Shiraz Lye feels Sri Lanka can become a key destination for the IT-BPM industry

Compiled by Yamini Sequeira

Sri Lanka has long been touted as a potential sourcing and product engineering country in the region for IT services. Geographical location, regional nonaligned foreign policies, cultural bindings, proximity to the largest IT-BPM (business process management) country in the world, easy access and travel freedom across the region are some of the main attributes that the island can offer the IT industry, notes Shiraz Lye.

He explains: “Many companies in this industry have set up operations with an inside-out approach where they do business across South and East Asia while based in Colombo. On the other hand, ‘outside in’ companies have set up their extended captive and in-house centres on the island as an offshore destination for their own IT and related services.”

“Sri Lanka offers high value for costs (i.e. space, transport, data costs and the cost of living) compared to other low-cost destinations in Asia,” Lye explains, adding: “This is in addition to the ease of setting up business, easy repatriation of earnings, fees and capital, foreign ownership, an intelligent workforce and so on.”

IMPORTANCE The implications for information technology and related services for Sri Lanka’s economy are significant, he asserts: “For domestic consumption, the IT and services sector thrived during the pandemic. Scheduling the workforce, planning production, monitoring distribution, e-commerce, communications and delivery among others greatly depended on it.”

Exporters too felt a similar effect following an initial lapse till the gears shifted. Large IT-BPM export markets went through the same dynamics of total dependency on IT and its services, to keep nations and businesses moving.

Demand increased – and destinations such as Sri Lanka had an opportunity to service the demand, and most export related IT companies’ order books were full.

“Sri Lanka moved up the tech ladder a few years ago with simple BPO (business process outsourcing) call centres and agents, and expanded into KPO (knowledge process outsourcing) and BPM services that demanded a higher level of skills and engagement,” Lye adds.

ADVANTAGES Furthermore, Sri Lanka does well on value arbitrage compared to other countries in the region.

He elaborates: “We had to provide more value addition with premium services that accompany KPO and BPM product engineering. There are many companies that provide complete financial, HR and legal services, as well as design and development of software products, which are utilised by major league global organisations.”

“Companies in the BPM sector handle complete processes such as invoicing and loan management, onboarding processes and even after sales service. Some companies are adopting emerging tech such as AI, intelligent automation and robotics to handle such repetitive functions,” Lye observes.

IT-BPM export revenue reached US$ 1 billion in 2019; and it is one of the top five export sectors in the country. He notes that the sector is relatively young compared to other traditional revenue earners such as apparel, tea and tourism but leads the pack in terms of net export revenue.

“The IT-BPM industry is poised to grow through value addition to its products and service offerings for exports. I see financial attractiveness, the ease of doing business, the availability of a skilled workforce and digital resonance as being key requirements of large multinational companies. Free trade agreements (FTAs) with regional and prominent countries are some ways to win in this game,” he muses.

POLICIES The IT industry has priority status and is high on the agenda of the government’s development machinery.

Lye explains that “there are many IT-BPM friendly policies such as tax holidays – including tax-free Strategic Development Project status for 10 years – concessionary rates for income tax, duty-free imports of IT and related equipment, and double taxation avoidance agreements with more than 40  countries.”

“The enactment of the Personal Data Protection Bill and Cyber Security Bill will help the industry tremendously,” he asserts, noting: “Furthermore, enabling framework policies such as an information and cybersecurity strategy, IoT road map and AI framework are also in the works.”

Lye points out that the drive towards a digital government, a digital economy, capacity building, digital laws and reforms, and frameworks to attract women to IT and entrepreneurship, will drive the industry’s growth trajectory – and in turn position Sri Lanka as a key player globally.

Regarding his wish list for the economy and what can be done to improve the investment climate, he remarks: “Consistent investment friendly policies for at least 10 years are mandatory. Policies and frameworks must be communicated to state and relevant agencies, as well as foreign missions.”

GOODWILL In his view, Sri Lanka needs to partner and work with global influencers and mobilisers to attract high net worth individuals, venture capital funds and investors to the country, and showcase what’s on offer.

Another important factor, according to Lye, is safeguarding preferential trade schemes such as GSP+. He stresses: “We need to establish cordial relations with international agencies and bodies, and maintain ratings and rankings that have a major influence over global trade and investment decisions.”

To improve the ease of doing business, he maintains that “digitalisation needs to be improved and fast tracked. This calls for connectivity, infrastructure, data privacy and cyber laws, access to information, resources and skills including language, and so on. Though this represents a wide range, it is actually about putting together a framework and action plan of what needs to be done, and doing it within the stipulated time frame.”

Another element is protectionism, which needs to be handled delicately. “While encouraging local talent and industries, we also need to be competitive. Sri Lanka is a small country and if it’s to play in global markets, we need to be equally competitive. Exposure to competitiveness will only come by competing with global or regional players,” he posits.

In conclusion, Lye states that more IT graduates are needed to meet demand. Data privacy, security laws and frameworks need attention, along with expanding information technology hubs to other key cities and regions to build a wider IT startup ecosystem and entrepreneurship among the youth. Finally, stability and data are vital for the IT-BPM industry to thrive.

The interviewee is a Director of IFS South Asia and the Sri Lanka Association for Software and Services Companies (SLASSCOM), and an international consultant in business and technology