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Outsourcing has evolved from the need to enhance competitiveness (autosaved)

Outsourcing has evolved from the need to enhance competitiveness (autosaved)







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    Outsourcing has evolved from the need to enhance competitiveness (autosaved) Outsourcing has evolved from the need to enhance competitiveness (autosaved) Document Transcript

    • 1 Introduction Sri Lanka is well known for its Tea, Rubber, Coconut and Tourism but in last few years export value survey from Export Development Board indicates that the total earnings from the KPO (ICT) and BPO industry was the 5th largest export revenue earner. This is a positive sign for Sri Lanka which is heading towards BPO and KPO industry boom. The main factor affecting this growth was the civil war which has existed in the country for last 30 years, and with the end of this war, Sri Lanka is emerging to become one of the best BPO and KPO destination. Sri Lanka is a developing country. As a developing country, in the business world we cannot depend on our own resources to interact with customers and business partners. Due to the lack of knowledge and lack of resources businesses have to outsource some of their activities as well as services. But in a country like Sri Lanka there are no such appropriate sources to outsource those kinds of services and activities in the near past. But now there is a growing industry for outsourcing activities and services. It means Sri Lanka has a growing market for Business Process Outsourcing and Knowledge Process Outsourcing. Before moving to the business process outsourcing and knowledge process outsourcing we should concern about the history of business and knowledge process outsourcing. Recently Sri Lanka has identified as one of the country that BPO’s and KPO’s are emerging rapidly. Sri Lanka has been competing for outsourcing business for several years under the shadow of a 30-year war which increased risk. In 2009 a war ended and the country is looking forward to increasing services investments in particular. Outsourcing has evolved from the need to enhance competitiveness, reduce costs and maximize profits enabling companies to concentrate only on the core competence, while at the same time reducing operational risks involved in management. It provides room to increase productivity and efficiency in management. The period of 1994-1996 saw a boom in Business Process Outsourcing (BPO) activities. Some business enterprises such
    • 2 as GM, Xerox, Kodak and IBM have been incorporating the outsourcing ethic in their business strategies for more than a decade. Outsourcing comprises of mainly the following functions; Human Resources Procurement Finance and Accounting Customer Care Logistics Facilities Operations and Management Training Medical billing /Transcriptions First of all it is better to get a brief introduction about what is BPO? It can be described as follows. BPO Definition: BPO stands for "business process outsourcing," which is simply another term for outsourcing. This is when a company contracts an outside provider for services or business processes. This might include manufacturing or back-office functions such as accounting and human resources. But BPO might also include front-end services such as customer care and technical support. "Global BPO" is another term for off shoring or outsourcing outside a company's home country or primary market. BPO Advantages Cost reductions- Cost reduction is done through process improvements, reengineering and use of technologies that reduce and bring administrative and other costs under control.
    • 3 Concentration on core business- With the day-to-day back office operations taken care of, the management is free to concentrate more on the core business of the company. Outside expertise- Company is saved from the hassles of recruiting and training personnel. BPOs ensure that experts from another company provide the needed guidance and skills. Cater to changing customer demands- It is another great advantage of outsourcing the business processes. Many BPOs provide the management with flexible and scalable services to meet the customers' changing requirements, and to support company acquisitions, consolidations, and joint ventures. Revenue increase- As stated above, by outsourcing non-core processes, companies can concentrate on increasing their sales and market share, develop new products; spread out into new markets and increase customer service and satisfaction. If we talk about some processes of BPO, we can get a condense idea about this. There is a simple process that uses BPOs. Many businesses need data entered into systems or converted from hard copies to soft versions. This could be a result of a wide range of needs and could be done in various ways. An example could be entering a customer’s personal details that are on a hard copy paper into computer systems, so that better analysis can be done on that data. Some more examples are as follows: Data entry from hard copies and Image files into various computer (soft) formats Business data entry such as sales, purchases and human resources Data entry for electronic books and websites Receipt and bill details entry into spreadsheets and/or computer systems
