Download - SLASSCOM Strategy Document 2016 · at the Travolution Awards and was praised for “taking initiative approaches and technologies to develop new products and services for their trade

SLASSCOM StrategyDocument 2016

About SLASSCOMSLASSCOM is the national chamber for the IT/BPM industryin Sri Lanka and acts as the catalyst of growth for theSri Lankan IT and BPM industry by facilitating tradeand business, propagation of education and employment, encouragement of research and innovation, and by supporting the creation of a progressive national policy framework. Member organizations of SLASSCOM account forapproximately 90% of the IT/BPM industry export revenue.

SLASSCOM is the national chamber for the IT/BPM industryin Sri Lanka and acts as the catalyst of growth for theSri Lankan IT and BPM industry by facilitating tradeand business, propagation of education and employment, encouragement of research and innovation, and by supporting the creation of a progressive national policy framework. Member organizations of SLASSCOM account forapproximately 90% of the IT/BPM industry export revenue.

15 years ago, the IT/BPM industry recorded an export revenue of $50 million and today, quoting Central Bank figures for 2015, it’s at $850 million, employing around 80,000 professionals. We are inching towards becoming a $1-billion-dollar industry. We have become the fifth largest export revenue earners with 95 % value addition.

It has been a journey not by accident but by a plan made 10 years ago when we set our mission to become a billion-dollar industry. And looking into the future, in line with making Sri Lanka a key IT/BPM destination, SLASSCOM’s Vision 2022 is an aspiration that foresees the Sri Lankan IT Sector becoming a $ 5 billion industries, creating 200,000 direct jobs and enabling the launch of 1,000 startups.

This Strategy Document, which is the first of its kind, mirrors this tactical direction that we had, starting 10 years ago and outlines the framework that will see Vision 2022 become a reality. The industry’s main priority for the next decade is to move up the value chain, doing away with the dependency on cost arbitrage and instead focusing on niche sectors to truly deliver high value added products and services.The document outlines four key focus areas and seven proposed initiatives that take into consideration all these factors and will drive Sri Lanka towards being an innovative and competitive player in the global IT/BPM sphere.

Yet, this cannot be achieved alone – it requires support from not just the key stakeholders, but every player in the industry, from the government bodies to the private companies, innovators, entrepreneurs, to the academia, to action this strategy and make it a reality. Mano Sekaram, Chairman,SLASSCOM,

Industry performance summary and shape of future success

Vision 2022: Sri Lanka IT / BPM Sector

3SLASSCOM

IT/BPM industry national goal: Job creation and export revenue generation

When compared against main economic sectors such

as apparel, agricultureand tourism, the knowledge services sector has the most potential to increase future

export revenue andemployment with almost 100% local value addition

No. employed

2007 2013

2007 2015 2022

2007 2015 2022

171 225

1000+

213850

5000

33,702

2022E

200,000

Export Revenue (USD) Mn

No. of Start-ups

75,107


SLASSCOM

Journey thus far over the last decade …

4

The software used for holiday bookings at Qatar Airways /

Emirates was developed in

Sri Lanka.

Dialog Axiata PLC awarded the Global Award

for the Best Mobile Money Service and Best Technology Enabler at

the Mobile World Congress (MWC) 2015 and Best

Mobile Network Solution for Serving Customers at the

MWC 2016.

Immigration entries at Mauritius and Fiji are recorded via a

Sri Lankan Software.

Transactions of the Global Stock exchange from London

to Johannesburg or from Borsa Italiana to Bursa

Malaysia amongst many others will be completed

via a software developed in Sri Lanka

2007Sri Lanka’s first ruralBPO was establishedin Mahavilachchiya.

2007

2008Formation of SLASSCOM as a representative bodyfor the advancementof IT/BPM Industry.

2011

2013Sri Lanka selected as the Offshoring Destination of the Year 2013 by the NationalAssociation for Outsourcing (NOA) in UK, an achievement to be repeated againin subsequent years.

2013USD 720 mn export revenue and 75,107 IT workforce.

2010USD 310 mn export revenue and 50,159 IT workforce.

2009Country’s first IT Park was established as a privately

owned venture with 550,000 sq.ft of developed space for use by IT and IT

Enabled companies.

2011SLASSCOM launches an

industry career initiative FutureCareers at Colombo

EDEX exhibition.

2013Transition from version 1.0 to

version 2.0 of the e-Development Agenda,referred to as 'Smart Sri Lanka',to move from pure

technology and focusing more on innovation, transformation,

entrepreneurship and inclusion.

Launch of Spiralation,the Government funded technology based startup accelerator programrun by the ICTA of Sri Lanka.

USD 213 mn export revenue from the

industry and 33,702 IT work force

Examples from amongst a multitude of local achievements

2014Launch of SLASSCOM Sri Lankan IT/BPM Industry Review Report.

