HUB POTENTIAL

Compiled by Yamini Sequeira

ECONOMIC GAME CHANGER

Surinda Gunawardena calls for a dynamic environment for the IT-BPO sector

“Sri Lanka’s IT-BPO (business process outsourcing) sector has emerged as a significant contributor to the economy by tran­sitioning from being dominated by manufacturing to one that’s focussed on IT-BPO services too,” says Surinda Gunawardena.

He continues: “The sector is expanding rapidly, and offering major career opportunities for educated professionals; it is also playing a part in diversifying Sri Lanka’s economic base. The sector’s growth has been instrumental in reducing the country’s reliance on traditional industries and paving the way for a more modern knowledge based economy.”

IT-BPO services earn substantial revenue for the nation and the sector aims to generate income in excess of US$ 30 billion by 2030.

“Multinational IT-BPO companies that are attracted by the skilled labour force and favourable business environment are increasingly setting up back offices in Sri Lanka. The continuous influx of foreign investment highlights the sector’s potential to be a major revenue earner for the country,” he asserts.

Gunawardena highlights the case of a UK-based company that chose Sri Lanka over other Asian nations such as Malaysia and India, citing the “quality of labour and appeal of the country’s lifestyle” as key factors.

The presence of multinational companies not only brings in foreign capital but also enhances the local workforce’s skill set through exposure to global best practices and standards.

RESILIENCE Despite recent challenges including the COVID-19 pandemic, the sector has displayed resilience and continuous growth. During the pandemic, the IT-BPO sector was one of the few that maintained operations – it even experienced growth.

Gunawardena explains: “The ability to work from home facilitated continuity unlike in the manufacturing industry, which had to shut down. While some software companies experienced project cancellations, the industry remained robust overall.”

“The pandemic underscored the importance of digital infrastructure and remote work capabilities, and reinforced the IT industry’s critical role in the economy,” he adds.

Meanwhile, the availability of qualified IT graduates has increased due to the support of private universities and the state sector. Companies are hiring graduates and providing specialised training to ensure a steady supply of skilled professionals.

“Recruits are being sourced from Colombo, Galle, Kandy and Negombo, which have large English speaking populations. IT talent is being nurtured in Jaffna as well, and this provides a huge growth opportunity for companies that can now source skilled employees at competitive rates,” he reveals.

There is also a large presence of female employees in the sector. This gender diversity contributes to a more inclusive and innovative work environment, he points out.

Gunawardena remarks: “IT-BPO is attractive to entrepreneurs as the barriers to entry are low. I know of employees in the healthcare tech sector who have branched off to establish their own successful startups.”

Skills such as sales and marketing need to be enhanced, but customer care and English language skills make Sri Lanka’s IT-BPO sector extremely competitive. Gunawardena notes that healthcare tech in particular is a niche where many Sri Lankan companies are providing high value to lower value services such as medical transcriptions, billing and so on.

ROADBLOCKS High electricity and imported equipment costs are major challenges for the IT industry. Though brain drain has also impacted it, migration has recently slowed due to reduced opportunities abroad and increased stability in Sri Lanka.

“Addressing these challenges requires strategic interventions such as investing in renewable energy to reduce electricity costs and offering incentives to retain talent in the country,” he adds.

Government policies and infrastructure support are critical for further growth. Reducing electricity costs and providing tax incentives will boost the sector. Additionally, policies that facilitate easier IT equipment imports and improve the overall business environment will be beneficial.

“The government’s role in fostering a conducive environment for the IT-BPO sector can’t be overstated, as proactive measures can greatly enhance its global competitiveness,” Gunawardena stresses.

Companies in this sector can garner higher profits by setting up operations in cheaper locations such as India, Malaysia, Dubai or Bangladesh but they choose to remain loyal to Sri Lanka. Therefore, additional incentives should be extended to retain investors in the IT-BPO sector.

INVESTMENT The IT-BPO sector has considerable potential for global investment. Initiatives such as the development of Port City Colombo aim to create a hub for such services by offering tax incentives and infrastructure support to attract businesses.

The IT industry is seen as a critical area for growth with ample opportunities for entrepreneurship and innovation. Port City Colombo in particular is expected to be a game changer as it will position Sri Lanka as a premier destination for international IT-BPO operations.

“More incentives will pave the way for Sri Lanka to transform its economy into a knowledge-based resource,” Gunawardena maintains.

Sri Lanka’s workforce is noted for higher productivity and quality compared to other nations. And the country’s ability to offer skilled labour at a lower cost makes it a competitive destination for IT-BPO services.

The focus on advanced and complex tasks adds value and differentiates Sri Lanka from other outsourcing destinations. He believes that this competitive edge is crucial to sustaining long-term growth and attracting high value projects.

Sri Lanka’s economic stability will influence the sector’s growth. Supported by foreign investments and sound economic policies, stability is essential for continuous expansion.

Given that IT-BPO companies bring in valuable foreign exchange, they should have access to uninterrupted resources such as electricity and fuel to remain competitive in the global market.

THE OUTLOOK Gunawardena believes that “the outlook for the sector is positive with expectations of substantial growth and contributions to the economy in the coming years. Ensuring economic stability through prudent fiscal management and strategic international partnerships will be the key to unlocking the full potential of the IT-BPO sector.”

Presently, the sector stands at a pivotal juncture with the potential to transform the national economy. By leveraging its skilled workforce, attracting multinational investors and overcoming existing challenges, the sector can achieve remarkable growth and contribute to the country’s economic prosperity by positioning Sri Lanka as a global leader in the IT-BPO services arena.

The interviewee is the Managing Director of Synergen Health.