Baseline Sector Analysis of the BPO industry in Sri Lanka

Posted on September 29, 2006  /  27 Comments

The final report of the study that was conducted on Sri Lanka’s BPO sector is available for download below as a PDF file (931kb)

A Baseline Sector Analysis of the Business Process Outsourcing Industry of Sri Lanka


  1. This is an excellent study that can serve as model for similar studies of other sectors of the new info services industry, and also in other countries. I hope you will be able to follow up with more studies.


  2. News coverage by the Daily Mirror (10 Oct 2006):

    National ICT Week kicks off linking govt. bodies

    BPO the main focus this week to creating better awareness, establishing better infrastructure

    By Sunimalee Dias

    With the Business Process Outsourcing (BPO) market growing at a rapid pace the need has arisen for timely infrastructure and skilled manpower from Sri Lanka to gain access in the global market. This was stated at the commencement of the National ICT Week that kicked off yesterday in Colombo.

    The leading skill requirement in the BPO labour market is for English language skills with almost all BPOs comprising 95% including companies that are engaged in providing services other than call centre services, considering the ability to speak in English the most important requirement for their work while other prominent requirements are accounting skills and technical knowledge, the Information and Communications Technology Agency of Sri Lanka (ICTA) Programe Director Suresh Bartlett said yesterday.

    In addition it was pointed out that the feasibility of setting up a dedicated BPO zone with enhanced transport and telecommunications infrastructure should also be considered

    It is important to make sure that all are focused on this sector and note that this is the next wave among the industries in the country, he said.

    The main obstacles to growth are civil and political instability, mass transport services and telecommunications, Bartlett said. He was speaking on the survey carried out in respect of this sector.

    In the survey carried out it has been found that nearly all BPOs invest in compulsory and/or non- compulsory training of employees to meet skill and quality.

    “It is clear that much needs to be done for Sri Lanka to ride the BPO wave and attract apportion of the huge potential that this industry offers. The BPO industry could be the next big thing for Sri Lanka; much bigger than the apparel trade, if we get our act together. It is important that all concerned – all areas of government, private sector, industry associations, chambers of commerce must come together and do their bit in ensuring this success for the country as a whole,” he told the media.

    It was highlighted that the BPO industry in Sri Lanka was not expanding at the rate at which it needs to.

    Bartlett observed that “If we can secure 1% of the market in the next 2 to 3 yrs we can earn US $ 2 billion industry by employing approximately 200,000 plus knowledge workers.” At present approximately offshoring is an over US $ 100 million industry employing approximately 10,000 people with around 4500 in BPO industry.

    Investment flows into Sri Lanka’s BPO sector have been relatively regular since 2000. The inflow is from foreign investments, local investments and joint ventures with most BPO investments under the Board of Investment (BOI).

    The industry is predominantly export oriented with 71% of the companies exporting 100% of their services.

    The leading consumer of Sri Lanka BPO services are the US and the UK while others comprise Australia, Sweden, New Zealand, Hong Kong, Singapore and Japan.

    ICTA Chairman Prof. V.K. Samaranayaka said that they kicked off the morning with creating a “Connected Government” by signing a contract with Samsung Networks Inc. to implement and manage the Lanka Government Network (LGN) project.

    Funding for this has been provided by the Korean government.

    The LGN is a strategic project of the re-engineering government program of ICTA and would equip and digitally connect a large number of district and divisional secretariats, ministries and key government departments to ensure an interchange of information as well as to provide ICT based citizen services.

    In view of the National ICT Week it has been planned for a private sector forum to be held while a meeting of the secretaries of ministries was carried out in the afternoon of the opening day.

  3. News coverage of the study by The Island (10 Oct 2006):

    Sri Lanka looks at riding the BPO wave

    The global market for Business Process Outsourcing (BPO) services is estimated to be around US $ 11.5 billion and is expected to grow tenfold to around US $ 120 – 150 billion in the near future. India is already one of the world’s largest players in the BPO market and accounts for 46 per cent of the global market.

    Sri Lanka too is gradually emerging as a BPO destination. Recognizing the sector’s potential for the country’s economic growth, the Information and Communication Technology Agency (ICTA) of Sri Lanka commissioned a study to conduct a baseline sector analysis of the BPO industry in Sri Lanka to fill the knowledge gaps regarding this emerging service sector.