2011Launch of the

annual industry compensation and

benefits survey.

2014Sri Lanka wins the National

Outsourcing Association (NOA) Offshoring Destination of the Year Award 2014, for the 2nd

time, validating that the country is a leading destination for outsourcing of information technology and Business

Process Management.

SLASSCOM


5

2016SLASSCOM signs a MOU with LearnTV, a national educational television channel, to promote SLASSCOM events and education programs to schools and individuals across the country.

2016

2016

Launch of Startup Sri Lanka Next Generation Program designed for children to help develop a skill set to overcome social challenges and achieve their goals using technology and an entrepreneurial mindset.

2016

2016

Signing IKT Norge MOU to promote ICT sector business co-operation between Norway and Sri Lanka.

SLACC, in partnership with EDB, ICTA and SLASSCOM

hosted the inaugural Australian IT/BPM focused Business

Mission to Sri Lanka.

2016SLASSCOM signs MoU with Observer

Jobs to enhance the national ICT sector career opportunities.

2015

2015Launch of the Certified Finance and Accounting Specialist qualification by CA Sri Lanka in order to support the skill and manpower requirement to drive the FAO industry.

MoU signed between SLASSCOM and Japanese

Information Technology Services Industry Association

(JISA) to share knowledge and have business exchange

by members of bothSLASSCOM and JISA in the

area of informationtechnology (IT).

University ofMoratuwa

ranks worldnumber 1 in

Google Summerof Code

for nine consecutiveyears for the

highest numberof students

from a singleuniversity inthe world.

Virtusa was ranked in the "Execution Zone"

in the Enterprise Software segment of

its annual Global Service Provider Ratings Report for 4 consecutive

years by Zinnov, a leading global

management consulting firm.

Zone24x7 won the Gold award

for the Best R&D Product at the 2015 Asia

Pacific ICT Alliance Awards(APICTA) for its

autonomous inventory

robot ‘AZIRO’

WSO2 positioned in the 'Visionaries

Quadrant' in three of the new Magic Quadrant reports

published by Gartner.

Examples from amongst a multitude of local achievements

2014Launch of Jaffna IT Week, focusing on regional growth in Jaffna.

Launch of SLASSCOM Sri Lankan IT/BPM Industry Review Report.

2014

TRACE Expert City was established with the objective of setting up “expert cities” equipped with green, energy efficient layouts and interiors to provide world class, cost effective work spaces to Sri Lankan companies to foster innovation.

2016

Plug and Play, A Startup Sri-Lanka initiative in collaboration with various

infrastructure providers, to provide affordable workspaces for Startups.

2016

SLASSCOM organized SeedStars Colombo, the local chapter of one of the largest global pitching platform for startups, where startups can access investment and business internationally.

2016SLASSCOM organized Kandy IT week to build regional skill capacity to support the growth of the country’s IT/BPM industry.

Delivery of the first Sri LankaStartup Report providing insights on

growth barriers, opportunities, skills and future outlook for startups in Sri Lanka.

Creation of Xeleration, the first global reach accelerator

2015

CodeGen won the Technology Team of the year 2016 award

at the Travolution Awards and was

praised for “taking initiative approaches and technologies to

develop new products and services for their

trade clients

● Sri Lanka’s competitive advantage in the IT/BPM industry is built around agility, high value-to-cost, a niche talent base, strong ethics, cultural adaptability and superior quality of life as a destination for doing business.

● Sri Lanka is recognised as a Global Center of Excellence for Financial Accounting Outsourcing – we have the second largest pool of UK qualified accountants next to UK.

● Sri Lanka is emerging as a high-end global product engineering / building destination – where availability of deep niche skills is a key advantage along with the cultural adaptability and product engineering heritage.

● Sri Lanka is a highly cost competitive destination and despite a highly educated workforce, wage costs are comparable (and almost 1/3rd less for certain BPO roles) to other regional markets.

● Nearly 50% of the students who have finished their higher education are trained in technical and business disciplines.

● Sri Lanka offers tier 1 infrastructure with a tier 2 cost structure.

● The country has created a national intellectual property rights office and as per AT Kearney, is among the most rigorous intellectual property protection regime in the region.


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Sri Lanka’s key competencies and strengths...

Ranked 14th in the AT Kearney Global Services Location Index (GSL) 2016. Previously ranked number 5 in financial attractiveness ahead of India and China.

Ranks Sri Lanka No.1 in South Asia in the Doing Business Index 2014.

Ranked on Gartner's 30 Leading Location for Offshore Services. Included among the Top 9 in Asia Pacific.

12th in the top ranking destinationsin IBM Global Location Trends Report.

Ranked among the top 10 emerging global destinations by Global Services Magazine.

Awarded “Offshore Destination of the Year” byNational Outsourcing Association in 2013 and 2014. Shortlisted for the award in 2015.

