Kal's World: BPO/IT industry in Sri Lanka

It's important to have a good understanding about the industry one is in; specially when the industry is highly dynamic. It helps to plan your next career move and also helps you to prevent being at loss of words when engaged in a conversation with an industry pundit :)

IT industry in a developing Asian country like Sri Lanka thrives mainly due to outsourcing.

Outsourcing is the delegation of work from an organization/company to a service provider company, where the service provider company typically carries out the same work cheaper and more effectively than the company which is outsourcing. Companies outsource work primarily to gain cost advantages, efficiencies and expertise.

BPO : Business Process Outsourcing
KPO : Knowledge Process Outsourcing
FAO : Financial and Accounting Outsourcing
ITO : Information Technology Outsourcing
HRO : Human Resources Outsourcing
LPO : Legal process outsourcing
DPO : Document Process Outsourcing
ESO : Educational Services Outsourcing

Business Process Outsourcing (BPO) is the act of transferring some of an organization's repeated business processes to an outside service provider to achieve cost reductions while improving service quality. The Higher end BPOs, also called KPOs (Knowledge Process Outsourcing) generally requires a specialized skills. For example, accounting and finance, investment research and engineering.

With a population of only 20 million, Sri Lanka does not offer the size advantages of countries such as China, India, and the Philippines. However, recognizing its small scale, Sri Lanka has tended to focus on higher-value niche products across industries

BPO is a fast growing vibrant sector of employment in Sri Lanka. Many global and local BPO companies have operations in Sri Lanka. WNS, TimeX BPO, Office Tiger, HSBC Data Processing Limited, Amba Research, Aviva are few of the leading companies. The first IT and BPO companies established operations in Sri Lanka as far back as the 1980s. Today, more than 300 IT and BPO companies have operations in Sri Lanka, more than 60,000 people hold IT or BPO jobs, and the sector generates more than $400 million in exports. Several well-known international firms such as HSBC, IFS, Motorola, HP subsidiary MphasiS, RR Donnelley, and WNS have established R&D, IT, and BPO centers in Sri Lanka. Meanwhile, Sri Lanka-based firms provide advanced services to blue-chip global clients, including Google, Lenovo, Microsoft, Nokia, JPMorgan, the London Stock Exchange, Santander Bank, and Emirates Airlines.

In the Sri Lankan economy IT-BPO export earnings have shown a stable upward trend during the past few years and it has reached an estimated IT-BPO export revenue of $ 275 million in year 2009.

A recent World Bank study revealed that the country’s labor costs ranked the lowest, in comparison to many other outsourcing destinations.

According to the latest National ICT Workforce Survey, the number of Sri Lankans holding IT or BPO jobs has almost doubled from 34,000 in 2006 to 63,000 in 2011. The national goal is to increase direct employment in the sector to 100,000 in the next five years.

More than 5,500 graduates with IT-related degrees and post-graduate degrees are now joining the workforce each year. In addition, more than 25 private educational institutes offer diplomas in IT, and tertiary and vocational education institutes around the country offer preliminary IT training courses.

55% of the IT professionals have more than 3 years experience and the balance 45% are with less than 3 years experience. The overall attrition rate is about 7% and the brain drain is about 4% among the IT Workforce in 2009. The attrition rate of IT Workforce in the IT Sector is relatively high with 11%.