Sri Lanka’s business process outsourcing (BPO) industry aims to generate $3 billion in export revenue by 2024 as the country undergoes a digital transformation.
The Information and Communication Technology Agency (ICTA) predicts Sri Lanka can reach the $3 billion export target through innovation and expansion. The BPO industry is part of the country’s information and communication technology (ICT) sector, which is predicted to contribute $15 billion to the digital economy by 2030.
Meanwhile, the Federation of Information Technology Industry Sri Lanka (FITIS) anticipates the number of businesses to increase to 750 tech companies, 1,000 information technology (IT) startups, and 500 other technology startups, generating at least 100,000 jobs by 2024.
These developments come as the local economy rebounds. Following a first-half contraction, the country’s GDP grew by 3% in the second half of 2023. As economic recovery continues, the inflation rate will remain below 10% between 2024 and 2025.
Sri Lanka as an outsourcing destination
The island nation has emerged as an attractive outsourcing destination for its unique advantages. Its robust educational system and English-speaking population produce a constant flow of skilled professionals.
The BPO industry in Sri Lanka serves different sectors such as customer support, IT services, human resources (HR), and finance and accounting. Due to its advantageous location and proficiency with knowledge-intensive procedures, the nation has drawn international businesses looking to streamline their operations.
Primary advantages for the BPO industry
Sri Lanka enhances its appeal as an emerging outsourcing destination for the following key advantages:
Cost-effective labor
The country offers competitive labor costs at $1,700 per year, at par with those of India, Bangladesh, and the Philippines.
Educated and tech-savvy workforce
Sri Lanka boasts a highly educated and English-proficient workforce, driving a solid knowledge services industry with over 80,000 skilled professionals. Sri Lanka stands out in Asia with 93.3% adult literacy, ahead of other outsourcing countries such as India (77%) and Bangladesh (76%).
Strong infrastructure
Infrastructure investments have enhanced connectivity and reliability in Sri Lanka, the first South Asian country to trial 5G technology and launch a commercial 4G-LTE network. The island boasts 95% 4G coverage.
Advanced technologies such as artificial intelligence (AI), automation, and data analytics transform the local IT industry, improving service delivery and operational efficiency. This digital shift positions Sri Lanka as an innovation and technology leader, keeping pace with global digitalization trends.
Stable political environment
The country’s political stability provides a positive business environment. Sri Lanka’s centralized system of government plays a dominant role in this.
Former President Ranil Wickremesinghe had set strategic priorities through a 25-year development plan. The immediate goals were stabilizing the economy, increasing private investments in critical sectors, and liberalizing trade.
Sri Lankan government initiatives to aid the BPO sector
The Sri Lankan government has implemented various initiatives to support the BPO sector’s growth. These include establishing special economic zones with tax incentives and infrastructure support for companies.
The government focuses on streamlining regulations, promoting digital innovation, and fostering a positive business environment. It allows 100% foreign investment in any industrial, trading, or commercial activity, except in coastal shipping, air transportation, and military hardware.
The government also established the National Workforce Development Policy and Program to produce a trained, employable workforce, enhance workforce skills, and maintain competitiveness.
As Sri Lanka continues to innovate and strengthen its BPO capabilities, it capitalizes on the growing demand for global outsourcing services.
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H Connect International. (2024, January 23). Sri Lanka: The Untapped Gem of the BPO World. Retrieved October 3, 2024, from https://www.linkedin.com/pulse/sri-lanka-untapped-gem-bpo-world-hconnect-int-jltqc/
Sirimanna, B. (2024, September 29). Thriving BPO industry targets $3bn in export revenue in 2024. The Sunday Times (Print Edition). Retrieved October 3, 2024, from https://www.sundaytimes.lk/240929/business-times/thriving-bpo-industry-targets-3bn-in-export-revenue-in-2024-572416.html
Ambepitiya, C. (2023, January 12). The BPO industry in Sri Lanka. Retrieved October 2, 2024, from https://www.linkedin.com/pulse/bpo-industry-sri-lanka-chirantha-ambepitiya/
