BUSINESS PROCESS

OUTSORCING (BPO)

AS SOLUTION FOR POVERTY

OF RURAL AREAS IN

THE SRI LANKA Increase the income of rural people

Abstract BPO is the Sri Lankan 5th largest revenue earner in export sector. As everyone knows service providing sector is the most suitable category in behalf of achieving Sri Lanka the wonder of Asia in as economical giant. Therefore developing BPO sector in suburb and rural areas is must. It will give solutions for unemployment of those areas as well as lower of income of the people in those areas.

samitha.jayaweera29@gmail.com

Policy Coordination and Monitoring Division

Presidential Secretariat

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Business process outsourcing as a solution for poverty of rural areas in the Sri Lanka

Introduction

Sri Lanka is well known for its Tea, Rubber, Coconut and Tourism but in last few years

export value survey from Export Development Board indicates that the total earnings from

the KPO (ICT) and BPO industry was the 5th

largest export revenue earner. This is a positive

sign for Sri Lanka which is heading towards BPO and KPO industry boom. The main factor

affecting this growth was the civil war which has existed in the country for last 30 years, and

with the end of this war, Sri Lanka is emerging to become one of the best BPO and KPO

destination.

BPO stands for "business process outsourcing," which is simply another term for outsourcing.

This is when a company contracts an outside provider for services or business processes. This

might include manufacturing or back-office functions such as accounting and human

resources. But BPO might also include front-end services such as customer care and technical

support. Knowledge process outsourcing (KPO) is the allocation of relatively high-level tasks

to an outside organization or a different group in a different geographic location. Examples of

KPO include long-term jobs for intellectual, analytical and knowledgeable people within

industries such as research and development, financial consultancy and services, business and

technical analysis and many others.

Some examples for BPO and KPO services in Sri Lanka

Finance and accounting (General accounting, Payroll, Account receivables, Tax and

regulatory compliance, Budgeting, Cash management etc.).

IT software development.

Investment and asset management (Investment researches).

Human resources (Employee hiring, Payroll - varying from company to company,

Legal)

Procurement (Requisition and approval, Order management, Account payable).

Logistics (Product selection, Delivery, Installation, Warehouse management).

Real estate management.

Miscellaneous (energy service, customer service, mail room, food processing).

Data entry from hard copies and Image files into various computer (soft) formats.

Business data entry such as sales, purchases and human resources.

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Data entry for electronic books and websites.

Receipt and bill details entry into spreadsheets and/or computer systems.

Data entry into product catalogues.

Data entry into various mailing lists.

Converting data from one format to other formats based on client needs (e.g.: From

Microsoft Word to HTML format).

Insurance Processing.

Form Processing Services.

Current status of BPO & KPO industry in Sri Lanka

The BPO sector focus on Financial & Accounting services, Investment research, Engineering

services and UK based Legal services. Sri Lanka is emerging as a global BPO destination of

choice in number of key focus domain areas. Sri Lanka is ranked among the Top 16 Global

Outsourcing destinations by AT Kearney report 2014 and ranked among Top 20 Emerging

Cities by Global Services Magazine.

There are about 15,000 people working in the BPO industry. IT and BPO collectively is the

fifth highest foreign revenue income source for Sri Lanka, and that speaks for its vitality. The

financial and accounting services outsourcing sector has had a significant growth in Sri

Lanka. Colombo now has the world’s largest pool of UK qualified English speaking

accounting professionals outside the UK itself. Many global companies have chosen to set up

their niche centers that expertise a certain area in Sri Lanka. And also BPO industry is

contributing to the Gross Domestic Production by generating $400 million per year.

BPOs now in Sri Lanka Currently outsourcing agencies such as Industrial & Financial

Systems (IFS), HSBC, Astron, Aegis, e-Collage, Virtusa and Millennium Information

Technology, Hello Corp, Amba Research, RR Donnelley, Quattro and Timex BPO and

Finance Centers such as WNS Global Services exist in Sri Lanka. Almost all of these are

owned by large foreign parent companies.

If we take the status of the BPO and KPO industry, income wise hare is a growth in the

industry year by year. By reading below information we can understand where we are in the

industry.

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Reasons for locating in Sri Lanka

Sri Lanka’s main attraction for the BPO business is low labor costs. The finding is in line

with a recent World Bank report on off shoring to Sri Lanka (henceforth referred to as the

“World Bank report”), which suggests that Sri Lanka’s labor costs are among the lowest

when compared to other global BPO outsourcing destinations. World Bank report cites that

labor cost, per hour, in Sri Lanka (at less than USD 0.60), is lower than in Mexico (USD 1.60

‐ USD 2.10), Thailand (USD 1.10 ‐ USD 1.60), China, Philippines and India (USD 0.60 ‐

USD 1.10).

