An Analysis of issues pertaining to infrastructure for establishing BPO zones in Sri Lanka

Abstract

Sri Lankshas the potential to develop further its Business Process Outsourcing (BPO) industry as it has a greater low cost advantage than other South Asian countries. The availability of highly educated and easily trainable labour also contributes to the attractiveness of the offshore business in Sri Lanka than ever before. The improvement of the country's position in this industry, as reflected in the Network Readiness Index and the A. T. Kearney's Global Service Location Index for the last two years, highlights the fact that the relative attractiveness of offshore business opportunities in Sri Lanka has improved. Despite these positive signs on paper, the country's BPO sector is operating without creating any positive improvement to the industry and making no significant contribution to the country's economy. This is mainly due to non investment-friendly policies and the lack of government support for the sector. Moreover, the senior managers of BPO companies in Sri Lanka are not happy with the existing physical infrastructure, as it has created constraints for the growth of the industry. The non availability of quality infrastructure services and the high infrastructure cost has weakened the competitiveness of Sri Lanka's BPO operations in the global outsourcing market. This study takes a cross country approach to examine the industry practices in India, China and the Philippines, as these countries are among the top ten ranking BPO service providers in the A. T. Kearney's Global Service Location Index. The study then identifies necessary improvements to be made to the basic physical infrastructure services and some industry specific infrastructure services essential for the outsourcing industry in Sri Lanka. As a solution to the existing infrastructure Issues, the study proposes the establishment of several BPO zones in different parts of the country, which would enable the recruitment of qualified labor from different parts of the country and facilitate easy operations in terms of low cost structure. It concludes with policy recommendations that are essential for establishing the reputation of the country's BPO industry as a leading service provider in the global offshoring map.