Sri Lanka is accelerating in to an emerging destination of choice for the ITO and BPO market. In the last fiscal year Sri Lanka was ranked 21st in A.T. Kearney’s Global Services Location Index (GSLI) 2011, ranking as an increasingly attractive offshoring destination. Sri Lanka’s capital city, Colombo has been recognised as a global centre of excellence for Finance and Accounting, with Global Services Magazine ranking the city in the top 20 in the world.
Sri Lanka’s per capita income is at US $ 2399, the highest in South Asia. Earnings from exports of ITO/BPO sectors have steadily escalated over the last decade. Despite the global downturn, the Sri Lankan ITO/BPO market has grown by 23% and is primed to further surge following the end of the ethnic war and the rapid development taking place in the country. Sri Lanka hit a highest ever FDI of US$ 1.07bn by December 2011 and has a target to achieve a FDI of US$ 1.75bn by 2012. Sri Lankan GDP has grown 8.2% vs annual 4-6%.
The vision of the Sri Lankan Government is for the ITO/BPO industry is to become the top revenue earner for the country by 2016, with a target of US$1bn in export revenue and direct employment to increase to 100,000 and indirect to 150,000. Today, more than 300 IT and BPO companies have operations in Sri Lanka with more than 60,000 people earning more than US$400 million in exports.
- Government support for education in Sri Lanka is very high with 5.4 percent of GDP being spent on primary education.
- The Government made 2009 the Year of English and IT in its commitment to make ITO and BPO its number one export by 2012
- Sri Lanka has approximately 10,000 state schools, 23 universities with international degrees and agreements with other universities including Monash, Curtin, Staffordshire, Manchester, University of London and Metropolitan
- Sri Lanka has a 92 percent literacy rate, the highest in South Asia and the United Nations Human Development Index
- The education system is based on old-style UK GCSE “O” and “A” levels
- Sri Lanka produces 40,000 CIMA and ACCA qualified accountants and 70% of this pool is prepared for BPO work
- Strong career guidance, training and vocational studies
- The ICT Agency of Sri Lanka (ICTA) initiative “Nenasara” mobile library for digital content for villages was launched
Excellent Language Competences
- English is the primary language of higher education, the scientific community and the commercial sector.
- All graduates are fluent in English
- Sri Lankans offer a neutral English accent
- Sri Lanka offers a rapidly growing skilled workforce. Sri Lanka’s 40,000 IT/ITES strong workforce is growing at a rate of 30% per annum
- 50,000 new accountants per annum. Colombo has the largest pool of UK certified accountants outside of the UK
- Sri Lanka produces 30,000 graduates per annum, many of whom have international exposure
- Sri Lanka enjoys a low attrition rate compared to other offshore destinations, at 6.6%
- Sri Lankans are noticeably friendly, highly productive, creative and adapt very fast to different cultures and environments. This results in easy integration to operating units of other countries
- Heavy emphasis on size of workforce and size of existing IT/BPO industry in the country is an advantage with Sri Lankans holding IT or BPO jobs has almost doubled from 34,000 in 2006 to 63,000 in 2011 according to A.T. Kearney’s Global Services Location Index (GSLI) 2011 and National ICT Workforce Survey
- Sri Lanka Software Service Companies (SLASSCOM) launched “Future Careers” with high focus on Capacity building. The platform is focused on creating awareness among youth about the benefits of selecting IT or BPO as a career path
- “e-diriya” initiative aims at providing a basic computer knowledge to underprivileged students in the country
- Sri Lanka is a highly cost competitive destination and was ranked equal 4th in terms of financial attractiveness on A.T. Kearney’s Global Services Location Index (GSLI) 2009
- Sri Lanka has little wage appreciation unlike many established global sourcing destinations such as India. With wages ranging from US$60 to 1500 per month, a recent World Bank study revealed Sri Lanka’s total cost per associate/worker can be as much as 30 percent lower than other offshoring destinations
- Sri Lanka has an open market and was the first country in South Asia to liberalize its economy.
- Sri Lanka’s business environment is favourable to outsourcing, by allowing Total Foreign
- Ownership and no restrictions on repatriation of earnings. Safety of foreign investment is guaranteed by the constitution
- Tax holidays range from 5-12 years. In addition, a concessionary rate of income tax of 15 percent (up to a maximum of 20 years) is also extended after the tax holiday period.
