Sri Lanka And Business Process Outsourcing Business Essay


1. Business Process Outsourcing is no more a new concept. However, it had become an essential component in all over the business world. Business Process Outsourcing is one-step ahead of the 'Outsourcing concept', and there are many business process activities being identified to outsource in production and other business sectors.

2. Business Process Outsourcing is popular in most developed and many developing countries like China, Philippines and India are few examples that this process is professionally worked out and getting high profits to their countries. They have also inter-connected net of offshore Business Process Outsourcing systems.

3. Presently a company can outsource their business to BPO vendors, So that they can actively involve in their principle business operations. BPO provider or BPO vendors will look

after other matters of Business Process professionally involved with new technology and modern equipments and most probably with less cost.

4. Business Process Outsourcing is not much popular in Sri Lanka when compared with other Countries. However, there are few BPO providing companies performing their

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business process activities effectively at present. There are more benefits in Sri Lankan to implement Business Process Outsourcing market to initiate their business activities.

5. Companies should correctly evaluate the outsourcing activities of the business process and should identify the correct vender for outsourcing. Therefore, a company can enjoy the benefits of BPO if not the outcome would not be positive.

6. Sri Lanka having access of educated unemployment of young work force they can effectively employ in BPO involved companies. It will help to solve the unemployment problem and will also open the opportunity to serve in foreign countries as well.

7. BPO concepts are popularize among the commercial sectors like banks, production centres, other services, and communications improving and promoting BPO private sector businesses. In addition, its' benefits should reach the customers in Sri Lanka as a whole.


8. The aim of this service paper is to enhance the knowledge on Business Process Outsourcing concept and elaborate the benefits to introduce it to Sri Lanka.


9. Business Process Outsourcing is a sub-set of outsourcing which involves the contracting of the operation and the responsibilities of specific business processes to a third party service provider.

10. Business Process Outsourcing to customers. Customers who are involved with Business Process Outsourcing services are expected to have certain objectives and goals by implementing BPO process in their business organizations:

a. Innovative ways of increasing the efficiency and quality of an entire business process through values added services.

b. Customer satisfaction.

c. Direct quantifiable impact to cost.

11. Any company can facilitate Business Process Outsourcing requirements from a vendor who is established in any part of the world. There are some terms used as based on the location of the service provider's location. Those are:

a. Onshore BPO. In this case, for example a service provider is located on shore, i.e. if the US based company is outsourcing to another US based company.

b. Near-shore BPO. In this particular situation, the service provider is located near shore is somewhat a lower country location in a nearby country. For example, if the US based company is merging outsourcing work to another company-based like Canada, the process will be called near shoring.

c. Offshore BPO. In this case, the service provider is located far away from the company, which the outsourcing work communication and control is existed using IT or computer systems enabled tools over long distance telecom networks. For example, when a US based company outsource work to another company based in India or Philippines.


12. Business Process Outsourcing has many functions. All the below mentioned functions could categories under seven main headings [1] . Those are:

a. Finance and accounting.

b. Investment and asset management.

c. Human resources.

d. Procurement.

e. Logistics.

f. Real estate management.

g. Miscellaneous (energy, service, customer service, mailroom, food processing)

13. Presently in the Business Process Outsourcing market, companies had identified plenty of functions from the above main categories that can be outsourced to a BPO company. For example; Finance and accounting as a main categories, consisting of General accounting, Payroll, Treasury/cash management, Accounts payable and receivable, credit, Fixed assets, contract maintenance, Collections, Financial systems, Tax and regulatory compliances, Budgeting, Securities and exchange commission and regulatory reporting.

