Air Pockets

October 7, 2006 (LBO) – Sri Lanka’s deadly ethnic conflict is possibly the biggest challenge that is holding down the business process outsourcing industry’s growth, as an escalation in violence spooks foreign clients, a new industry study shows. The South Asian Island had a head start by opening its telecommunications industry in the early 1990s, but subsequently missed the global business outsourcing bus, as foreign firms flocked to neighbouring India, taking advantage of a large knowledge pool of low cost workers and booming infrastructure.

Since attracting the first business process outsourcing (BPO) unit in 1983, growth has been slow, attracting little over 13 million dollars in investments spread over 25 companies, employing close to 4,000 people who earn a monthly average of 270 dollars.

While, infrastructure bottlenecks like poor transport, expensive electricity and reliability of telecom services makes it difficult to do business, Sri Lanka’s three decades old ethnic conflict has emerged the biggest headache for the fledgling BPO industry.

Violence has surged on the island in the past 10 months, claiming over 1,500 lives since December and leaving a 2002 ceasefire in tatters.