- The Government provides special assistance on real estate acquisition, based on investment and employment generation potential
- Grants for training and marketing
- As of April 2011, the standard corporate income tax rate is 28% down from 35%
- The Sri Lankan government is one of the biggest catalysts for driving its outsourcing growth and has publicly shown its commitment by setting the target for ITO and BPO being the country’s largest revenue earner by 2012
- The government declared 2009 the year of English and Information Technology, with the goal of improving the knowledge of English and IT in young adults and school children to ensure they have the necessary skills to meet future outsourcing industry demands
- The government also provides substantial cash grants for companies in the ITO-BPO space to support business development such as: training, consulting expertise, marketing, quality enhancements
- The President of Sri Lanka is directly supervising Industry Capacity Building Program set up to boost the country’s ICT industry
- Sri Lanka has an independent judiciary system and follows the British Commercial Law principles and practices in its legal system, giving peace of mind to UK investors and outsourcers, as well as facilitating the setup of contracts
- Sri Lanka is a signatory to international treaties on intellectual property rights such as the Berne Convention and WTO/TRIPS and adopted a comprehensive IP regime. Sri Lanka also enacted an Electronics Transactions Act, Computer Crimes Act and is a signatory to the latest UN e-contracting convention. A Data Protection Code of Practice is also under preparation
- Sri Lanka has a strong enforcement unit which ensures that all regulations are fully adhered to
- Sri Lanka is the second highest reduction worldwide in recorded software piracy over the past year
- Sri Lanka has eight telecom operators and is connected to the world with three international submarine cables providing ample redundancy. Broadband, Leased-line and Satellite connectivity are widely available
- Sri Lanka is among the first countries to establish a 4G network. The Telecom Regulatory Commission also provides special access facilities to IT and BPO companies enabling easy import of equipment
- Colombo has a well-established road network with a quality supply of power, modern office facilities and a well-developed set of support infrastructure services
- An IT park is being built over 17 acres of land at Katunayake, 18 miles north of Colombo and The Hambantota IT/BPO Park opened recently to provide 100000 employment opportunities including over 40000 seats in direct IT/BPO related jobs in the Southern Province
- An additional 110 acres have been earmarked for IT campuses at Biyagama
- Commercial grade real estate is very favourable, with rent ranging from $0.85 to $1.20 per month
Many companies from the UK and also Europe and the US have established relations with Sri Lanka, whether it be working with a Sri Lankan company in an outsourcing capacity or setting up their own operations in major Sri Lankan cities.
Sri Lanka has around 300 companies present within the IT-BPO market. Some of these include: HSBC, Aviva, Microsoft, Motorola, Industrial & Financial Systems (IFS), Amba Research, RR Donnelley, LegalBase WNS, Quattro, Virtusa, MphasiS, eCollege, Valista, Millennium Information Technology, Innodata Isogen and Stax
In the past year itself?
