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Core Challenges Of Sri Lanka Becoming a Top BPO Destination

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Introduction

Sri Lanka is emerging as a global BPO destination. And is ranked among the top 8 countries with a flexible labourmarket, advanced infrastructure quality and network readiness. In this era where the country is moving towards economic development, it is no secret that the development of the Business Process Outsourcing industry will be a huge contributing factor to this effort. And the government of Sri Lanka has taken active measures to ensure Information technology & English language skills are developed throughout the country.

What is BPO?

Business Process Outsourcing is the contracting of a specific business task, such as payroll, to a third-party service provider.(SEARCHCIO, 2016)

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In the early stages of BPO, it only applied to manufacturing entities, such as soft drink manufactures. However in the present it is applicative to the outsourcing of services. Usually BPO can be applied as a cost-saving measure for tasks that company requires but does not depend to maintain marketplace position. Generally BPO can be divided into two categories: back office outsourcing which includes internal business functions such as billing or purchasing, and front office outsourcing which includes customer-related services such as marketing or tech support.

BPO Industry in Sri Lanka

Sri Lanka is rising as a global BPO destination. Still an emerging industry, since 2000BPO industry has reached a steady state while attracting some of the global giants in the BPO sector. And Sri Lanka is growing in reputation for offering a rapidly growing niche workforce which is highly adaptable, innovative, English speaking and loyal. Currently, there are over 60,000 employees in the BPO industry in Sri Lanka and the workforce is growing at over 20% year-on-year. The workforce is reliable with very low attrition rates ranging from 10-15%. Presentlythere are around 300 BPO companies operating in Sri Lanka. Annual exports of BPO sector is around 400 million US dollars in 2011.

According to SWOT analysis BPO industry has significant strengths, opportunities, weaknesses and threats.

  • Strengths: high literacy rate, English slieaking lioliulation in Colombo, availability of sliecific talent liool, investor friendly liolicies, time zone advantage, low labor cost for highly educated work force.
  • Weaknesses: lack of infrastructure, middle & senior management brain drain, lack of language skills outside Colombo, high bandwidth and electricity cost, lack of 24/7 suliliort for the industry such as transliort and catering.
  • Oliliortunities: end of the civil war, benefits to other industries (IT hardware and software liroviders), brand Sri Lanka as a niche knowledge hub in BliO, and use the large Sri Lankan exliat community to attract work.
  • Threats: USA onshore olierations scaling uli at low cost, India and lihilililiines already have a large market share, china and brazil emerging as strong low cost lilayers with English language skills.

Current top Sri Lankan BPO companies include: HSBC Data Processing Lanka (Pvt.) Ltd, WNS Global Services (Pvt.) Ltd, Virtusa (pvt) Ltd, Amba Research Lanka (Pvt.) Ltd, John Keels Holdings PLC, Hellocorp (Pvt.) Ltd, Microsoft Sri Lanka.

Challenges of BPO in Sri Lanka

Sri Lanka is emerging as the next global BPO destination. Even though there is a stable foundation for Sri Lanka to be in the top ten BPO destinations, there are many challenges the country would face in reaching that goal.

External challenges

Global economic changes: With the capacity of the worldwide economy to withstand further stuns to the framework, there are weights on the BPO segment to draw in new clients and hold existing ones.

A positive perspective is the way that the falling rupee versus the dollar has implied that the Sri Lankan outsourcing organizations are procuring the impact of the devaluation as far as higher rupee incomes. This additionally expands the intensity of these organizations since their administrations cost less in dollar terms.

Language barrier: whenan outsourcing of call center jobs or transcription work, language would probably have a major role, as both requires clear understanding of the accents, practice of speaking colloquial terms fluently and the same.

Exchange rate ratio: At the point when assembling offshoring plans, organizations once in a while investigate the currency patterns of the destination nation. Fluctuating currency with lack of common sense can wind up costing more than the cost of the work done onsite.

