ICT
BPO is very much related to IT
Yasas V. Abeywickrama
Sri Lanka has been increasingly recognized as an attractive
outsourcing destination. In 2005 HSBC established its captive call
centre in Colombo and that was a milestone for this sector. By 2007,
major BPO destination ratings such as AT Kearney had featured Sri Lanka
top of their ratings. The environment is also highly conducive for
establishment and growth of the outsourcing sector.
What is Business Process Outsourcing (BPO)
Yasas
V. Abeywickrama |
Outsourcing is to contract out an organization's operations and
responsibilities to a third party through an agreement. If Business
Processes are outsourced, then it is termed BPO.
When organizations outsource knowledge intensive business processes
that require specialized domain expertise (rather than process
expertise) and is called as Knowledge Process Outsourcing (KPOs).
BPO is very much related to IT - Information Technology. Business
related processes cannot be outsourced to far away places if there is no
IT. Computers, internet, networking and communication technologies play
a key role when outsourcing business activities related to accounting,
data processing, finance, customer service etc.
In BPOs, it is standard business processes that are being outsourced
to another party. This could be standard data entry, financial data
entry, basics financial accounts maintenance, medical transcriptions,
call centres.
However, in the KPO scenario, it is not about standard business
processes. It is about things like outsourcing the documentation of a
market research report or asking a third party to do an analysis of your
organization's financial accounts for the last five years. Now, these
are not standard things.
Sri Lanka's Position
They are specialized, they are not repetitive and requires
application of special knowledge. Hence they are knowledge based
processes as opposed to standard business processes. At the last count (EDB
Export Value Survey 2008) there were around 41 BPO/KPO companies that
were operating in Sri Lanka, mostly small and medium companies and few
large global players. Among the several leading global BPO/KPO companies
operating in Sri Lanka were HSBC UK banking centre, WNS UK legal
services centre, Aviva Finance and Accounting Centre, Industrial and
Financial Systems (IFS), Amba Research, RR Donnelley, Aegis. In addition
to those which were mentioned in the report there are many other BPO
companies that operate below the radar and almost all of them are in the
small to medium category.
Earnings from exports of IT-BPO sector have shown a steady upward
trend during the past decade, and the 2006 BPO exports were at US $ 173
million and had grown close to US $ 400 million by 2010.
Given the circumstances prevailing in the past few years where global
economy had slowed down, the BPO sector is one industry which was
resilient to the adverse conditions and actually grew in terms of
employment as well as export earnings. When recession hits, western
companies are pressured to lower costs hence outsourcing grows even
faster and deeper during such difficult times.
Currently, close to 15,000 are employed in the BPO industry in Sri
Lanka. According to SLASSCOM (The IT/BPO industry chamber) during the
past 5 year period it had grown at 26% Year-on-Year. Main services
currently provided in Sri Lanka include back office data processing and
administrative work, voice related outsourcing, medical data
transcription, insurance claims processing, business integration,
accounting and tax services, legal data base processing and e-commerce
services. Legal services outsourcing is gaining increased prominence
while for finance and accounting sector the potential remains intact. A
recent PricewaterhouseCoopers survey has highlighted the fact that Sri
Lanka and the Philippines together provide up to 20% of the total
outsourced legal services worldwide.
Most of the work so far has been outsourced from USA and UK, but now
other countries in Europe as well as the Australian market is picking
up. In July last year, the SLASSCOM signed a MoU with Australian
Information Industry Association (AIIA), which will strengthen
relationships to bring more work from this segment.
The best thing with this sector from an economical perspective is the
fact that it can bring foreign revenue to Sri Lanka. Even today, it
stands as the fifth highest foreign income earner for Sri Lanka.
As the world continues to move towards a knowledge based economy, the
potential of this sector is increasing and we need to capitalize on this
trend. From a career perspective, it offers well paying salaries,
professional working environments, international work exposure and a
lift in the life style.
Finance, Accounting BPO sector
Large companies now tend to outsource their accounting functions to
more specialized providers, in most cases at lower cost destinations.
The idea is to concentrate on your core business and get routine
standard work out of the way.
It could also mean that you get better accounting services as the BPO
provider may be specialized in accounting while it may not be your area
of strength.
This is an area where Sri Lanka is already doing well. Financial and
Accounting services outsourcing sector has had a significant growth in
our economy. Colombo now has the world's largest pool of UK qualified
English speaking accounting professionals outside the UK itself, mainly
through CIMA.
Many global companies have chosen to set up their niche centres
relating to this area in Sri Lanka such as Accounting and UK Legal
Services Centre of WNS and Investment Research Centre of Amba Research.
If we take Finance and Accounting BPOs, they provide end-to-end
finance and accounting processes such as Purchase to Pay Cycle, Order to
Cash Cycle, Account to Report, Banking and Treasury Cycle, Fixed Assets
reporting, General Account Cycle and Management Reporting Cycle.
There are financial analysis, research and reporting related work
also at the higher end of the BPO landscape. Companies such as Amba
Research are more geared towards this end.
The Future
The BPO sector is here to stay and grow. In the new knowledge era, it
is one of the best industries that a developing country like Sri Lanka
could develop. Even during a recession it can sustain and can offer
great careers to our young people while earning crucial foreign income.
So, let's develop it together!
The Writer Yasas V. Abeywickrama is an entrepreneur, trainer, writer
and speaker. |