Technology

Impediments to woo knowledge based FDI to Lanka

Excerpts from the research paper presented by Manager, Investment Promotion of the BOI, Dr. Mervyn Jayakody at the 26th National IT conference organised by the Computer Society of Sri Lanka recently.

Knowledge based ICT related FDI flows into the country are increasing considerably. However, the IT BPO industry related FDI has shown only a slight growth.

The main component of the ICT related FDI is telecommunication sector investments which accounted for 38.9% in 2005 and increased to 54.9% in 2007. This growth is due to the increase of capacity of main telecommunication operators. The IT BPO industry related FDI has increased only from 0.8% in 2005 to 1.18% in 2007.

The overall contribution of knowledge based FDI (telecommunication and IT BPO) has increased from 39% in 2005 to 56% in 2007. However, in Sri Lanka the knowledge based FDI is limited only to telecommunication and IT BPO related industries.

Decisive factor

The inflows of foreign investment in the fields of bio technology, research and development and pharmacuticals have not occurred because of the non-availability of a suitable investment climate. In the 1980s the location decision of many FDIs were mainly based on the availability of low cost and unskilled labour. However, today the importance of low cost unskilled labour is diminishing in the attraction of FDI. Instead knowledge has become an important decisive factor in deciding the destination on contemporary FDI because knowledge is one of the most strategic resources for firms.

The global FDI has shifted from resource based to knowledge based. Sri Lanka’s knowledge sector offers opportunities for growth particularly given the country’s good track record in literacy and secondary education enrolment.

Sri Lanka’s workforce has many knowledge related competitive advantages such as solid mathematical background that translates into solution driven approach software development, competitive wages, high productivity, creativity and hand to eye coordination. Such knowledge related advantages provide a conducive environment in attracting knowledge based FDI.

Rapid development

Rapid development in the telecommunication infrastructure during the recent past has fulfilled a main requirement for IT BPO related FDI.

Sri Lanka is emerging as a regional telecommunication hub. Sri Lanka is also recognised as one of the emerging destinations for the Centre of Excellence (CoE) for financial and accounting outsourcing by Tholons, a US based outsourcing consultancy and investment firm.In 2007, for the first time Sri Lanka was included in the global service location index survey 2007 conducted by the global IT consulting giant A.T.Kearney.

This report analysed and ranked the most remote contact centres and back office support and revealed the relative cost advantage of the leading offshore destinations. Sri Lanka was ranked 29 among the top 50 nations in 2007.

The A.T. Kearney report highlights that Sri Lanka offers many advantages as India, with similar labour costs, widespread use of English, strong education systems and increasingly open and well regulated business environment indicating that Sri Lanka is a potential destination for IT BPO related industries.

The international investor community has already placed its confidence on Sri Lanka by investing in the ICT industry. World renowned companies in the ICT related industries have invested in Sri Lanka.

Investment incentives

Meanwhile, The Government has emphasised the need to develop local institutional capacity to foster and attract FDI. Sri Lanka also offers attractive investment incentives for investors in the ICT industry such as 3-12 years tax holiday, duty free imports of capital goods and exemption from exchange control.

There are impediments in attracting knowledge based FDI. Low investment in education and training, insufficient English language skills, slow growth of science and technology, lack of communication infrastructure,comparatively high cost of telecommunication services including telephone and internet and lack of ICT professionals are among them.

Since these impediments outweigh the key advantages Sri Lanka may miss the opportunity of attracting knowledge based FDI unless correct policy measures are formulated and implemented.

Attention, particulary should be focused on major areas i.e. improve information infrastructure, improve education system and intensify R&D activities.

Lankan company helps Silverstone get back on track

A vibrant young Sri Lankan software house has been making its mark on the international business scene, proving yet again that Sri Lanka has what it takes to compete with the best in the world.

Programus, which has more than 10 year’s experience developing software solutions to support niche businesses, is the company behind OPTIMO, the specialist software solution for venue and event management which helped Silverstone turn around from a 3.5 million pound loss making entity to making a profit of 4 million in a relatively short period.

The hallowed home of the British Grand Prix now depends on OPTIMO to achieve and monitor targets and management of marketing, sales, pre event and event day activities for all types of race meets and corporate hospitality programs. Major and minor participative courses, product launches and conference and banqueting services at Silverstone are also managed by OPTIMO software.

Lanka Bell and Maliban in ICT partnership

Maliban, one of Sri Lanka’s enduring mega-brands and Lanka Bell, the wholly Sri Lankan telecommunications giant have come together in a partnership that has resulted in the renowned confectioner acquiring the latest in enterprise business solutions for its communication needs.

Lanka Bell has linked the Maliban Head Office complex and the company’s dealer network islandwide via a seamless integrated telecommunications solution.

Comprising advanced E1 technology and CDMA connectivity meshed with sophisticated PABX infrastructure with Direct Inward Dialling, the solution enables Maliban to conduct all its voice communications across the company’s network of 85 main distributors at zero cost, bringing about a new dimension in communications efficiency.

Lanka Bell’s Managing Director Prasad Samarasinghe said: “This is just one example of the kind of quantum change that can be achieved in the way companies do business by adopting the latest in integrated communications solutions that Lanka Bell has to offer. Maliban and Lanka Bell are two local brands that have achieved world-class quality and leadership in their fields.

We are truly committed to this partnership and serving the needs of Maliban by exposing Maliban to the latest in technology and cost effective solutions.”

Maliban Chairman and Managing Director A. G. R. Samaraweera said, “Lanka Bell has evolved into a dynamic enterprise solutions provider with access to expertise and products that are truly cutting edge.

We look forward to working with Lanka Bell to maximise the benefits and cost efficiencies made possible by the communications solution provided to our company.”

The only wholly Sri Lankan owned company in the telecommunications sector, Lanka Bell is the second largest ‘fixed line’ provider in the country with around one million subscribers.