    • 4 Data entry into product catalogues Data entry into various mailing lists Converting data from one format to other formats based on client needs (e.g.: From Microsoft Word to HTML format) Insurance Processing - When clients submit insurance claims to insurance companies, in most cases, the processing of those requests can be standardized and outsourced. Such processing takes place based on set criteria; therefore there shouldn’t be much trouble in sending it off to a more cost effective location. Form Processing Services - Just like the Insurance claims processing previously discussed, many other types of forms processing work can be outsourced as well. It can be as simple as processing Credit Card application forms. Other aspects could be medical forms processing, medical billing services, online form processing and payroll processing etc. Some of the above work can be termed back office work (as you don’t have to do them in the front office that interfaces with customers) and also administration related business processes. Other than these tasks, there are more BPO categories operating in the Sri Lankan industry. Those processes can be categorized as below. Finance and accounting o General accounting o Payroll o Account receivables o Tax and regulatory compliance o Budgeting o Cash management etc. Investment and asset management o Investment researches
    • 5 Human resources o Employee hiring o Payroll( varying from company to company) o Legal Procurement o Requisition and approval o Order management o Account payable Logistics o Product selection o Delivery o Installation o Warehouse management Real estate management Miscellaneous (energy service, customer service, mail room, food processing) KPO Definition: Knowledge process outsourcing (KPO) is the allocation of relatively high- level tasks to an outside organization or a different group in a different geographic location. Examples of KPO include long-term jobs for intellectual, analytical and knowledgeable people within industries such as research and development, financial consultancy and services, business and technical analysis and many others. In the KPO scenario, it is not about standard business processes. It is about things like outsourcing the documentation of a market research report Or asking a third party to do an analysis of your organization’s financial accounts for the last 5 years. Now, these are not standard things. They are specialized; they are not repetitive and require application of special knowledge. Hence they are knowledge based processes as opposed to standard business processes.
    • 6 The Outsourcing Industry has been extensively researched in the past decade. Business Process Outsourcing (BPO) in particular has been the topic of many analyses. Outsourcing first appeared in the IT industry in the 1980s. This was the time when companies recognized the benefits of having IT service partners in order to develop complex systems, and enhance the way that a business process or service is managed. Since then, the outsourcing industry has gone through its introduction and growth stages, with growth rates of around 50%, and has reached its transformation stage. Increasing globalization and high pressure to innovate have substantially shortened the product and service life cycles. Industry life cycles have therefore become shorter and shorter - outsourcing is no exception. Knowledge Process Outsourcing (KPO) is the next step up the outsourcing value chain. While BPO provides extensive process expertise, KPO is emphasizes on business expertise. KPO indicates a major industry shift, away from execution of standardized processes to carrying out highly complex and customized processes that demand advanced analytical and technical skills as well as decisive judgment. Knowledge process outsourcing (KPO) is a form of outsourcing, in which knowledge related and information related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions typically those that are easily undone if they conflict with higher-level business plans. This term is very new to the south Asian countries. KPO typically requires people with higher education, specific skills, and specialized business experience. As the work entails decision-making, offshore teams would need to be more closely integrated with the onshore teams that they support than would be the case in a typical outsourcing engagement. Outsourcing is not a trivial process. It is a large scale process and most western countries use that abundantly. Therefore it causes to reduce administrative expenses and risks. Outsourcing is knowledge based process therefore that is always
    • 7 being a vital activity in an every organization. KPO is becoming more complex than BPO. The reason is knowledge is important as physical assets. The Knowledge Services sector which encompasses IT software development, Knowledge Process Outsourcing / Business Process Outsourcing industry, IT and IT enabled services and IT Training sectors, has tremendous potential to emerge as a key growth sector in Sri Lanka. Given the quality of students, level of English and literacy, and the proximity to India, Sri Lanka is in an ideal position to develop into a high value added IT / KPO services provider. It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, let us not treat it only a 'B' replaced by a 'K'. In fact, Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing. A study on Knowledge Process Outsourcing (KPO) sector shows a huge supply gap that threatens to cripple its growth. Many companies outsource to KPOs because KPOs have better knowledge base and economies of scale to provide cost-effective results. Therefore a KPO can perform market research for its clients, process complex data and process reports, or create solutions for its clients. Considering the complex nature of the work of KPOs, they need subject experts for content, functional experts for results analysis and domain experts for different industries. A vast pool of highly educated professionals in Engineering, Medicine, Management and Accountancy etc. are required to serve the KPO industry. KPO jobs are challenging as they provide domain knowledge and process expertise with analytical skills for analyzing data, using resources for information research, and making presentable reports from raw data.
