What do we know about Sri Lanka's Telecentres?

What do we know about Sri Lanka’s Telecentres?

Posted on November 20, 2008 / 5 Comments

Here are the summarised results from the telecenter operator survey done by LIRNEasia at the weCan workshop in October 2008. Sample was not representative, but large enough to get a general idea about the telecenter operations in Sri Lanka.

Out of a total of 147 operators surveyed, the bulk, 101 were from Nenasalas, the 500 odd telecenter network created under the World Bank funded e-Sri Lanka programme. 10 were from Sarvodaya multi-purpose telecenters and 6 from others (eg. public libraries) 30 have not specified the type of the telecenter.

Do telecenters in Sri Lanka make money? Yes. They report an average monthly income of Rs. 22,119. (=USD 201) This is associated with a relatively large standard deviation of Rs. 21,714 (= USD 197) indicating a variation within a wide range. Not a surprise since some telecenters are running at a loss (presumably temporarily) and few reporting a monthly income of over Rs. 100,000 (= USD 900).

However, providing Internet services ranked only third among telecenter income components (16%). The key sources of income are education and training (43%) and providing fax, photocopy and printing series (21%). They also make money from VoIP (4.5%), bill payments (2.5%) telephone calls (2.5%) selling other goods (2%) and VCD/DVD rentals (1%).

Asked for the preferred income profile, the results were not too different. They still want 33% income from training, 21% from fax photocopy and print services and 17% from Internet services. Is this an indication of being more realistic or less ambitious? You decide.

Average monthly expenditure of a telecenter is Rs. 15,837. (USD 144) This may not reflect the real costs as the Internet charges for Nenasalas are borne by ICT Agency from the money comes from e-Sri Lanka programme. Salaries is the highest cost component (39%). Then comes electricity (25%). About 10% each for telephone and rent.

On average basis a telecenter has 5 PCs and employs four staff members – two permanent, two temporary. Correlation between the income and the permanent staff strength was 0.56; the income and the number of PCs, 0.62.

Do telecenters make a profit? Yes, but perhaps may not in real terms. They record a monthly average profit of Rs. 6,735 (=USD 61) with a large standard deviation of Rs. 9,504 (=USD 86). This indicates the loss incurred by some of them. This is again without considering the cost of the communication link. (The monthly average cost of a 2 Mbps business broadband connection is USD 46 in Colombo. This might be slightly high in rural areas.)

Telecenters operators are rewarded in different ways. Only 33% are salaried. 22% receive a share of profits. 13% receive an allowanced based on performance. 32% receive no personal income. How they prefer to be rewarded? 51% wants a monthly salary; 26% a share of profits and 18% a performance based allowance. Doesn’t sound too entrepreneurial but in Sri Lanka culture job security plays an important role.

5 Comments

Harsha Liyanage
November 21, 2008, 12:28 pm
I am quite surprised to see this profitability (61$ avg profit). As per our records (Fusion) most of these telecentres do not have a proper understanding about their actual expenses. (Not many maintain accounts).

The rest (eg preferance to educational services) is almost inline with our general finds based on earlier surveys.

Anyway, this is a helpful update, Chanuka, thank you for sharing this.
Chanuka Wattegama
November 21, 2008, 1:17 pm
The relatively large standard deviation ($ 86) means the profit (loss) of a telecenter varies within a large range. Even few successful ones can boost the average. So this is not against your observation.

However, if they were to pay for electricity, staff salaries etc on their own a telecenter that does not make an income will not last long. So their mere survival (for few years at least) is proof that they at least break even. (Of course, not considering the cost of the link)

Many small scale business people do not maintain accounts. But that does not necessarily mean they run at a loss.
Insider
November 23, 2008, 11:07 pm
Chanuka says “Internet charges for Nenasalas are borne by ICT Agency from the money comes from e-Sri Lanka program”.
This is only true for the first two years as some folks from even Lirne-Asia may testify. In year 3 the Nenasala operator pays 1/3 rd of the costs and in year 4 they pat 2/3rds as it was designed as a declining subsidy.
As ICTA has bought the connectivity directly from the service provider the mechanism for the declining subsidy is for the Nenasala operators to pay back to the ICTA 1/3rd of the costs in year 3, and 2/3rds of the costs in year 4. Any guesses as to who is prompt with their payments and who is falling behind?
Bulk of the Nenasalas in Religious institutions and prompt payers, while bulk of the Nenasalas run by entrepreneurs are falling behind. Interesting observation, not necessarily captured in a survey such as the above.
Chanuka Wattegama
November 23, 2008, 11:32 pm
@Insider,

Thanks for the info. I knew about the plan, but did not know it was actually happening. Glad to learn that. This might have reflected in our survey results if not for the fact that majority of the operators were from telecenters no more than 2 years old.

It is also news for me that temple model is more regular in their payments. Probably because their costs are limited. Also the line between the two seems to be thin now.

Finally, this information would certainly of more value if you didn’t hide behind an avatar. Can’t cite anyone who just introduces himself/herself as an ‘insider’.
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