The United Nations e-Government survey ranks Sri Lanka No.1 in South Asia in the e-Government ranking.

● High literacy rates – yet, not the skills needed for the industry hence need to partner with education institutions early on to develop certain key skills to be employable.

● Increasing the industry workforce as well as retaining existing workforce – stopping the brain-drain and migration out of the country.

● Increasing infrastructure capacity at an affordable cost – high lease costs for foreign investors, high energy costs need to be addressed.

● Improving the destination branding where other regional markets are also aggressively expanding.

● Less importance on cost-arbitrage and need to focus on value-addition – also, local wage costs increasing.

● Archaic labour laws and need for flexible work arrangements.

● Need for more supportive eco-system to encourage entrepreneurship and start-ups for IT/BPM – limited business support, start-up funds or mentoring and incubator space.


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Source : AT Kearney Analysis 2012, SLASSCOM

…yet, there are challenges to overcome

FinancialAttractiveness

Educated Skilled Workforce

Infrastructure Low Risk Emerging Market

Information Security

Office rent of class A space in major business hubs

Secondary enrollment rate Overall infrastructure quality score

Business operational risk Rigor of IP Protection

UK 26Mauritius 30Malaysia 32UAE 30China 47

UAE 6.3Malaysia 5.7UK 5.6

UAE 98%UK 96%Mauritius 192

UK 5.7UAE 5.0Malaysia 4.9

Sri Lanka 47Sri Lanka 4.7Sri Lanka 90%Sri Lanka 227 Sri Lanka 4.1 Egypt 49Mauritius 4.6Mauritius 89%Bangladesh 252 China 4.0Philippines 52China 4.2Philippines 82%Philippines 262 Indonesia 3.6Pakistan 52Egypt 3.9Egypt 81%Malaysia 316 India 3.5India 52India 3.8China 76%UK 26 Egypt 3.3Bangladesh 55Pakistan 3.5Malaysia 70%Egypt 368 Pakistan 3.1Vietnam 56Philippines 3.4Vietnam 70%Vietnam 440 Philippines 2.8

Vietnam 3.1India 59%Pakistan 455 Vietnam 2.5Bangladesh 2.8Bangladesh 44%China 472 Bangladesh 2.4

Pakistan 33%India 918UAE 918


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Priority for the next decade is to moveup the value chain and focus on niche sectors

The country’s overall strategy is to adopt a focused approach to differentiation and targetmarkets with planned initiatives for skills development and talent management. The industry’s

e-development agenda supports this strategy by building an innovative and continuouscollaborative environment conducive for growth. Industry targets will be achieved by leveragingSri Lanka’s core strengths to spearhead penetration of fast-growing markets. Cost arbitrage has

become secondary to value creation and industry knowledge in the decision making processof who and where to partner. Outside of the Fortune 500 companies, a massive opportunity liesin the huge untapped markets of SMEs, public sector and family run entities which will require

a different and more innovative service model. With cloud solutions becoming increasinglymore stable and cheaper, opportunity exists to leap frog into next generation services

such as demand based and online big data services.

Priority markets: SMEs, Indian Ocean region (including Asia Pacific, Middle East, Africa), markets with

cultural/professional links to Sri Lanka (UK, NZ, Canada, Japan etc.)

Captive/Outsourced Business Process Management

& Contact Centres

Finance Accounting

Outsourcing (FAO)

KnowledgeProcess

Outsourcing (KPO)

Captive/OutsourcedSoftware Development, Training & Maintenance

TraditionalCustomised Software

Development

High-EndProduct Engineering

Based on clear USP: Superior Product Engineering, Accounting & KPO Talent, Competitive Costs, Stable Business Environment, Highly Desirable Lifestyle, Proximity India+1

Global Centre ofExcellence for:

IPCreation

Target by 2022:

Top 3 globally

Top 3 in the region

Natural India+1 choice


9SLASSCOM

In the interim, Vision 2022 sets the near term ambitions to consolidate the gains thus far

Aim by 2022is for the IT/BPM industryto become the #1 strategicindustry for Sri Lanka andbe at the forefront of driving the knowledge basedeconomic growth.

Meansdeveloping the industryworkforce to focus on high value / high impact nichesegments.

Requires

a change to the approachand way competitiveadvantage has been builtup to date.

What has led us here …

● Cost reduction

● Efficiency (meeting requirements)

● Mastering basic skills (to follow instructions)

● Developing hard infrastructure (telecom,

electricity, logistics etc)

● Quality of business environment (cost of doing

business, legal protection, labour laws)

What will lead us into the future…

● Value addition and moving up the value chain

● Innovation (customised solutions)

● Developing advanced skills (to solve

problems)

● Providing soft infrastructure (business

support, educational facilities, R&D etc.)

