A baseline sector analysis of the Business Process Outsourcing industry of Sri Lanka - PowerPoint PPT Presentation

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A baseline sector analysis of the Business Process Outsourcing industry of Sri Lanka
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A baseline sector analysis of the Business Process Outsourcing industry of Sri Lanka

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  1. A baseline sector analysis of the Business Process Outsourcingindustry of Sri Lanka Harsha de Silva, Sriganesh Lokanathan, Dilshani Samaraweera 27 September, 2006

  2. Agenda • Overview of BPO sector • Obstacles to growth and operations • Growth plans • Conclusions

  3. Overview of BPO sector • Composition • Investment • BPO entry and reasons • Services • Export markets • Employment • Skill requirements

  4. Composition of Sri Lanka’s BPO industry • Equal proportion of captive & non-captive operators (48%) • While majority are offshore, value of total offshore investment is low = USD 4.3 million (out of USD 13.2 million) • 86% have BOI status

  5. BPO Investments with BOI status

  6. Offshore/ Onshore Investments

  7. BPO entry by year

  8. Reasons for locating in Sri Lanka

  9. Operating costs of BPOs

  10. Government incentives used by BPOs • Tax incentives is the third most frequently cited reason for locating in Sri Lanka

  11. Most popular services • Accounting = 43% of the companies • Call centre services = 19% • Medical insurance processing = 14% • Non-captives offer more services than captives (avg. of 3.5 vs. 1.4)

  12. BPO service offerings

  13. Main export markets

  14. Employment • Total employment (21 BPOs) = 3,700 • 50% have up to 62 workers • Avg. workforce at offshore BPOs = 265 • Avg. workforce at onshore BPOs = 78 • Avg. workforce at captive BPOs = 228 • Avg. workforce at non-captive = 134 • The average monthly salary of a BPO worker = USD 270 (inclusive of bonuses and commissions.) • 95% provide training

  15. Age distribution amongst BPO workers (excluding largest BPO)

  16. BPO employees by educational qualification (excluding largest BPO)

  17. Workforce composition of the largest BPO • The largest BPO reported a workforce of 1,700 • Degree holders = 25% • Advanced Level qualified = 75%

  18. Turnover in 3, 6 and 12 months (includes largest BPO) • Avg. 1-year turnover = 6% • Avg. 6-month turnover = 4% • Avg. 3-month turnover = 3%

  19. Skill requirements – Primary Skills • Spoken language proficiency in English considered an important requirement by 95% • Written proficiency in English considered important by 66%

  20. Satisfaction on availability & quality of personnel

  21. Obstacles to growth and operations

  22. Leading obstacles

  23. Operational stability • Civil/political instability is the leading threat to operations and growth – 67% • Further more: • 67% expressed concerns about the state of law and order. • 57% expressed concerns about maintaining Sri Lanka’s image abroad. • 33% of the companies do not think that interpretations of regulations applicable to BPOs are consistent and predictable

  24. Regulations • Taxes are not considered an obstacle but tax administration is seen as an obstacle by 38% • Labour regulation are considered a difficulty by 38% • Customs/trade regulations are seen as obstacles by 10% but 67% do not think they pose a problem • Environmental regulations are not considered problematic

  25. Regulations

  26. Delays due to regulations/procedures • All of the companies that experienced start up delays are BOI companies

  27. Public/Mass transport system • Mass transport is the second most frequently cited obstacle to growth and operations • 57% said mass transport is an obstacle • 38% said transport infrastructure (roads) is an obstacle

  28. Telecommunications facilities Reliability of leased lines and telephones

  29. Types of Internet access used by BPOs

  30. Growth plans

  31. Expansion plans • 95% plan to increase employment • Employment growth of 30% in 2006-7 • 76% stated expansion plans out of which: • Physical exp. = 50% • Market expansion = 13% • New partnerships = 6%

  32. Conclusions

  33. Primary requirements for BPO sector growth • Capacity expansion • English • Telecommunications (+land) • Mass transport • Feasibility of setting up a dedicated BPO zone with enhanced transport and telecommunications infrastructure should be considered. • Facilitation of entry & operations • No specific regulatory changes • facilitation mechanisms - investment entry & operations • Marketing and promotions

  34. 12 Balcombe Place, Colombo 8, Sri Lanka (v) +94 11 493-992 (f) +94 11 494-0290 asia@lirne.net www.lirneasia.net