    • 8 Some of the skills required by KPO specialists are: Ability to acquire Domain Knowledge (in a wide range of domains) Understanding of End-User Applications Clear and Precise Written Communication Financial accounting, analysis and research Online Research Online Surveys Online Marketing Proposal Writing Information Technology (IT) Consulting As you can see, just like BPO, KPOs are also wide ranged. There is work related to financial accounting, research, ICT, medicine, insurance etc. As an example if we take Finance and Accounting KPOs, they provide end-to-end finance and accounting processes such as: Purchase to Pay Cycle Order to Cash Cycle Account to Report Banking and Treasury Cycle Fixed Assets Cycle General Account Cycle and Management Reporting Cycle We will talk about specific areas within KPOs in future editions of this column. Some of the challenges involved in KPO will be around the requirement for high standards, investment in KPO infrastructure, lack of talent pool, and requirement for higher level of control and risk management.
    • 9 Statement of the problem Does current status of the BPO and KPO industry favorable to Sri Lanka? What are the future trends and consequences of growing amounts of BPOs and KPOs in Sri Lanka? Current status means the current employment, current revenue earnings, awareness of the people etc. are they in a satisfactory level? In this case the currently operating companies, number of employees in those companies, current position of the Sri Lanka comparing to the world industry and contribution to the economy are analyzed under the topic. Also under the future trends and consequences of the industry, research elaborate about the new entrants to the industry, steps taken for the development of the industry and future trend in the job market of this industry etc. and also the future impact of these steps on the industry is discussed as well. Objective of the research The main objective of the research is to identify the current situation of the industry in Sri Lanka and find out the weaknesses of the industry. Also after identifying opportunities of the industry suggest actions to be the best outsourcing destination in the world. Significance of the study This study is important to identify Sri Lankan BPO and KPO industry and consider the steps to be taken for the development of the industry. Also this research is very important to the employees in the field, people who like to join with the industry and students who are studying about the industry. Survey methodology To conduct the survey first of all we checked the places of getting information to this and persons. Then we got some appointments from Amba research, WNS global and MAS
    • 10 holding. While getting information from those companies we conducted a survey on face book. We asked some university students about the awareness on BPOs and KPOs. Then we went to Lanka BPO academy to get information. There we got lot of information about the industry. While conducting the research we interviewed people by using different methods such as face to face interviews, through face book, through twitter and through MySpace. In live interviews we interviewed 43 people including university students and employees, 18 people by using face book, 50 people by using twitter and 10 people by using MySpace. face to face face book twitter myspace 43 15 50 10 People interviewed
    • 11 Current status of BPO & KPO industry in Sri Lanka The BPO sector focus on Financial & Accounting services, Investment research, Engineering services and UK based Legal services. Sri Lanka is emerging as a global BPO destination of choice in number of key focus domain areas. Sri Lanka is ranked among the Top 50 Global Outsourcing destinations by AT Kearney and ranked among Top 20 Emerging Cities by Global Services Magazine. There are about 15,000 people working in the BPO industry. IT and BPO collectively is the fifth highest foreign revenue income source for Sri Lanka, and that speaks for its vitality. The financial and accounting services outsourcing sector has had a significant growth in Sri Lanka. Colombo now has the world’s largest pool of UK qualified English speaking accounting professionals outside the UK itself. Many global companies have chosen to set up their niche centers that expertise a certain area in Sri Lanka. And also BPO industry is contributing to the Gross Domestic Production by generating $400 million per year. BPOs now in Sri Lanka Currently outsourcing agencies such as Industrial & Financial Systems (IFS), HSBC, Astron, Aegis, e-Collage, Virtusa and Millennium Information Technology, Hello Corp, Amba Research, RR Donnelley, Quattro and Timex BPO and Finance Centers such as WNS Global Services exist in Sri Lanka. Almost all of these are owned by large foreign parent companies. If we take the status of the BPO and KPO industry, income wise hare is a growth in the industry year by year. By reading below information we can understand where we are in the industry. AT KERNEY ranking In year 2011 AT Kearney’s Global Services Location indexing ranked Sri Lanka among the top 50 global outsourcing destinations and in year 2009 Sri Lanka has reached the 16th position. But, in the 2011 Sri Lanka slipped down to 21st position in ranking index. There are other rankings which rank the BPO and KPO industry as follows.
