We’re generally in favor of budget business models, but export industries that do not earn enough per employee to pay a decent wage have to be an exception. Here is some analysis I did on the Sri Lanka software export and offshoring BPO industries, based on official figures:
The total software earnings of USD 294 million are produced by 27,000 people. That is LKR 99,825 per employee per month. Lower than I expected.
On the BPO side, 13,000 people produce USD 98 million. That boils down to LKR 69,103 per employee per month.
Now that does not look too pretty, does it? Taking overheads and marketing into account, the firms in the BPO industry would be lucky to be able to spend LKR 40,000 on compensation per employee per month. That’s an average.
The full column is here. The preceding related column, which pointed out that Sri Lanka seems to short of people with skills is here. The two issues are related. Why we do not have enough people is because we do not pay them enough. Why we do not pay them enough is that the revenue per employee is too low.
One reason we cannot increase revenue per employee is because no one can get 5 nines (99.999) reliability in Sri Lanka. Good KPOs can work around this, but not the standard BPOs. And increasingly people are beginning to assume that video conferencing is possible. But how reliable is that in Sri Lanka?