The second most important reason for selecting Sri Lanka to set up a BPO unit is the lower

costs of conducting operations.

Tax incentives is the third most common reason for locating BPOs in Sri Lanka.

Time/distance advantage due to Sri Lanka’s geographic situation is another deciding factor.

This is of importance mainly to offshore operators.

Duty exemptions on capital goods (another government incentive) is significant factor when

deciding to locate a BPO operation in Sri Lanka.

Most BPO operators do not think cultural similarity is a significant factor.

As well as these reasons, there are some more reasons for entering of BPO and KPO

companies into Sri Lanka.

The Sri Lankan economy is one of the most:

o Business Friendly in South Asia.

o Liberalized in South Asia.

Total foreign ownership of investments permitted.

Up to 12 year Tax Holidays for IT/BPO/KPO Industry.

Foreign Exch. (current a/c payments).

No restrictions.

Safety of foreign Investment guaranteed by constitution.

Double Tax Relief.

Equal treatment of foreign & local investors.

Sri Lanka has increased 04 ranks in the Doing Business Rankings of the World Bank.

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Sri Lanka is among the first south Asian countries to establish a 3G, 4G, and LTE

networks.

Country providing over 100,000 A/L qualified students per year.

Country providing over 6,000 IT qualified graduates per year.

Country providing over 40,000 graduates per year.

Country having over 200,000 human resource in accounting pool have qualified

through BCOM, ICASL, CIMA, ACCA, CMA, and AATSL.

Computer literacy of 40% in age group of 5 to 60 year old.

Sri Lanka is one of the lowest-risk emerging markets in term of personal safety and

security.

3 submarine cables with international bandwidth.

Ability of endurance, ability to understand others requirements and less

aggressiveness of the Sri Lankans when comparing to the main competitors like India,

China and Philippine.

Sri Lanka has great potential to develop the BPO industry. A.T Kearney stated that “Sri

Lanka is hidden gem for outsourcing” in 2012. But this industry most probably centralized in

Colombo. Only few areas like Kandy, Seenigama, Mahavilachchiya and Jaffna have BPO

companies apart from Colombo. In Kandy there are few companies of BPO sector. But all

other areas have one company for each area. Kandy, Galle, Kandy, Jaffna, Kurunegala,

Hambantota and Rathnapura areas have human resources which needed to develop BPO

industry. But companies do not interest to move or start new branches on those areas still

they can have advantage of low labor cost than Colombo. It shows that some areas must take

in to the account in order to develop the BPO sector as government. If government able to

provide those facilities required by the of BPO companies to start business in suburb areas, it

will be great opportunity to increase the income of rural areas and decrease the

unemployment of rural areas. Sri Lanka must focused on this industry because it generate

foreign currency without sacrificing any physical resource other than knowledge. Not only

that many industries have bad influences to the environment of Sri Lanka or bad influences in

cultural factors, but BPO will not do any damage neither culture or neither environment.

According to newspaper article, researches already have done, presentation done by some

companies and discussions done with relative industry people, there are some facts and

proposals that have to consider by the government in order to develop BPO industry in

suburb and rural areas of Sri Lanka.

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Increasing the English language skills of the people comes in to first place when we

prioritizing them. Second one is the increasing computer literacy of the people in those areas.

Developing telecommunication infrastructure of the suburb areas is also one major need in

behalf of developing BPO sector. Not only that but also increasing awareness of the people in

suburb and rural areas, especially among the youth and upcoming workforce of the Sri Lanka.

Starting mass transportation in those areas which support to work according foreign working

hours. Making human resource plan to the BPO sector with help of the BPO companies is

also an essential requirement. Because exposing that need to the general public will make

them more attract to the BPO sector jobs and develop their skills according to those

opportunities

Few Tactical and Technical Recommendations which reorganize are as follows.

Increase the English literacy

Telecasting the cartoons in English medium.

Use modern technologies to teach English such as visual programs, computer

games and activities.

Taking a policy decision that all TV channels must telecast English movies

with original medium with Sinhala subtitles other than dub them in Sinhala.

Training school teachers continuously.

Start spoken English session with practical situations for primary schools

levels

Start more English medium classes.

Start new television channel for education in English. But this channel must

conduct education programs like cartoons, films, practical sessions, and etc.

which is not make children bored.