    • 12 GARTNER ranking World’s leading research and advisory company Gartner, Inc. has ranked Sri Lanka among the top 9 countries in the Asia/Pacific Region for globally sourced activities in 2010-2011. Sri Lanka was among the Top 30 locations for offshore services in 2010 in Asia being ranked by this firm and other countries in the Asia/Pacific region include Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam. IBM ranking In IBM’s Global Location Trends report for 2010 Philippines has got the top place displacing India for the first time in terms of estimated number of workers in outsourcing industry. According to their ranking Sri Lanka is in the 12th position. The following is the order of rankings indicated in this report: Philippines, India, United States, Poland, China, United Kingdom, Colombia, Costa Rica, Fiji, Ireland, South Africa, Sri Lanka, Hungary, Australia, Egypt, Chile, France, Canada, France, Singapore and Netherlands. GLOBAL SERVICES ranking According to the global services, Sri Lanka is in the top 10 emerging global destinations in outsourcing industry in the world. These rankings are varying one to another. The reason for that are the ranking criteria of those companies. In terms of financial attractiveness Sri Lanka is in the 5th position in the world when India and China is in the 1st and 2nd positions. In the Sri Lankan economy BPO and KPO earnings has shown a stable growing trend during the last few years. These figures are mentioned below.
    • 13 Year Exports earnings (USD Millions) 2005 107 2006 117 2007 193 2008 256 2009 271 2010 310 2011 400 Then when we were considering the current BPO and KPO institutes that conducting the professional courses for this industry we found that there are only handful institutes in Sri Lanka. Actually there is one authorized institute that conducts programmes for the students. That is the Lanka BPO Academy. They are conducting programmes with the BPO Training Institute of United States. The current status of learning about this field is present at a very low level. As they said us the total students that qualified and get the certificates are around 300 per year. In respect to the other countries it is a very low level. In the world there are 50,000 student are qualifying per year on this industry. 0 50 100 150 200 250 300 350 400 450 2005 2006 2007 2008 2009 2010 2011 Earnings
    • 14 Currently the government and the BPO academy is putting some effort to popular this field among people and mainly among students who are seeking new professional ways. At the moment they are conducting below programmes.  BPO training programme for graduates collaborating with the Ministry of Higher Education and the University of Colombo.  Programme for the school leavers (after A/L) with the help of youth affairs and skills development.  Training programmes for schools, for teachers etc. Then if we talk about the current investment of this industry in Sri Lanka, The total investment of the 21 surveyed companies is slightly over USD 13.2 million. These investments are mostly under the Board of Investment of Sri Lanka (BOI). The total offshore investment is USD 4.3 million compared to the USD 7.8 million worth of onshore investments. Type of BPO & KPO investment In millions (USD) BOI investments 11.8 Non ‐BOI investments 1.4 Total investment in the sector 13.2 BPO and KPO investment with BOI (Board of Investment) status Type of BPO investment In millions (USD) Offshore investments 4.3 Onshore investments 7.8 BPOs that are both onshore and offshore 1.1 Total investment in the sector 13.2 Offshore/ onshore BPO investments
    • 15 Reasons for locating in Sri Lanka Reasons for locating in Sri Lanka Sri Lanka’s main attraction for the BPO business is low labor and low operating costs. A majority of the surveyed companies (71%) cited lower labor costs as an important deciding factor. This included 73% of offshore BPOs and 63% of onshore BPOs. The finding is in line with a recent World Bank report on off shoring to Sri Lanka (henceforth referred to as the “World Bank report”), which suggests that Sri Lanka’s labor costs are among the lowest when compared to other global BPO outsourcing destinations. World Bank report cites that labor cost, per hour, in Sri Lanka (at less than USD 0.60), is lower than in Mexico (USD 1.60 ‐ USD 2.10), Thailand (USD 1.10 ‐ USD 1.60), China, Philippines and India (USD 0.60 ‐ USD 1.10). The second most frequently cited reason for selecting Sri Lanka to set up a BPO unit is the lower costs of conducting operations. This was mentioned by 67% of the respondents (73% of offshore BPOs and 50% of onshore BPOs). Tax incentives is the third most common reason for locating BPOs in Sri Lanka (48%) indicating that government incentives are successful in attracting BPO investments,