● Quality of life (desired place to live and work)

Generate $5 billion revenue

Enable 200,000 direct jobs

Generate 1000 startups

2,500 FTE

7,500 FTE

15,000 FTE

Employement Revenue FTE per year

US$ 60,000& upwards

70,000 FTE US$ 20 - 40,000

100,000 FTE US$ 10 - 20,000

10,000 FTE

7 proposed initiatives


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Given the large pool of finance and accounting professionals, specific initiatives have beenidentified within the overall Vision 2022 topromote Finance and Accounting Outsourcing business services

National FAO objective

Increase FAO SL

SLASSCOM initiatives to driveVision 2022 objectives in the FAO sector

rankings

Position Sri Lanka as an Outsourcing Choice

Create Material/educational curriculum which can be shared

with customers Regional FAO development

Support for Potential Clients & start-ups

Develop FAO brand & Web presence in collaboration with

ICTA

FAO conference & Global FAO award jointly with NOA

Reg ional BPM Development

Prog ram

Publish FAO industry related case studies/

success stories

Build Capacity with joint Forum (CIMA, CA, ACCA, CFA &

AAT)

CFAS Qualification for specific skills &

knowledg e development with

CA Sri Lanka

50- 100 startups by 2022

FAO accelerator prog ramme in

partnership with CA Sri Lanka

● Coordinated annual campaign plan for IT/BPM promotion and branding leveraging technology (low cost e-channels, rather than high cost untargeted advertising).

● IT/BPM industry branding and collateral to be used as a single identity to promote industry internationally by all stakeholders – state institutions and missions, IT/BPM companies, SLASSCOM, diaspora.

● Targeted promotions encompassing key value propositions to specific markets.

- By region (UK/EU, ASEAN/ANZ, East Asia, US/Canada, Mid-East/Africa, etc..).

- By sector (FAO, KPO, Products, SW development, etc..).

- By company (MNC, SME).

● Focus on attracting image-changing large, high-profile FDIs.

● Establish a dedicated IT/BPM industry desk at Sri Lanka’s Investment Promotion Agencies (EDB, BoI).

● Engagement with influencers - global advisories and consultancies such as Gartner, McKenzie, Forrester, AT Kearney – for regular coverage and feedback.

● Leverage diaspora as a key sales channel as India, Egypt, Brazil, etc. have as a key sales channel.

● Leverage Sri Lanka’s trade counselors at our overseas missions.

● Adopt a structured campaign approach to increase effectiveness of marketing missions: pre-mission planning, research, targeting, pre-selling.

● Increase 1-to-1 customised pitches/conferences with the CXO level.

● Increase local promotion: larger business groups, SMEs, knowledge-based professions.


12SLASSCOM

Branding

Status

Proposal Initiatives

Govt. assistance to support above initiatives:● Launch an IT/BPM branding unit encompassing the BOI, EDB and SLASSCOM in order to develop a coordinated annual plan for investment and export promotion in the knowledge services sector.

● Continue country benchmarking reports annually authored by globally recognized influencers and analysts (such as Gartner, Forester) funded by the Government.

● Funds and state level patronage to host the first Global Outsourcing Summit to be held in Sri Lanka.

● Work with the government to use trade counselors/Commissioners of Sri Lankan missions overseas to promote IT/BPM. Provide each mission with an information pack ( EDB, BOI or ICTA to fund the preparation of up to date international standards information packs ).

● Ministry of Foreign Affairs to invite SLASSCOM for their briefings with Sri Lankan Diplomats overseas.

● Sri Lanka ranked amongst the top 25 destinations in AT Kearney's global ranking in years 2013 & 2014 and ranked 14 in 2016.

● BPO in Sri Lanka, nevertheless, isn’t searched often enough to appear on Google Analytics.

● Competing service locations such as Chile, Brazil, Spain, Philippines etc have state backed destination promotion campaigns.

● Higher education reform to increase quality and quantity and further encourage private sector participation in education delivery and technology.

● Proactively target and attract top-tier global universities.

● Encourage schools and universities to incorporate ICT and applied skills.

● Pursue joint industry-education curriculum development and research programmes.

● Continue industry-education outreach via Future Careers, Open Days and Industry Visits.

● Continue government support for industry training and certification programmes.

● Support the development of the talent supply outside Colombo.

● Form global university partnerships.

● Launch special programmes to attract diaspora and international knowledge workers.

- Introduce non-resident type dual citizen schemes.

- Introduce PAYE incentives to attract global knowledge workers.

- Easier visa and work-permit process for knowledge workers akin to program to attract Regional HQs to Sri Lanka.

● Government-Industry partnership and support for senior talent development: joint courses on BPR skills, customer communication, high-end analytics and project management.

● Emphasise and promote quality of life as a key attraction to local industry reinforce image by promoting openness, creative environment, etc.

● Update archaic labour laws to recognise flexible work arrangement to increase non-active yet willing workers to enter industry workforce.


