Post-war Sri Lanka is turning the heat on India’s $12.4-billion business process outsourcing (BPO) sector. The neighbouring island, armed with a pro-outsourcing government and a sizeable pool of low-cost, service-oriented talent, has become a happy hunting ground for companies wanting to set up offshore centres.
Sri Lanka is providing BPOs tax holidays for a period of 5-12 years, wholesome infrastructure support and various grants for training and quality enhancement. This has India’s IT/BPO trade body Nasscom worried, with its president Som Mittal admitting to FE that Sri Lanka has emerged a strong competitor.
Officials with Slasscom—the IT/BPO governing body of Sri Lanka—in an exclusive interaction with FE, said the companies such as Convergys, HCL and Accenture have approached them in the past few months, with the intention of setting up new centres. Convergys is looking at setting up a joint venture there. Firms like MphasiS, WNS, Aegis and Quatrro BPO have already set up operations in Sri Lanka.
Earlier this month, the United States Agency for International Development (USAID), announced a $10-million corpus for training Lankan youth in the IT-BPO sector. Sri Lanka is also ranked above India in the World Bank’s `Ease of Doing Business’ index. No wonder, international giants such as HSBC, Aviva, Microsoft, Motorola, and Virtusa have been operating in the country for long.
Says Ashique M Ali, director and global trade forum leader, Slasscom, “Since the end of the war, there has been a renewed vigour in promoting the sector. There has been a special focus on India through a dedicated body. We have been seeing great interest on the part of Indian companies in setting up and expanding their centres here.”
India, on the other hand, is presenting a contrasting picture, with factors like a drying talent pool, increasing overhead costs in metros and a slow rate of development in tier II towns. No wonder BPO companies, especially the small and medium sized ones, have been scouting for less troubled shores.
Aegis, Essar’s BPO outfit, which has 550 people in Sri Lanka, plans to take the staff strength to over 1,500 in the next two years. “And in the next 6-9 months we are also planning to start serving our international clients from Sri Lanka,” says Sudhir Agarwal, president, APAC & MEA, Aegis. WNS Global Services is looking to tap the domestic market in Sri Lanka, says Keshav R Murugesh, its group chief executive officer, indicating the growing stature of the industry in Sri Lanka.
Raman Roy, chief executive officer of Quatrro BPO, also regarded as the father of the Indian BPO industry, says, “Government support and talent put together, I would say that Sri Lanka offers a superior cost proposition compared to India. There is a need to fine tune policies to ensure that India retains companies and does not lose business. The demand for skilled man-power in India far exceeds the supply.”
Som Mittal says it makes sense for companies to look at Sri Lanka. “Companies are seeing it as a preferred destination for establishing new centres. In India, over head costs are more, and with uncertainty on STPI sops, India has a disadvantage. The government needs to be more proactive and provide tax benefits, at least for SMEs.”
If the sops are withdrawn under the STPI after March 2011, Indian companies will have to set up operations in SEZs, in order to get tax incentives. This will be an unattractive proposition, specially for smaller companies, as the norms require them to have a minimum of 10,000 employees and cover an area of at least a million square feet.
But still India holds a few aces up its sleeve. “Lanka is emulating the India success story. The absence of physical infrastructure such as roads and high cost of telecom infrastructure are the major disadvantages that the Sri Lankan BPO industry suffers from,” says Kumar R Parakala, global head of sourcing, KPMG. India also has the advantage of numbers. Says Gopi Natarajan, chief executive & president, Omega Healthcare Management Services, “The entire country has a population of about 20 million people which is lesser than some of our big metro cities in India. There is a finite number of talent pool available in Sri Lanka especially for voice services, but certainly not as big as what India has to offer.”
Source:http://www.financialexpress.com/news/lanka-eyes-share-of-indias-bpo-pie/674192/0