    • 16 particularly foreign investments. Almost two thirds (64%) of offshore companies cited tax incentives as important, compared to the 25% of onshore companies. Over one third of the companies (38%) cited the time/distance advantage due to Sri Lanka’s geographic situation as a deciding factor. This is of importance mainly to offshore operators. Over half (55%) the offshore companies cited time and distance as a deciding factor compared to only 13% of onshore companies. A little over one fourth (29%) of the companies cited duty exemptions on capital goods (another government incentive), as significant when deciding to locate a BPO operation in Sri Lanka. This included 27% of offshore companies and 25% of onshore companies. Most BPO operators (90%) did not think cultural similarity is a significant factor. As well as these reasons, there are some more reasons for entering of BPO and KPO companies into Sri Lanka. The Sri Lankan economy is one of the most: o Business Friendly in South Asia o Liberalized in South Asia Total foreign ownership of investments permitted Up to 12 year Tax Holidays for IT/BPO/KPO Industry Foreign Exch. (current a/c payments) : No restrictions Safety of foreign Investment guaranteed by constitution Double Tax Relief Equal treatment of foreign & local investors
    • 17 Sri Lanka is ranked 03 in the Doing Business Rankings of the World Bank Then if we talk about the current employment and their benefits, Sri Lanka is a very good place for BPO and KPO employees. In the current status the employment in the BPO and KPO industry is growing rapidly. It can be shown as below. YEAR EMPLOYMENT 2007 6500 + 2008 8200 + 2009 10900 + 2010 13100 + 2011 15000 + Employment in the BPO and KPO industry in recent years Employment in BPO and KPO industry 0 2000 4000 6000 8000 10000 12000 14000 16000 2007 2008 2009 2010 2011
    • 18 Currently after every three months BPO and KPO companies recruit new employees as there new agents. But according to the current status there are no such trained people to fulfill those vacancies. For an example, three years back an Indian company came to Sri Lanka to start their venture here. They planned to recruit 1000 people each year and do it for three years. But unfortunately they could recruit 140 employees yet. Then if we take the employee salary rates in the current market it is very high. We can understand about that from the below pyramid. Top level 6 years Middle level 4 years Supervisory 2 years Then if we take the ages of the current employees in the industry majority of the employees are youngsters. Most of them are between 18 years to 24 years old youngsters. Secondly there are people who are between 25years to 35 years are working in this industry. We can get a clear idea about that by looking the below pie chart. Head of operation head of HR Rs.200, 000 -600,000 Assistant manager/ manager Rs.50, 000- 200,000 Senior agent/Team leader/Trainer Rs.25, 000 - 60,000 Agent /Executive /Associate Rs.15, 000 – 25,000 Entry level 4 months
    • 19 If we take the BPO and KPO employees by educational qualifications majority of them are A/L holders. And there are graduates, professional qualification holders, diploma holders, O/L holders, others and post graduates respectively. We can understand this by referencing below chart. 18-24 years 25-35 years 36-45 years 45 + years 59% 30% 8% 3% A/L holders Graduates Professional qual. Holders Diploma holders O/L holders Others Post grads 15% 13% Age distribution amongst workers Workers
    • 20 Finally when we were surveying about the obstacles to Sri Lankan BPO and KPO industry, we could identify some major obstacles as well as miner ones. Most of the employees who we interviewed said Mass transport is one of the most frequently cited obstacles to growth and operations. It means most of the working hours are formed according to the British working hours since, most of the companies is British companies. So employees especially females cannot go back to their homes due to the transport difficulties. Then other main obstacle of the expansion of the industry is the telecommunication facilities in our country. In Sri Lanka the telecommunication facilities are not well established over rural areas. So industry is limited into Colombo area only. Finally when considering the awareness about the industry among age groups we could identify below things. The answers they have given us as below. I am fully aware of both Only aware of BPO Only aware of KPO I have heard but not knowing about it I am not aware of both (nothing) The percentages of the given answers are clearly mentioned on the below pie chart. Only 5% of the people are fully aware of both BPOs and KPOs. And another 10% are only aware of BPOs. The percentage of the people who only aware of KPOs is 5 %. Also 20% of the people have heard about this but not knowing about it. Finally 60% of the people do not know anything about both BPOs and KPOs.