13SLASSCOM

Workforce Capacity

Status

Proposal Initiatives

Govt. Assistance to support above initiatives: ● Support from state media to increase IT awareness and IT innovation among youth.

● State bank financial support to encourage enrollment in recognised programmes to make advanced education affordable with tied-in post-study give back through employment in local IT/BPM industry.

● Policy and legal changes to accommodate contributions from foreigners and expatriates.

● Develop a framework to align the secondary education stream to match the human resource capacity requirement.

● Support the curriculum development to ensure secondary education streams are catered to IT-BPM industry requirements.

To continue to develop and attract local talent

● State universities currently produce c.3,000 students per year and have limited funds for expansion. ● Lack of an authority to ensure quality of private higher education - Low awareness on industry career prospects, particularly within the BPM sector.● Launch of Certified Finance and Accounting Specialist qualifiction to develop BPM sector workforce. ● Ongoing career fairs, open days held around country during 2015.

The proposal is for the establishment of University Colleges in order to offer the same curriculumand degree programmes as their Public Universitycounterparts, however, on a fee basis whilst Public Universities continue to offer free higher education. Such courses are to be made available for both local and foreign students. The Public Universities shall accredit the courses and monitor the quality of delivery by the University Colleges. The academic faculty at Public Universities shall be encouraged to participate in the delivery of courses at the University Collegesfor an extra fee. Towards this end, encourage Public Universities to establish public-private partnerships with recognised private sector partners to provide industrial training and practical experience.

With this proposal, Public Universities will beencouraged to increase the pursuit of more R&D whilst the University Colleges concentrate on course delivery. Private sector investment is to be encouraged for the establishment of necessary infrastructure facilitiesfor the University Colleges – such investmentpromoted as ‘not-for-profit’.

The proposal sets out the establishment of 12University Colleges with an annual student in-take of 1,000 each primarily comprising of those unable to seek entry into the Public Universities or those with sufficient financial means to do so. The overall course fees are to be kept at relatively affordable levels in line with the ‘not-for-profit’ objective with further financial assistance made available for aspiring students with less financial means. A quota of foreign students, at higher course fees, to be pursued through on-going marketing and promotion of education tourism by the University Colleges. Residential facilities to also be offered to all students at the University Colleges in order to generate a distinct learning environment.

The roles of the Public Universities in connectionwith the said proposal to establish University Colleges include:

● To set operating standards and norms for partnering University Colleges.

● To provide curriculum and detailed syllabus for degree programs to be offered whilst permitting some flexibility for University Colleges to improve syllabus and/or make it more practical and relevant to external industry.

● To monitor and moderate all courses offered, teaching standards and physical infrastructure in order to maintain quality standards.

● To permit accredited University Colleges to use the names and logos of the affiliated Public Universities in exchange for predetermined royalty fees.

● To release lecturers willing to work on a full-time basis at the University Colleges for a temporary period of time.

● To promote joint work programmes in the industrial segment related to the degree courses offered.

Proposed plans to promote University Colleges affiliated to Public Universities through Public Private Partnerships in order to increase total annual supply of IT/BPM industry workforce from 6,000 up to 18,000 over the next three years.

In order to pursue this proposal, it is proposed that the Government shall formulate suitable policy andeligibility criteria and invite private sector investors for the proposed Public-Private Partership initiative.It is also envisaged that the Government, along with the private sector investors, shall formulate a suitable governing structure and responsible authority to oversee the University Colleges. Under the conditions setout by such governing authority, it is proposed that Government land be identified and allocated forprivate sector development of the University Colleges.


14SLASSCOM

● Incentivise and boost innovation and R&D spending by:

- Setting R&D spend targets by sector (government, industry, academia) by benchmarking against regional leaders and adjusting measurement and incentive systems for R&D spending, patent registration and commercialization.

- Establishing recognition and incentives at corporate and industry level for research publications, patents and knowledge sharing.

● Promote creative / entrepreneurial culture by:

- Encouraging innovation and entrepreneurial thinking through structured programs at primary and secondary school level onwards.

- Increasing media coverage of local innovation and entrepreneurial endeavours.

- Organizing competitions and sponsoring awards to celebrate and reward entrepreneurs.

- Studying and adopting entrepreneurship development programmes from other successful countries / regions.

- Creating a structured industry mentoring mechanism focused on start-ups with high potential.

● Create more co-working incubator spaces and SME support centres with shared services at affordable costs through public-private partnerships.

● Mobilise more finance to support startups and entrepreneurs by attracting more angel and venture capital financiers as well as incentivising funding from traditional financial sector institutions.

● Opening up markets for startups by connecting diaspora with high potential business ideas and local tech talent to realise such ideas, establishing partnership with regional accelerators to promote regional expansion of high potential startups.