- Tellida started operations in Sri Lanka in 2012 with solutions that address core operational areas of Finance & Accounting and Legal and Contact Centre Domains for companies in UK, Australia and Singapore
- Pearson undertakes offshoring operations of UK publisher and education company Pearson in Sri Lanka
- Virtusa, which was named Named One of Britain’s Top Employers for Second Year in a Row, , created a virtual archive website to enable public access to historic records and images from Network Rail the owner and operator of Britain's railway infrastructure
- Colombo-based Millennium Information Technologies delivers trading, order routing, surveillance and depository solutions to many of the world's leading stock exchanges, broker-dealers, and regulators. The company is a wholly owned subsidiary of the London Stock Exchange Group
- 99X Technology with its offices in Norway, became the first-ever Software Company in Sri Lanka to win the prestigious Arch of Europe Gold Award for Quality and Technology
- RR Donnelley opened its second facility in Colombo
- Aegis Services Lanka in partnership with a leading telecom headquartered in India, moved to 228 seats
- HSBC now has a team of over 2100 growing 800 more heads from last year and started support of HSBC Securities Services’
- WSO2 positioned in the “Visionaries” Quadrant of three new Magic Quadrant reports published by Gartner supplies Open-Source enterprise service by used by eBay. Clients include BBC, BP, Fidelity Investments and Volvo
- With India’s manpower costs rising 10-20 percent per annum, Indian outsource service providers are currently looking to Sri Lanka to provide extra capabilities. Indian based companies with operations in Sri Lanka include Genpact, WIPRO, TCS, FirstSource, Aegis, MphasiS, Quattro and WNS Global Services
- MphasiS, Hewlett-Packard subsidiary, established a global delivery center in Sri Lanka in 2012 and plans to employ 2000 people by 2013
- WNS, is a global BPO leader, delivers data and multilingual voice support to a leading UK insurance company, UK government agencies and banking and finance firms
Sri Lanka is recognised as a niche centre of excellence for Finance and Accounting Outsourcing with the world’s second largest pool of UK qualified accounting professionals (only second to UK). A survey in Global Services magazine ranked Sri Lanka among the top 20 centres of excellence for FAO in the world. Leading global companies such as WNS, Amba Research, Quattro and HSBC have set up their FAO centres in Sri Lanka. Sri Lanka’s capital, Colombo, was ranked 7th among the 15 emerging global cities and recognized as the Center of Excellence for Financial and Accounting Outsourcing by Tholons, a US-based boutique outsourcing consultancy and investment firm
The growing IT-BPO industry in Colombo offers a unique advantage for Small and Medium Enterprises (SME) to enjoy premium access to Sri Lanka’s tier one talent pool. Sri Lanka has a number of joint ventures with smaller economies in Ireland, within Europe and Scandinavia with the typical company size of 50-150 employees. 75 percent of the ITO-BPO companies in Sri Lanka are SMEs and 65 percent of them are foreign direct investments. Several European SMEs have started R&D centres in Sri Lanka.
- Motorola has a R&D centre in Sri Lanka
- Malaysian Axiata owned local mobile network operator Dialog Telekom has R&D collaboration with one of the leading local universities
- Sri Lankan companies have delivered software and services to global telecom companies such as British Telecom, Singapore Mobile One, Mexico’s Telcel, Florida’s TODO1, and have won global awards from Mobile World Congress and Ericsson.
The government’s focus on the development of IT and the highly skilled workforce makes ITO one of Sri Lanka’s main areas of strength. Some examples of Sri Lanka’s work in ITO include:
- Airline system software for Emirates, Braathens and Air Arabia was developed by Sri Lankan company, John Keels Computer Service
- Leading Swedish ERP provider, IFS, has its research and development facility in Sri Lanka, employing over 700 software developers
- Nokia’s mobile phone global repair and return software and DHL’s logistic software components were developed by Sri Lankan company, e-builder
- Sri Lanka has delivered trading and depositary solutions to some of the leading stock exchanges in the world resulting in the London Stock Exchange acquiring a Sri Lankan IT company for its technology leadership in the field
- Software development/ services is expected to grow between 17% - 18% in the next three years while software product service line is expected to grow between 10% - 13% by 2014. IT services is expected to grow between 8% - 10% in the next three years and IT consulting is expected to grow between 7% - 9% Source: ICT Export Value Survey 2010 by PWC
“Sri Lanka is globally recognized as a niche centre of excellence for Finance and Accounting Outsourcing with the world’s second largest pool of UK qualified accounting professionals only second to UK. Sri Lanka also has the advantage of being in a different time zone that gives it flexibility in working hours. In selecting Sri Lanka, HSBC was satisfied that the country was able to meet its high operating and data protection standards.” Rumi Contractor, Group General Manager, Service Delivery & CEO HSBC Global Resourcing Ltd.
“The availability of top tier talent and the low cost of operations in Sri Lanka made it a logical choice for our company. We started working in Sri Lanka in 1997 recruiting just 26 graduates in the first year, since then we have grown to 635. Sri Lanka offers us a great base to expand into Asia”. Alastair Sorbie, CEO/President, IFS
“Post conflict, Sri Lanka has a lot to offer: Language skills; Accountancy and other BPO offerings; Political focus on BPO; Tax and grant opportunities for inward investment; SLASSCOM focus and investment”. Clive Longbottom, Senior Analyst, Quocirca.