    • 21 Awareness about the BPO and KPO industry FUTURE TRENDS IN BPO AND KPO INDUSTRY Then coming to the future trends of this industry there are so many things to be considered than other industries. As trends, We could observe that there is a great opportunity for Small and Medium Enterprises to enter the industry. The growing BPO industry in Colombo offers a unique advantage for Small and Medium Enterprises (SME) to enjoy premium access to a high quality talent pool, which is becoming increasingly challenging in large established destinations such as India and China. The environment is also highly favorable for establishing high-in-demand niche competency centers out of competition for even larger global services companies. Government is giving incentives and other supports for the industry fully aware of both only KPO only BPO heard but not having wide idea not aware of both
    • 22 The national level competency development programs focus on building Sri Lanka as a Center of Excellence (COE) for key focus domain areas. The BPO sector focus on Financial & Accounting services, Investment research, Engineering services and UK based Legal services. The BPO and KPO industry has been identified as a propel industry by the government. By recognizing the potential of the industry, the government has taken number of positive steps by providing fiscal and other incentives and support to speed up the development of the sector. Employment opportunity Currently over 15,000 employees are working in the industry. But, it is not sufficient for the demand of vacancies and the demand of the industry. There are many people who like to work in the industry. But they do not have enough qualifications. The future plan of the industry is to make the 15,000 employees into 50,000 by the year 2015. So this is a great opportunity for the people who are willing to enter the industry. Also the employment is growing 15% - 205 year by year. Changes in the global economic environment In 2009/ 2010 there was a great economic crisis in the western countries. As a result of this many of the big companies tended to outsource their works from the outsourcing companies. But they had a problem of cost. If they outsourced their works from their country it would be taken high cost. So they turn into our countries to outsource their works. That was a great opportunity for us to develop our industry. Since now Sri Lanka is in the 5th position in terms of financial attractiveness in the world. Education level required by the industry In Sri Lanka there are no many people who have qualifications on BPO and KPO industry. And also there are no many institutes to conduct education on the industry. Most of the people in the industry are learn through their experiences. But there are few skilled people who in the industry currently. But now there is one institute who conduct courses for students who are willing to get qualifications
    • 23 Awareness of the people As mentioned earlier most of the people don’t have clear awareness about the industry. When conducting the research we did some surveys on face book, twitter, MySpace and talking to the people. Nearly 20% of people have the full awareness on both BPO and KPO. 40% of people have heard about that but don’t have clear idea. 18% of them know only about the BPO 22% of them don’t know anything about this industry. So this is a very good opportunity for newly entering people to the industry. They have good chance to grow up in the near future due to the rapid development of the industry, Since the BPO and KPO industry large but hidden industry in Sri Lanka. Entry of new BPO and KPO companies to Sri Lanka In the next few months two or more BPO and KPO companies going to be started in Sri Lanka. So it is a very god opportunity for the employees who are working now in the industry. They can get better jobs at better salaries in these companies, since newly entering companies tend to hire employees from the current companies. CONSEQUENCES OF THE BPO AND KPO INDUSTRY As e result of rapid growth of the industry, Sri Lanka is facing to both positive and negative consequences. First it is better to talk about the positive consequences of the industry. Investment In last seven years more BPO and KPO companies has invested in Sri Lanka. As a result of this thousands of employment opportunities has created and they could contribute to
    • 24 the economy by generating millions of income. Also as a result of this BPO and KPO industry have become the 5th largest income generation source in the country. Employment As a result of emerging of outsourcing companies, youngsters got an opportunity to getting employment in those companies. Not like other industries, this industry does not have an excess people to work. So as a result of this, they can reach to a good success in this industry. Also there are no many matured people in this industry. As a result of this young people have more opportunity of getting employment in this field. Since the majority is youngsters, they can get good opportunity to climb- up to the top positions of the companies. When they got promotions newly entered employees can get their promotions also. Income generation In last few years the income generated by the industry has grown up rapidly. According to the statistics BPO and KPO industry is the 5th largest income generation source in the Sri Lankan economy. Due to the growth of this industry Sri Lanka can earn more income in the future. According to the statistics, BPO and KPO industry targets to get US$ 1 billion income in 2015. Literacy If we take the literacy side in Sri Lanka, due to this industry the ability to operate computers, communication skills, accounting knowledge and other skills are growing up. Most of the BPO and KPO companies are seeking the people who have above skills. So to get a job in outsourcing company employees have to develop their above skills. And also after joining to the BPO or KPO Company they provide a short term training programme for every employee before start their works. Due to that reason this is a very
    • 25 good opportunity for the employees as well as the people who are willing to join with the industry. Improving computer literacy With the growth of this industry our youngsters can get a good opportunity for improve their literacy on information and communication technology. On the other way around there are some negative consequences of the industry as well. Foreign investment In Sri Lanka, most of the BPO and KPO companies are foreign owned. Further, 75 percent of the BPO and KPO companies in Sri Lanka are foreign direct investments. In near future three or more foreign companies going to be established in the market. Sometimes this will influence badly on our economy. Barrier liberalization Legal, language and cultural barriers can cause serious problems. Sometimes foreign companies may ask for legal liberalizations from the government when they become stronger in the market.
