Outsourcing has evolved from the need to enhance competitiveness (autosaved)
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
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
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;
Finance and Accounting
Facilities Operations and Management
Medical billing /Transcriptions
First of all it is better to get a brief introduction about what is BPO? It can be described as
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.
Cost reductions- Cost reduction is done through process improvements,
reengineering and use of technologies that reduce and bring administrative and
other costs under control.
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
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
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)
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
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
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
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 Account receivables
o Tax and regulatory compliance
o Cash management etc.
Investment and asset management
o Investment researches
o Employee hiring
o Payroll( varying from company to company)
o Requisition and approval
o Order management
o Account payable
o Product selection
o Warehouse management
Real estate management
Miscellaneous (energy service, customer service, mail room, food processing)
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
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
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
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
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.
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
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.
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
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
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
face to face
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
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
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.
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
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.
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
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
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.
Year Exports earnings (USD Millions)
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.
2005 2006 2007 2008 2009 2010 2011
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
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
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
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,
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) :
Safety of foreign Investment guaranteed by constitution
Double Tax Relief
Equal treatment of foreign & local investors
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.
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
2007 2008 2009 2010 2011
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
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.
45 + years
Professional qual. Holders
Age distribution amongst workers
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
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.
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
heard but not having wide
not aware of both
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.
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
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
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
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.
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
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.
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.
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
good opportunity for the employees as well as the people who are willing to join with the
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.
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.
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.
STEPS TO BE SUCCESS
In Sri Lanka we could find main weaknesses in the BPO and KPO industry. Those are,
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
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
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.
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.
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
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.
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
the infrastructure of those areas. Mostly it is really useful to expand the industry to the
rural areas in the country.
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.
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
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
industry well. By doing awareness programs in rural areas some benefits can be aroused
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
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.
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
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.
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]