15SLASSCOM

Entrepreneurship and startups

Status

Proposed Initiatives

Government assistance sought Incubate - Create a national incubation fund to identify, fund seed capital and nurture 100 most promising startup every year for the next 5 years

Initiate – Enhance current O/L IT curriculum to include a technology entrepreneurship program and help create the risk taking and startup mindset early on

Over 32 Startups have been funded through Spiralation – the government funded technology based accelerator programme since 2011. MIT Global Startup Labs has been partnering with University of Moratuwa since 2011 to support Startups. SLASSCOM launched Xeleration, an accelerator programme targeting budding Sri Lankan entrepreneurs with an added dimension of being a global startup exchange programme. Competitions such as Young Computer Scientist Award, Children’s Hackathon, Yarl Geek Challenge, Microsoft Imagine Cup run in collaboration with Government, Industry and NGOs paving the way for the next generation of tech startups. Cultural perceptions against entrepreneurship impose social barriers to entrepreneurism whilst access to finance has been a traditional barrier for SMEs. A recent crowd funding platform named Crowd Island was launched and similar initiatives in the future may reduce financial barriers for start-ups.

Accelerate – Fund focused programs to identify and assist 20 most high potential technology companies that can create 100 + employment opportunities and $10M annual revenue to achieve those goals

Sri Lankan Entrepreneurs are:

Sri Lankan Start-ups are

Young76% between

the agesof 20-36

Predominantlymale

96% of start-ups were founded by males

Educated86% have a professional qualification, Bachelor's

degree or higher

● Expanding – 55% reported generating early or growing revenues annually (with ~65% of them generating up to LKR150M in revenue annually).

● Growing their workforce – 38% work in a team of 2-5 people whilst only 7% work on their own.

● Internally funded – personal savings and support from family and friends are the most common means of funding.

A survey amongst 115 aspiring entrepreneurs, 110 existing entrepreneurs, 23 government / industry / corporate / education bodies and 16 investors revealed the following about Startups in Sri Lanka.


16SLASSCOM

Startup Sri Lanka – where are we now ?


17SLASSCOM

Respondents were asked to rate a multitude of factors pertaining to the current situation of start-ups:

What do they think about the current start-up ecosystem?

Affordable Work Space

Access to debt capital from banks

More reliable and cheaper access to internet bandwidth

Sri Lanka brand recognition and global marketing to help attract foreign clients

Access to experienced mentors to gain advice

Regulatory environment and ease of doing business

Access to technically proficient talent

A convenient means of making and receiving payments online (Such as PayPal)

Technical skills

Visible successes and role models that encourage newstart-ups

Guidance from experienced entrepreneurs

A collaborative business culture

A pro-entrepreneurship culture and support from familyto pursuit start-up dreams

Risk tolerance and celebration of failures

A supportive regulatory environment and ease of conducting business

Availability of Capital

Ranking of obstacles for growth of a startup

Ranking of enablers for Startups to succeed

● Technical / non-technical skills development initiatives for human capital.

● Peer benchmarking and formulating competitive compensation structures to reduce ‘flight risk’ of industry workforce.

● Encouraging employers to formulate convincing employee value propositions through exposure and knowledge sharing from best practices in competing destinations.

● Creation of a “HR Professionals eco system” to develop HR capacity and best practices within the industry.

● Formulate policy to promote flexible work arrangements to encourage greater use of technology and accommodate different life style or life cycle needs of industry workforce, e.g. remote working, part time work, etc.

● Provide wealth management guidance for IT/BPM professionals.

● Support the development of an asset owning knowledge workforce that will help reduce the brain drain by working with stakeholders to provide IT/BPM sector employees with affordable access to housing and create a domestic environment that replicates the environment they currently go seeking overseas.


18SLASSCOM

Workforce retention

Status


Government assistance sought

● Develop a policy framework around labour regulation, taxes, land use, permits, access to finance, integrated town development conducive to attracting FDIs and talent into the IT/BPM industry.

● Set up an Government-Industry consultative committee to regularly review and promptly address business impediments for the growth of the local IT/BPM industry.

As per year 2000 data available, 28% of emigrants from Sri Lanka were tertiary educated and the country ranked at #20 out of 103 countries for which emigration rate data was available.● Endeavors to attract top global companies at the high-end of the value chain have been showing encouraging signs and may be a boom for niche IT professionals, R&D specialists.

The following proposals are made as a way to accelerate the move to regional centres and to create sufficient incentives for the early movers to start the process.

● Cost effective office facilities : Create a facility around central areas with connectivity and provide at nominal rate/free based on the number of employment created for a defined period of time.

● Workforce training: Develop a specialized training program along with the potential companies and have a vocational training authority or a university take on to create a regional talent pool.

● Government outsourcing: As an incentive to move to the regions, provide some of the government BPM work to companies moving to regional thrust areas, e.g. Tamil call center set up in to Jaffna.