    • 26 STEPS TO BE SUCCESS In Sri Lanka we could find main weaknesses in the BPO and KPO industry. Those are, English Telecommunications (+land) Mass transport Non availability of BOI permitted BPO and KPO zone Lack of skillful employees for vacancies Lack of awareness in rural areas Lack of computer literacy in rural areas English In outsourcing industry English knowledge is very much important. The main reason for that, majority of the companies are foreign companies. Their language is English. And also 100 percent of our clients are from the foreign countries. So we have to develop our English literacy. Telecommunication and infrastructure One of the major barriers to the industry is the lack of telecommunication infrastructure in other areas in the country at the same time Colombo has developed facilities. Due to that reason the industry is limited to the Colombo area. If there were substantial infrastructure facilities in rural areas where space would not be an issue compared to Colombo, they could easily expand and also employ people from the same areas thus, providing a solution to the unemployment problem. This is also one of the main reasons why the government has to provide the necessary services infrastructure to the rural areas as fast as possible. Mass transport Most of the time outsourcing companies are foreign owned. So they have to work according to the clients’ or mother company’s’ time schedule. In this case employees cannot procure their transportation facilities from public transportation. Then companies have to provide transport facilities for them.
    • 27 Non availability of BOI permitted BPO and KPO zone Like in Philippines there is no such a zone for the industry. In Philippines there is a particular town only for BPO and KPO companies. But in Sri Lanka there is no such place like Philippines. Lack of skillful employees for vacancies In Sri Lanka there are no enough skillful people to fulfill vacancies. Currently there are many job opportunities in BPO and KPO for the people. But unfortunately there is a scarcity of skillful in the market. Lack of awareness in rural areas In Sri Lanka communication infrastructure is well developed everywhere specially IT. Due to that reason people who are living in rural areas do not have considerable awareness about BPO and KPO industry. Lack of computer literacy in rural areas Due to the scarcity of information and communication infrastructure the children who are in those areas do not have appreciable knowledge about IT. So they do not know about these kinds of industry opportunities. In addition to these problems Sri Lankan BPO and KPO companies are facing some other difficulties as well such as, There is no proper authority to take on the woes of these companies and or advice them and help them expand, which would help reduce unemployment considerably. high rent One of the other major issues that they face is the high rent that has to be paid for operating from Colombo. This makes them pass on the added expenses to the client and therefore put their next job at risk.
    • 28 These kinds of problems are always in Sri Lanka since we are a developing country. So as a government and as companies they have to encourage people to eliminate these kinds of problems. To do this they have to take some steps by negotiating with everyone in the field with general agreement. Also they have to do this in aright manner. Recommendations for the growth of the industry To make popular the BPO and KPO industry, Sri Lankan government and the industrial companies are taking some actions currently. In the government side the actions that they are taking and, they can take are mentioned below. They are, Start to develop the computer literacy This is a good thing that can happen to our rural people and the whole country. The government and the ICTA(Information and Communication Technology Agency of Sri Lanka) has come up with various programs such as initiating Nenasala centers in rural sectors ranging from Trincomalee to Anuradhapura and Polonnaruwa and also the upcountry. By doing this their target is to open up 1000 Nenasala centers across the island. Also the English knowledge of the people especially youngsters like after A/L should be improved. So the government is conducting by English training programmes to improve the knowledge of English of those people. If not people from rural areas cannot move with foreign clients. Develop telecommunication infrastructure In Sri Lanka telecommunication infrastructure is very poor in rural areas like Hambantota, Monaragala and areas which assaulted by the war like Vavuniya, Mullaithivu etc. due to the 30 years war, infrastructure of some areas has destroyed completely. So in order to develop the industry (rural BPO and KPO) we have to re-build
    • 29 the infrastructure of those areas. Mostly it is really useful to expand the industry to the rural areas in the country. Mass transport In Sri Lanka one of the major issues facing by the employees is transportation. Most of the companies are working according to the foreign working hours since most of the companies are foreign owned. So in some cases employees have to work till late night according to the foreign hours. Due to that reason mostly female employees and some of the male employees who are coming from out station are facing some difficulties in going back to the houses or shelters. To overcome this problem both government and companies can take actions in their sides. In the side of the government they can execute a transportation plan for the employees who work in nights. But sometimes it is difficult to send many buses to all the areas. But it should be done in proper way. Government can put buses to the roads which many employees are coming to work such as high level road etc. From the side of BPO and KPO companies they also can execute transportation services for those employees. For an example in the garment factories provide transportation for their employees. Like that BPO and KPO companies can provide transport service to the employees it is better to encourage them to work well. But it is not easy to provide transport for all the employees. To do it they have to follow a systematic way. If they can hire employees from same areas such as some from one particular area, another group from that area likewise they can implement it very well.P Lack of skillful employees for vacancies In Sri Lanka there are no highly skilled employees in the BPO and KPO industry since the industry is not very much famous in the country. In our country people are not aware about the job opportunities and path to go in the industry. And also there are no such approved institutes in Sri Lanka to give a proper education to the people who like to join with this industry.
