External critical success factors for the growth of startup software development companies in Sri Lanka

Abstract

Sri Lankan software industry is still in its tender stage. It is an industry which needs minimum of investment with potentially high returns in a short period of time. Therefore, many small and medium scale software firms have been started. But only a few could grow successfully, while some were struggling to survive and others have failed. This research attempts to achieve three objectives. The first is to identify the external factors that affect the growth of infant software development companies. Secondly, we wish to identify the most significant factors. The third is to identify the relationship of firm's successes and failures on most significant factors. The focus is on software companies that develop software for the local market. Based on literature and interviews with industry experts and entrepreneurs, a list of possible factors which may affect the growth of startups was prepared. A theoretical framework was formulated and a questionnaire was prepared to collect data. The sample was selected from among the software companies started between the year 2000 and 2006 having at least one local project completed. Based on the responses and the data analysis carried out, unavailability of IT workforce, telecommunication, electricity, acknowledging the local products and tax holiday schemes were identified as the most critical for the growth of startup software firms. It is recommended to expand the IT training capacity 111 the country to produce required professional workforce. Software development centers can be setup in the vicinity of such training centers to get capable students on a part-time basis. The government can provide an encouraging ..environment with the infrastructure in place and incentives for startups.