● Extended tax incentives: Based on the number of jobs created in regional centers, provide an extended income tax incentive.

● Acceleration grants: Provide 1 to 1 investment grants up to a significant value limit for the first movers over a stipulated time period in order to encourage companies to move in to the designated regional centers.

● Financial assistance: Incentivize regional workforce to seek employment within the IT/BPM companies in the regions through state supported financial assistance programs for higher education, asset ownership and family support.


19SLASSCOM

Regionalization – creating inclusive growth

Status


Government assistance sought ● Encourage public-private partnerships for the provision of commercial office space and education services in the regions.

● Identify and outsource / allocate certain components of Government IT or Business process work to qualifying IT/BPM companies in the regions.

● Introduce extended tax incentives for companies and individuals to operate or work in regions.

● Allocate matching funds to incentivize corporates and individuals to operate and work in the regions.

● Improve regional telecommunication connectivity and availability of reliable utility services.

● Jaffna IT week, Kandy IT week held to promote IT/BPM industry and create regional knowledge hubs.● Kandy, Kurunegala, Hambanthota, Jaffna and Galle identified as potential regional hubs for expansions.● Several companies have already set up small pilot operations in some of the regions.● Current availability of reliable connectivity, commercial space, supply of quality talent inadequate to encourage major business drive.

Jaffna

Galle

Kandy

Colombo

● Sri Lanka’s economy is undergoing an immense transformation, with socio-economic and infrastructure development unfolding in every area of the country, with a marked focus on advancement in the provincial zones.

● The proliferation of ICT in provincial regions is the fastest way of developing these regions. Growth has been so far concentrated within the Western province – regional hubs need to be created.

● The IT/BPM industry can operate from any location, given that a conducive environment, availability of skilled labor and sound infrastructure are in place.

● Over 80% of the nation’s current IT/BPM workforce comes from regional areas outside Colombo and this has created an environment of increased urbanization and high cost of living in Colombo.

● Given Sri Lanka’s development drive, Colombo, which is already home to hundreds of IT/BPO firms, will only get more congested. Increased expenses would mean higher costs of operation for companies and less savings for employees.

● The creation of ‘second tier cities’ would empower regional systems and the economy would see a paradigm shift from being Colombo-centric to being rural-centric. Regional people will be able to reap benefits while living in their own households, allowing them to enjoy a far better standard of life. This will assist in achieving the Government’s vision of transitioning Sri Lanka into an upper middle-income country.


20SLASSCOM

Case for Regional BPO Hubs

● Embark on regular benchmarking against best-in-class competitor destinations for IT/BPM services in order to identify areas where Sri Lanka needs improvement to support business climate and infrastructure.

● Formulate policy on improving and maintaining infrastructure quality at regionally competitive costs.

● Formulate more business friendly policy framework in the areas of labour regulations, taxes, permits, land use, foreign ownership to encourage investment and expansion of the IT/BPM industry.

● Study and eliminate business impediments with particular emphasis on the enabling environment for local start-ups and SMEs.

● Encourage development of shared commercial space, shared service centres.

● Reduce cost of business registration and regulatory compliance.

● Formulate policy towards easing access to finance to encourage education, business start-ups and R&D, business expansion and regionalization that is supportive of the growth of the IT/BPM industry.

● Design and launch development plans for fully-integrated Knowledge Cities with phase 1 covering regional IT/BPM cities in Jaffna, Kandy and Galle.

● Formulate policy and design development plans to promote soft infrastructure (education, health services, lifestyle) conducive to attract FDIs and global talent.

● Implement regional housing development projects for the IT/BPM workforce.


21SLASSCOM

Business infrastructure

Status


Government assistance sought ● Application of industrial electricity tariffs to large-scale IT/BPM export operations.

● Removal of special 15% tax on leases by foreign-owned firms.

● Develop a policy framework around labour regulation, taxes, land use, permits, access to finance, integrated town development conducive to attracting FDIs and talent into the IT/BPM industry.

● Set up a Government-Industry consultative committee to regularly review and promptly address business impediments for the growth of the local IT/BPM industry.

● Sri Lanka is rated as a highly cost competitive destination where average office rent in Colombo is at least 30% less than competing destinations.● 1st country in the world to be selected for implementation of the Google Loon Project to provide comprehensive network coverage throughout the country.● First South Asian country to establish a 4G LTE network. ● Only South Asian country to have acceded the Budapest Convention on Cybercrimes and to ratify the UN Convention on use of Electronic Communication in International Contracts.● Country is rated amongst the most rigorous IP protection regimes in the region.

TRACE Expert City in Maradana, Sri Lanka – concept to reality, a city developed and dedicated to promoteinnovation, research & development.

