IT SMEs finding it cheaper to do business in Sri Lanka

Hemamalini Venkatraman

Can India take a cue from its neighbour Sri Lanka to promote small and medium enterprises (SMEs) in the IT sector? The island nation is weaving its charm on IT SMEs from India even as it has launched its mission to touch $2 billion in software exports by 2012.

It is faster and cheaper to fly from Colombo to Chennai, than it is to take a flight from Chennai to even Bangalore or Hyderabad, observes Indian IT SME Association (representing over 3,200 such firms, based mainly in the southern IT hubs) president Sankaran P Raghunathan.

IT companies like Millennium Technologies, Virtusa and IFS and a host of BPO majors, HSBC Electronic Data Processing Centre, Amba Research and WNS Global Services, are already operating out of Sri Lanka.

The Government has constituted a hilevel task force to address supply side bottlenecks, while promotional agencies have been rolling out a red carpet welcome to Indian IT SMEs.

Recently, a delegation headed by Board of Investment (BoI) of Sri Lanka Executive Director Duminda Ariyasinghe came calling on Indias three southern capitals, Chennai, Bangalore and Hyderabad.

The IT SME association facilitated the meet in these places, with the Bangalore session chaired by Karnataka STPI Director R Rajalakshmi.

IT SMEs have enough and more reasons to consider the neighbouring country as the cost of doing business works out cheaper in Sri Lanka compared to Singapore or Malaysia. “We are not looking at competing with India but see ourselves complementing it, especially for backup recovery or business continuity operations.

Not only are the operational costs lower in our country, the attrition rates at about 13% is less than half that of India. Cost of labour is 30% lower than India,” Ariyasinghe told ET.

While competitive wages range from $100 - $1500 per month, other key points of the workforce being its high productivity, creativity, proven precision and manual dexterity skillsets.

Last year, its total IT/ITES workforce was 37,792, registering an annual growth of over 30%. Indian SMEs have the difficulty in hiring talent and getting space to meet their expansion. Whereas, Sri Lanka as a destination offers a huge advantage for this segment. Home to many start-ups, the entrepreneurial culture is quite strong there, Ariyasinghe added.

We have bounced back from a Tsunami. Taking cue, Indian companies are mulling the option of expanding their businesses there. Among the early movers are Chennai-based Blueshift and BPO firm Hellocorp.

The Economic Times