    • 30 In Sri Lanka there is only one institute to give knowledge to people about the industry. But it is not sufficient, and to make aware the people government should inspirit the institute to expand their service island wide. But also there should be a better way or approach to do it. If the government let them to expand their service, there should be effective quality guidance for it. On the other hand if a BPO or KPO company need to recruit new employees for their company they have to give a minimum of two weeks training for those new employees about their tasks. But in well established BPO and KPO companies in other countries those employees do not have any training normally. So in our country we have to give a better training for newly recruiting employees. So we have to establish effective system to train new employees in the industry. Lack of awareness in rural areas Since the industry is still growing in Sri Lanka most of the people do not aware about what it is? What is happening in the industry? What are the activities? Like that. Due to that reason the percentage of new entrants to the industry is low in our country. Also due to poor facilities such as telecommunication and other things the industry has not being disseminated to the rural areas. In Sri Lanka most of the people in rural areas never heard about this industry. Mostly people who are after 30 years of age do not know anything about that. Also some youngsters even do not know about the real meaning of BPO and KPO. So to make aware the people of rural areas we have to take some actions as the government as well as the industrial stakeholders. To make them aware, they have to conduct awareness programmes in those areas. Currently the Lanka BPO Academy is conducting awareness programs with the support of the government for the school students. But it does not cover majority of rural areas. Those programmes are limited to particular area. So if the government can help to expand it by supplying facilities they need the people of the rural areas can get to know about the
    • 31 industry well. By doing awareness programs in rural areas some benefits can be aroused as below. o Youngsters will aware about the industry If government and the companies can conduct programs to the school students (A/L) they will tend to search about the industry and then try to learn about the industry. If school leavers get to know about the industry it will be a benefit for the industry. o Develop skills of the people If the government tries to make aware school leavers and other youngsters with the help of institutes they tend to learn courses related to the industry. Then it is easy to recruit new employees to the industry. Since they have knowledge about the industry companies can recruit skilled employees. o Can extend the industry to the rural areas If the people of rural areas know about the industry and if they have better technology like internet, telecommunication and other infrastructures companies can easily extend the services and their operational areas to those areas. It means they can establish their companies in those areas. But not in very rural areas, they can establish companies in areas like Hambantota, Kandy. Then employment opportunities can be created in those areas easily. But there are some BPO operations in Mahavilachchiya, Galle, and Kandy as well as in areas such as Gampala and Piliyandala. However, it’s still only a handful of operations. So by supporting to expand the industry they can easily operate in these areas than earlier. Also the employment opportunities can be created as well.
    • 32 Lack of computer literacy in rural areas In Sri Lanka the computer literacy of school students in outside the Colombo is not much developed comparing with the Colombo students due to lack of facilities. So companies are facing some difficulties when finding people for the industrial vacancies.So government has to take actions to improve the computer literacy of school leavers and students in those areas. This is a good thing that can happen to our rural people and the whole country. The government and the ICTA has come up with various programs such as initiating Nenasala centers in rural sectors ranging from Trincomalee to Anuradhapura and Polonnaruwa and also the upcountry. Their target was to open up 1000 Nenasala centers across the island by 2007. But still they could open 665 Nenasala centers island wide. So this is not sufficient for the country. They have to get actions effectively and efficiently than earlier to achieve that target of 1000 Nenasala. By taking these actions only Sri Lanka can be the Center Of Excellence in the future. In the near future some more BPO and KPO companies are trying to enter in to the Sri Lankan industry. So we have to get ready for these situations. And also other countries who are doing their operations in the industry better than us such as India, Philippines are taking actions to develop their industry as well. So to give a good competition for those countries Sri Lanka has to build up the standards of the service as well as the facilities. References o Yasas Vishuddhi Abeywickrama; (2011): Emerging trends in the BPO industry; http://www.island.lk[2012 Feb 21] o Yasas Vishuddhi Abeywickrama; (2011): Outsourcing: Lanka in 12th place on IBM’s Global Location Trends; http://www.island.lk[2012 Feb 22] o Nandun Fernando (2012 Mar.) What is BPO? EDEX magazine, 26 -29. o Madu Rathnayake ;( 2010): daily news; www.dailynews.lk/2011/06/13/bus04.asp. o www.lankabusinessonline.com/fullstory(7 Dec 2010)[2012 Feb. 23] o lanka BPO academy www.lankabpoacademy.lk[2012 Feb. 18]