'Branding Lanka as a knowledge service hub, vital'

By Lalin Fernandopulle

The Sri Lanka Association of Software Services Companies (SLASSCOM) has submittted a series of proposals for the 2014 Budget to accelerate development of the IT and BPO industry in Sri Lanka, one of the top five export revenue earners.

The Association has called upon the government to brand Sri Lanka as the fast emerging South Asian knowledge service hub for selected niche services. SLASSCOM, Executive Director, Imran Furkan said that Sri Lanka has immense potential to be a key location for the IT and BPO business in the region and added that branding of the destination is vital to boost business.

Sri Lanka’s IT and BPO and knowledge services industry has made significant progress over the past five years.

The IT and BPO export revenue grew 182% from $ 213 million in 2007 to $ 600 million in 2013 to be among the top five export industries in Sri Lanka.

Employment opportunities grew from 33,000 in 2007 to an estimated 67,000 employees this year which is a 100 percent growth and the number of companies in the industry grew from 170 in 2007 to over 300 in 2013. This is a tremendous growth from any stretch of imagination and is due to the concerted effort from industry, academia, government and many other stakeholders.

“We have requested the government to retain the middle management and experts to sustain the growth of the industry which is poised to be the leading foreign exchange earner by 2022,” Furkan said.

The worldwide market for IT and BPO off-shoring has been estimated at $403 billion. Sri Lanka is fast emerging as a niche destination for the IT and BPO sector. Sri Lanka has all the attributes to make this happen, he said.

SLASSCOM has called upon the the government to make infrastructure cost competitive. The Association has proposed a shift from the general purpose rates for electricity to industrial tariff rates for the IT and BPO industry and exempting it from the telecommunications levy. It also proposed the removal of the 15% tax on lease value for all foreign owned entities.

“With a highly skilled workforce and a cost-competitive business environment, Sri Lanka is emerging as a hidden gem for IT and business process outsourcing (BPO),” said A T Kearney in the newly published country report on Sri Lanka, ‘Competitive Benchmarking: Sri Lanka knowledge services’. The report said that there were more than 300 IT and BPO companies operating in Sri Lanka with over 60,000 people holding IT and BPO jobs.

HSBC, IFS, Motorola, Virtusa, R R Donnelley, and WNS are some of the well-known international firms which have set up R and D, IT and BPO centres in Sri Lanka.

In addition, Sri Lankan based firms provide advanced services to blue-chip global clients, including Google, Lenovo, Microsoft, Nokia, JPMorgan, the London Stock Exchange, Santander Bank, Qatar Airways and Emirates Airlines.

Furkan said that SLASSCOM has proposed to align the current tax incentives to be more in line with the nature of the industry to increase new investment. Creating incentives to nurture new Tech Start Up companies, employability training to convert part or alternatively qualified graduates to be employed in the IT and BPO industry.

The IT and BPO industry is primarily driven by human resources and provides employment to a large number of educated youth. For each person directly employed in the IT and BPO sector, at minimum another three jobs are created around the supporting industry and consumption. The industry generates high paying jobs for professionally qualified people thereby distributing wealth to a wider section of the country. This will additionally increase government income.