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14. Predominant business model of 50's and 60's [2] was huge work places with warehouse used just to hold the supplies. However, at the present day Business process outsourcing introduced to gain productivity and profit of the business by giving burden of business process activities to a professional vender who provide service in minimum cost and more efficiently. The business owner can now plan for more business opportunities and more profits. There are many reasons to change present business styles of a company to Business Process Outsourcing The advantages are:

a. Reduce the Operational cost and Capital expenditure. By outsourcing to third world developing nations such as India, China, Philippines, and Mexico, companies can exploit cheap labour and infrastructure facilities available in those lands and in turn cut down man power, reduce operational costs and capital expenditure.

b. Concentration on core business. Back office operations of a company are highly tedious and need specialized attention. Most of them are critical for the company's progress. By outsourcing their back office operations businesses can concentrate on their core competencies while a specialized third party company is managing their back office operations smoothly.

c. Skilled manpower at lower levels. Outsourcing supports an organization to get the chance to get access to skilled and trained manpower extremely lower rates that will lead to increase the productivity and save costs in big scales to the expected goals and targets.

d. Advanced technologies at lower rates. Many technological developed offshore destinations gives the companies access to high tech newly developed technologies at very affordable rates.

e. Tax Benefits. By selecting the right BPO distinguished companies could save on high taxes in turn reducing their costs.

f. Increased Productivity. By employing skilled labour sufficiently to meet the required manpower at lower costs, companies can highly boost up their productivity in turn resulting in better customer satisfaction and increased profitability and promote stability of the company.

g. Improving company targets. In a fast improving economy, a company needs to provide the best services to its customers in order to retain customers moving by one place to another and do all this by keeping the rates low to a certain limit. Outsourcing in this case can help the company maintain lower rates with better services thereby helping them to stay abreast of the competition.

h. Benefit of the Labour opportunity. Business benefits a large differential in costs of labour between countries. For example; Germany, United States of America and United Kingdom have the highest costs of labour worldwide while countries like Canada and Australia have lower costs. In countries like India, Russia, China, Philippines and South Africa, the cost of labour is substantially lower and therefore it becomes very attractive to have work done in these countries.

i. Provides better quality. In many cases, actually benefitted in quality and delivery through the BPO some of the provider countries have been able to deploy substantially better quality personnel while still providing the cost benefit.

15. Apart from the above main advantages, there are some other benefits also to the Business process outsource Company, those are:

a. Streamlines a business' operations.

b. Gives you access to professional capabilities.

c. Shares the risk.

d. Piece of mind that the process is in good hands (reliability).

e. Do not have to worry about continually introducing new technologies.

f. Improves service quality.

g. Freeze up human resources.

h. Freeze up cash flow.

i. Makes the business more flexible to change (i.e. demand).


16. Over the past 20 years outsourcing as a phenomena developed at a very fast level. The growth of IT, aiding globalization and thereby generating multinational societies has given rise to situations where cutthroat competition tends to take the better use. One face of this competition is the frenzy of research and development, to cut costs and provide better services, which has manipulated itself into outsourcing. The situation seems more threatening every added day as more companies follow suite to the actions of their rivals.

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17. Main disadvantages of Business process outsourcing are:

a. Major downsides. Outsourcing is seen by many economists as a favourable situation but is not always so. It has many downsides that most of us cannot possibly conceive and only have to leave it in time. The present major downside of outsourcing is

the fact that policies of the first world nations like UK and US for outsourcing are nothing but poor. There is no fair playing ground for companies big or small and the only alternative that they are forced to believe is outsource.

b. Services at high rates. All of us need services and that too at a lower cost. Here the products and services that come cheaper and with higher quality get better sales than those with lower quality. The concept of a fair playing ground is that an organization must not be affected much irrespective of the fact whether it wants to outsource or not. This is where the government fails and this is where the fault lies.

c. Impact of off shoring jobs. With outsourcing, the jobs are sure to move. The third world countries are benefited because of this, but what about the people in the first world nations. They do feel unrest and no assurances are going to keep them from satisfaction about their precious job that was taken away. Here again the policies are to blamed. Offshore outsourcing backlash on communities was bound to happen not because the jobs are being outsourced, but because the way the jobs are being outsourced offshore today. People are not able to grasp the implications with a pinch of salt that is excessively salty.