Start to develop the computer literacy

Use the existing teachers in schools to teach IT with giving proper training.

Use existing computer labs/ “mahindodaya” labs in schools to conduct

evening and weekend IT courses as well as in school vacation courses with

help of SLASSCOM.

Start mobile computer labs service.

Start TV program which are more attractive to small children.

IT institutes which are starting branches in rural areas should provide tax

benefits as motivation.

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Develop telecommunication infrastructure

Use new express roads to develop telecommunication such as laying optic

cable line, giving high bandwidth internet to suburb areas like Kandy, Galle,

Kandy, Jaffna, Kurunegala, Hambantota, Dambulla, Negambo and

Rathnapura.

Giving high bandwidth internet access facilities to every industrial zones

which are exist as well as going to establish.

Mass transport

Gathering BPO companies in to industrial zones, because the transportations

system is already there.

Start combined transportation of public and private at least suburb areas like

Kandy, Galle, Kandy, Jaffna, Kurunegala, Hambantota, Dambulla, Negambo

and Rathnapura.

Starting 24 hours transport system at least in above mentioned suburb areas.

Lack of skillful employees for vacancies

Starting government and private institutes which conducting courses of BOP

courses.

IT lessons should start in secondary level in schools. And the lessons content

must develop the skills of students according the needs of BPO sector.

Conduct continuous training programs to IT teachers of schools with the

support of SLASSCOM which increase the awareness human resource

demand and skills needs in BPO sector.

Lack of awareness in rural areas

Include a lesson about BPO and jobs could obtain in BPO to the IT subject.

Train government field officers in BPO sector.

Standardize the computer skill levels according to job needs of BPO sector

with assist of provincial council.

Youngsters will aware about the industry

Use government visual media program with engagement PBO companies and

BPO institutes.

Inform the younger generation about upcoming human resource needs in BPO

sector by the government field officers like grama sewaka, development

officer, divi naguma officer and etc.

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Starting of BOI permitted BPO and KPO zone and facilitated the industrial zones to

start BPO companies.

Provide 1 to 1 investment grant up to 1 million USD for the first 5 companies to move

in to the designated regional center.

IT data centers should establish near to universities as motivation factor for BPO

companies. Because university student could have part time jobs as well as

boardinghouse facilities also exists already in those areas.

Government building which are not using should give to PBO companies to start new

branches in urban and semi urban areas.

Above recommendations should go through a feasibility study. Then they may implement.

But it is good have a discussion with the people who are involved in this business as well as

people who need to develop this BPO industry like,

Head of BPO companies ( Virtusa, IFS, HSBC,WSO2, Aegis, WNS, AVIVA,

Mortarola, innodata, amba research, R R Donnelley, SAKS, valista, apple, etisalat,

brandix, Sri Lankan airline, MIT and etc.),

SLASSCOM community,

Ministry of finance and planning,

Ministry of economic development,

Ministry of industry and commerce,

Higher education ministry,

Ministry of education,

Ministry of telecommunication and information technology,

Ministry of technology and research,

ICTA,

TRC,

Vice chancellors of Government University,

Director of UCSC,

Heads of private campuses,

Major IT educational institutes in Sri Lanka,

Sri Lanka telecom,

And BOI, to have good clarification in the development of BPO industry.

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BPO sector will be the best solution to increase the export revenue and decrease the

unemployment of rural areas. There for making correct decision to develop this industry will

very helpful prospective to Sri Lanka in achieving the goal “The Wonder of Asia”. Therefor

discussion with above mention organizations will more effective for making an action

plan to develop BPO sector. Plan could be present to the His Excellency the President for

further requirements. This will be the most sustainable answer for many problems in

economics of Sri Lanka. As a division having high concern in sustainable development of Sri

Lanka as well as aims and ambitions of His Excellence the President we are highly

recommending that BPO is the most appropriate method to reduce poverty in Sri Lanka.

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References

SLASSCOM Regional BPO Hubs Proposals

Sri Lanka ~ an overview of the BPO Industry by VincoConceptions

IT/BPO services – Why Sri Lanka? – Statistic presentation by John Keells Group

The Challenges of Sri Lanka Becoming an IT-BPO Destination by ICBT

http://www.e-edge.biz/Why_outsourcing_in_Sri_Lanka_is_the_best.html

http://www.lankabpoacademy.lk/

http://www.e-edge.biz/The_Rapidly_Growing_Sri_Lankan_BPO_companies.html

http://www.slasscom.lk/why-sri-lanka

http://srilankasoftwarecompany.blogspot.com

http://www.keells.com/bpo.html