    The study was conducted using a semi-structured questionnaire to elicit the views of senior management from existing BPO companies in the country. Learning Initiatives on Reforms for Network Economies (LIRNEasia) was commissioned to design and conduct the study. To maintain confidentiality and impartiality, the services of the market research firm, A. C. Nielsen Lanka (Pvt.) Ltd, was obtained to conduct the survey.

    The baseline study identifies factors that attract BPO investments into Sri Lanka and also potential constraints to such investment growth.

    Investment flows into Sri Lanka’s BPO sector have been relatively regular since year-2000. The inflow is in all three forms: foreign investments, local investments and joint ventures. Most BPO investments are under the Board of Investment of Sri Lanka.

    The study revealed that sector employment is slightly over 4,000, with a relatively young workforce mostly between the ages of 18 – 24 years (59%). Many join BPO companies after their A/Ls (51%), but 15% of BPO workers have degrees and companies are looking for fresh graduates.

    Sri Lanka’s main attraction for BPOs is as a low cost destination. Low labour costs is the primary reason for setting up BPOs in Sri Lanka followed by low operating costs. Tax incentives is the third most cited reason for locating BPOs in Sri Lanka indicating that government incentives have been somewhat successful in attracting BPO investments, particularly foreign investments.

    Sri Lankan BPOs take on a wide range of outsourced work but the most popular work undertaken is accounting services. 43% of the companies provide accounting services. Call centre services and medical insurance processing are the next most popular with 19% and 14% of the companies offering these services. Most BPOs take on more than one type of work and, in general, are geared to undertake at least two different types of services.

    The industry is predominantly export-oriented with 71% of the companies exporting 100% of their services. The leading consumer of Sri Lankan BPO services is the US, which is catered to by over half the BPOs (69%). The UK is targeted by 63% of BPO companies and 31% are exporting to Australia. Other export markets are Sweden, New Zealand, Hong Kong, Singapore and Japan.

    The survey also identifies the main obstacles to growth and operations of BPOs in Sri Lanka. Civil and political instability ranks as the number one threat to BPOs in Sri Lanka with 67% of the companies identifying this as an obstacle. The mass transport system ranks second with 57% of the companies calling it an obstacle. The commuter service is also noted as the most inefficient of all services with 71% of the companies calling it ‘inefficient’ or ‘highly inefficient’.

    Broadband facilities rank as the third leading industry bottleneck with 48% of the companies calling the services an obstacle.

    BPO companies are also concerned about the state of law and order and expressed dissatisfaction with efforts at maintaining Sri Lanka’s image abroad. These concerns regarding domestic stability and national image could be due to the potential danger of a reduction in outsourced work, if foreign companies perceive Sri Lanka as an unstable operating environment.

  4. And Sri Lanka is not even mentioned in this review!

    We got a long way to go.

  5. Downloaded and Thanks

    My worries are with local work not using a language of Latin script.

    If you specify the language only to Latin script we can talk about other issues.

    But there is a very large volume of work within Sri Lanka. To do in English Sinhala and Tamil.

    Donald Gaminitillake

  6. Again!!!!!!!!!!!!!!!!!!!
    Donald has started selling his language package here too. Admin, over to you.

  7. Be Prepared
    Lanka Business Online
    30 April 2007 06:13:30

    Sri Lanka firms providing disaster recovery for BPOs look for more business

    April 30, 2007 (LBO) – Two Sri Lankan firms which are providing disaster recovery services for BPO firms in Sri Lanka are expanding and hunting for more business.

    Lanka Communication (LankaCom) and Blue Chip Customer Engineering say natural disasters and increasing unrest is driving businesses to look for disaster recovery specialists to provide business continuity services.

    More here

  8. Let me present some extracts from the original e-Sri Lanka document.


    By the year 2007, e-Sri Lanka will be better known as the e-Sri Lankan Miracle – a model achievement drawing global recognition, in the deployment of ICT towards the achievement of Social and economic Development….

    Annual revenues (in 2007) from software exports are $ 500M Us and growing at 30% APR. Sri Lankan technology firms have listed on the NASDAQ, and more have engaged in joint ventures or been acquired by leading international firms.


    Now let me quote from the Central Bank Annual Report for 2006.


    Net earnings from software and IT enabled services exports increased by around 19% to US dollars 98 million in 2006.


    What does this say?

    e-Sri Lanka program was supposed to boost both software and ITES industries to the level that software industry itself earns USD 500 mil (FIVE HUNDRED MILLION!) by now.

    In reality, these two industries COMBINED earn less than one fifth of that. According to the LIRNEasia study the earnings from BPO industry is somewhere around USD 13 mil.

