond taxation, he insisted that Sri Lanka would struggle to capture such investment without the supporting infrastructure in place.
“If you don’t bring the National Single Window for trade and things like that, on the trade treaties with China and India, we will have significant challenges capturing that opportunity,” he cautioned.
Fellow panelist and DFCC Bank Director/Chief Executive Officer Thimal Perera noted that young entrepreneurs face a parallel barrier in accessing finance. He urged banks to move from collateralized lending towards cash flow-based lending, and pointed to opportunities in fintech, agritech and pharmatech.
“If you look at a start-up today, they’ll find it impossible to walk into a bank and get a facility,” Perera stressed.
Advocata Institute Chief Executive Officer Dhananath Fernando placed the graduate problem within a broader demographic shift, estimating that around 1.8 million young people would join the labour force in the coming years. That is roughly one and a half times the 1.18 million public sector employees recorded by the DCS in the first quarter of 2026.
“There’s about 1.8 million youth joining the labor force in the next few years. 1.8 million compared to our population, that’s massive,” Fernando warned.
(By Nishel Fernando for the Daily Mirror)