Subsequently, inclines in the conversion scale in admiration to an outside one must be one of the main considerations mulled over while selecting distinctive offshore destination nations.

Legal challenges: The legitimate risks connected with outsourcing start to an extensive degree from the way that there is a relative absence of point of reference for, instance: cures or harms that can be requested from an outsourcing administration supplier.

One way that has been compelling in decreasing risk has been the improvement of points of reference for venture, with expense installment developments.

Security risks:BPO client organizations offer data with their outsourcing accomplices. What’s more, International developments in information security have alleviated the danger of imparting information to administration supplier organizations.

Nonetheless, client organizations need to guarantee that their BPO administration suppliers take after the customer’s security arrangements. Along these lines the issue of security ought to be tended to service level agreements.

Labor related challenges: labor relations laws in the outsourcing area display another test to business process outsourcing wanders.

For instance, inability to take after these laws may bring about fines for the customer organization. For the above reason it is critical for organizations considering outsourcing to concentrate on the labor laws in the nation to which they need to outsource administrations.

Internal challenges

Lack of required labor force: though there is a good talent pool in Sri Lanka it is not large enough to support the demand. Also it is very difficult to find the suitable employee with industry knowledge. When compared with the other countries Sri Lanka has the highest brain drain rate. Hence, Sri Lankan BPO’s find it hard to acquire the required talent pool.

Lack of adequate infrastructure:from some recent interviews it was revealed that the top management in Sri Lankan BPO companies are not satisfied with the current infrastructure availability in Sri Lanka. AlthoughSri Lanka has good infrastructure when compared with the other top global BPO’s it is not enough to attract more investors to start their businesses in Sri Lanka. Investors hesitate to start their businesses with a seen risk.

Political instability: the political difficulties of recent years have seen the country slip from its position as a BPO location. Recent political developments have damaged the country’s creditabilityand has increased its risk as a location for global sourcing.

Government policy and regulation: The government realizes that BPOhas the potential to enhance economic development in the country. It is one of the top priorities of the government and favorable policies are being formulated to generate maximum benefits from the industry.

How to overcome challenges of BPO

BPO industry is the fifth largest foreign exchange earner for Sri Lanka. And Sri Lanka is in a highly advantageous position to achieve this target as the expansion of global offshoring and free flow of increasing technological developments provide a very stable environment for BPO industry.With highly skilled, well qualified labor pool and competitive utility costs Sri Lanka could take this opportunity to achieve their goal. When establishing that goal there are many challenges that the Sri Lankan BPOindustry has to face today. By developing strategies these challenges could be minimized into some extent.

By establishing BPO academies for young school leavers the government initiate more training courses for different languages to reduce language barriers and polishing skills to improve their knowledge about BPO industry. Furthermore the government could help to obtain more brain gain to the country by encouraging dual citizenship and gathering information about professionals. Hence, the government could prepare Sri Lankan graduates for local and global workforce.

Advantages and Disadvantages

Business process outsourcing is an awesome alternative for associations hoping to streamline business procedures and expansion efficiency and benefit. In this, outsider offices perform your back office and also front office data entry. This association gives undertakings the advantages of overhead cost diminishment, enhanced efficiency and better quality. In any case, there are additionally a few confinements if the assignments are not outsourced to the fitting BPO administration supplier. Therefore, before outsourcing it is important to understand the advantages and disadvantages of business process outsourcing.

Conclusion

Sri Lanka is well known for its traditional exports, but it is a clear indication that Sri Lanka is heading towards a BPO industry boom. Starting with captive units and low end activities BPO’s now moving to high end activities. Operating in both front office and back office operations. Although there is a suitable foundation to be among the top 10, there are many challenges the country will face in reaching that milestone. And the main objective of this assignment was to find out the core challenges of Sri Lanka becoming a top BPO destination.

In this assignment the following points are evaluated,

  • What is BliO?
  • BliO industry in Sri Lanka
  • What are the challenges faced by the Sri Lankan BliO industry
  • How to overcome these challenges
  • Advantages and Disadvantages

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