TRACE Expert City today is home to an increasing number of technology associated businesses pursuing knowledge-rich, techno-centric enterprises in order to promote a business hub geared towards innovation,entrepreneurship and professionalism. This technology hub has been conceptualized with the objectiveof creating an ecosystem that supports science, technology and innovation to lead the country towards theGovernment’s vision of a knowledge-based long-term socio-economic growth. The initiative also providesaccess for new partnerships among tech-oriented companies, academic partners and other institutions toengage in commercially feasible ventures.

Further development and expansion of the TRACE Expert City and replication of similar business hubsare proposed in order to provide enabling infrastructure to facilitate wider stakeholder participationto drive catalytic growth.

Case study of recent success in developing enabling business infrastructure to promote IT/BPM Industryand a wider knowledge-based economy


22SLASSCOM

● Encourage local companies to actively seek financial and strategic investors to enhance service capability, access to new markets, and enhance company and local industry brand.

● Seek formulation of investor friendly policy framework and regulatory requirements to reduce investment risk and market entry.

● Engage Sri Lankan diaspora and overseas diplomatic missions to promote IT/BPM industry capabilities and country investment incentives.

● IT/BPM industry representatives to be actively involved in outward missions travelling to attend investor promotion road shows and events.

● Actively engage in promoting Sri Lanka as a livable city and investor friendly destination for global corporates seeking overseas expansion or service centres.

● Pursue opportunities for public-private partnerships to attract highly rated higher education institutions to set up overseas or satellite universities to enhance advance skill levels and local R&D capability – availability of high-skilled talent to encourage FDIs in niche sectors.


23SLASSCOM

Attract FDIs

Status


Government assistance sought

● Formation of an inter-ministerial task force for IT/BPM chaired by the Prime Minister.

● Formulate necessary legislative amendments in the areas of labour law, foreign workers, land ownership and leases to promote FDIs.

● Formulate investment policies in line with a long term strategic plan for economic development.

● Establish bi-lateral trade agreements for technology and IT/BPM services.

● State support to attract at least five multi national corporations to start operations in Sri Lanka.

Number of large multinationals havealready set up offshore businesssupport / shared service centers inSri Lanka - There is 100% foreignownership permitted in the IT-BPMsector with no capital control orrepatriation risk.

London Stock Exchange Group acquiredMillennium IT which operates in Malabe, Sri

Lanka for their Trade Platform Software

Canadian IT company Navantis IT operates itsoffshore Development center in Sri Lanka

Globally known consultancy company Virtusaruns a 2000+ operation at Orion City

Gartner cool vendor CAMMS runs an offshore deve center in Sri Lanka

Globally renowned Education IT specialistPearson runs a 350 man R&D center at

OrionCity

HSBC runs a 2000+ TransactionProcessing operation in Rajagiriya


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SLASSCOM together with private sector stakeholders in the IT/BPM industry will work with the government to implement initiatives in line with long term national economic and social objectives. Our aim is to enhance avenues of foreign investment, foreign exchange revenue and skilled employment in a knowledge economy to compete globally where world class technology, innovation, global best practices are implemented. This will help the industry develop and sustain its competitive advantage globally.

● Support from state media to increase IT awareness and IT innovation among youth.

● State bank financial support to encourage enrollment in recognised programmes to make advanced education affordable with tied-in post-study give back through employment in local IT/BPM industry.


SLASSCOM

REFERENCES

• Annual Report 2007 Central Bank of Sri Lanka




• Competitive Benchmarking: Sri Lanka Knowledge Services. ATKearney

• Country Overview of the Startup Eco System of Sri Lanka

• Sri Lankan IT/BPM Industry Review Report 2014

• Sri Lanka IT/BPM Website ( srilankaitbpm.com)

• National ICT Workforce Survey November 2013

SLASSCOM Corporate Office

2nd floor, Mc Laren’s Building, 123,

BauddhalokaMawatha,

Colombo 4.

Office: 94 114 062223-7

Email: [email protected]

Web: www.slasscom.lk

Disclaimer This document has been prepared for general guidance on matters of interest only, and is not intended to constitute investment advice. The publication may contain opinions and statements of various information providers. PwC does not represent or endorse the accuracy or reliability of any opinion, statement or other information provided by any information provider or any user of this publication or other person or entity. You should not act upon the information contained in this document without obtaining specific professional advice. In no event will PwC or its professionals be liable in any way to you or to anyone else for any decision made or action taken in reliance on the information or for any direct, indirect, consequential, special or other damages related to you or to your use of information, even if advised of the possibility of such damages. © 2016 PwC. All rights reserved. PwC refers to the network of member firms of PricewaterhouseCoopers International, each of which is a separate and independent legal entity.

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http://www.slasscom.lk/

Download - SLASSCOM Strategy Document 2016 · at the Travolution Awards and was praised for “taking initiative approaches and technologies to develop new products and services for their trade

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