    Compare this with figures in India. Just check the IT/ITES contribution percentage to GDP in India and Sri Lanka and you will see the difference. I agree India had a head start due to various reasons, but there is no reason why we should be lagging this much, given the socio economic conditions in Bangalore and Colombo not too different.

    USD 98 mil business is no big deal because even in 2003, without any e-Sri Lanka, we had a software industry that earned USD 50 mil annually.

    Given the trends in the region, 50 mil in 2003, could have increased to 98 mil on its own WITHOUT ANY GOVERNMENT INTERVENTION.

    So what e- Sri Lanka had contributed? Hasn’t e-Sri Lanka badly failed to achieve its ambitious objectives?

    Any comments from ICTA?

  9. Shhhh!!!! Mum is the word!

  10. Though, I got to glimpse this important report on the Sri Lankan BPO Industry only late last night, I am sure ICTA and ITESA, both, by now, must’ve braced up for the challenge of bringing Sri Lanka into the list of major global BPO service providers.

    I guess, the country is phenomenally well poised to take that exciting BPO leap. However, caution has to be exercised in managing the talent supply chain, as going by the experiences of other Asian tigers like India, talent shortage suddenly raises its head and attrition, which looks pretty harmless now, can really shoot up like mad.

    Also, let’s not forget, clients need to be convinced about manpower quality and perhaps, Sri Lankan Industry can really take that advantage by creating a talent force which is not only trained well, but which is Certified by a neutral body. If handled with vision, Sri Lankan BPO can certainly POSITION itself as the only industry which employs and deploys globally certified people and processes.

    BPO Certifications can indeed prove to be one of the most powerful ways to distinguish and differentiate Sri Lankan BPO service exporters and providers from those of other giants in the Asian region.

    Gud Luck Sri Lanka! The Tiger has really woken up.

  11. Harsha de Silva comments on BPOs:

    “Our telecom reforms haven’t gone far enough to bring down one of the key costs in doing BPO type businesses which is the lease line costs,” De Silva said. Delays in reforms mean Sri Lanka loses out. Compounding the problem is the lack of skilled workers. He added that according to the government, the BPO or software industry is worth US$100 million. “If we had the infrastructure system set up here for BPO’s, we could have made Colombo into a Bangalore of Hyderabad. However, people go and invest in India and other places like Mauritius.”

    full story at

  12. One question the policy makers of all neighbouring countries could ask themselves is if IT outsourcing became such a successful industry in India why it did not take off like that in Sri Lanka, Bangladesh, Nepal or even in Pakistan, where the socio economic conditions are more or less the same.

    I did not know anyone has done a study on this but if so I will be eager to see it.

  13. All you have to do is download from the post at the head of this very thread.

  14. Yes, but it does no comparison. For example, some of these issues like transport problems might be common to Bangalore as well. Telecom infrastructure in B’lore might be good now, but not necessarily at the beginning of the ITES boom. So is it only political stability?

  15. Sorry, that’s all we got.

  16. Dear Mr. Gaminithilaka
    Is there any BPO opportunity for us?

    Janaka Lak Aruna Foundation

  17. Janaka,

    Why this request from Donald?

    Is he the Minister of BPO in Sri Lanka?

  18. Thank you very much for this study it is really helpful!

  19. Please send the details of How to Obtaining the BPO Process,

    And I like to participate to your company as a Partner.

    Your early attention is highly appreaciated

  20. Hi Sir /Madam

    We are a small team working from Sri Lanka for bellow services
    All ready we are giving our trust service for UK company and now we want to expand our service.

    1). Company Contact Information Research from internet,
    2). Digitizing (computerize) Row Banking Statements, ( Type scanned statements images’ data into excel sheets)
    3). Typing Images data to MS Word, Excel, Power point.
    4). Create Data information Data bases.
    5). Small web sites designing and developments.
    6). Computerrize all old documents and provide security
    7). Manage your Office document keeping space.

    We expect to give our trust, honest service to good companies like you. Our charges are very negotiable.
    pleas free to contact me to solve your all computer related problems and doubts.

  21. Hi,
    Do we have a similar study which was done recently.

    I would love to look at something as I am part of the team looking at the company footsteps in Sri Lanka.

    1. Rohan Samarajiva

      The Export Development Board commissioned a study in around 2008. SLASSCOM or the EDB should be contacted for it.

  22. This was very helpful for me to complete my investigation. Thank you.