d. The outsourcing trap. Outsourcing has many drawbacks that are still not clear and will emerge eventually as time passes. The drawbacks can be in the form of a firm actually increasing its spending structure without its knowledge, emergence of new competitors and loss in the product/service competitiveness. The false image of outsourcing created today are because of sloppy policies has lead to many outsourcing failures leading to heavy losses. Poor governance, lack of communications, cultural misfit, lack of knowledge and lack of good policies are responsible for major companies getting their feet burned due to outsourcing. Negative effects of outsourcing offshore are only bound to increase further in case the limitations on offshore outsourcing are not clarified.

e. Beware of the supplier. Outsourcing service providers or suppliers are the ones that offer services to small and medium sized organizations. Big shots don't need

these suppliers as they set up their own outlets. However, the small and medium sized. Companies depend completely on these suppliers to outsource their processes. Most of these suppliers handle many processes from different organizations and in many cases, may even be providing services to organizations that are rivals or direct competitors of each other. This gives rise to a situation of the information being leaked. As the supplier has complete control over processes of an organization, he may leak it to the potential competitor who offers better rates. This kind of situation is more than inevitable. This can lead to organizations loosing its customers entirely to their competitors; a situation that outsourcing gave rise to. One more situation that can develop is the supplier himself getting all the inside information can start his own services. This gives rise to a newer and stronger breed of competitors who have the ability to collaborate with competitors or set up individual branches with better services.

f. Lack of coordination. Outsourcing can also lead to the alterations of well-established job processes that can lead to unnecessary delays and conflicts. Lack of coordination between people having different cultural backgrounds and different time zones can also lead to time losses.

g. Negative effects on employee. There is a situation today where employees have started fearing job losses. This gives rise to lower motivation and thereby decline in services. After all, who would like to serve an organization that he feels is going to sack him for all his services. An employee can give the company 100 percent if and only if he feels that he is an integral part of the organization and not some dummy to be sacked whenever the company feels like. One more point here is that a sacked employee could even join hands with competitors and bring to light the weaknesses of the company.

18. Looking at all these drawbacks, outsourcing really does not seem to be the magic answer for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward. The governments of India at this point need to analyze this situation and help develop a fair playing ground for organizations taking into consideration the negative effects of outsourcing offshore.

19. Other disadvantages of Business process outsourcing.

a. The fear of the service provider ceasing to trade (bankruptcy, etc)

b. You may lose control of the process.

c. Creates potential reduction.

d. Other companies may also be using the service provider. Therefore, in some cases, the best interests of the service provider may be diluted with other users.

e. You may lose focus of the customer and concentrate on the product (the outsourced process)

f. The loss of talent generated internally.

g. Employees may react badly to outsourcing and consequently their quality of work may suffer



20. Evolution. Presently, Sri Lanka is developing in Business Process Outsourcing sector, over 40, 000 [3] of Sri Lankan youth employing in this sector. Over 3oo companies are establish operating as almost all BPO fields. Specially in Accounting, Computer, Legal service, managers and secretaries, Pay role service, recruitment BPO functions. And those companies have being organized as

21. For the purpose of developing the Business Process Outsourcing sector, main source as '' have being provide necessary information and links of the Business Process Outsourcing sector to Sri Lanka ( As per their information given, following are the major companies of Business Process Outsourcing service providers in Sri Lanka are WNS, Timex BPO , Office Tiger , HSBC Data Processing Limited , Aviva.

22. There are many BPO opportunities have being identified in Sri Lanka and competitive development is achieving in present. For that, several industry organizations are grouped and shoulder the responsibility of enhance the capacity of BPO sector in Sri Lanka. Those Industry associations are:

a. Sri Lanka Association for Software and Service Companies (SLASSCOM) is act as catalyst of growth for the Sri Lankan IT and BPO industry by facilitation trade and business,programe of education and employment, encouragement of research and innovation, and by supporting the creation of a progressive national policy framework.

b. The Association of Computer Training Organization (ACTOS) ; aim is ICT education in Sri Lanka.

c. Software Exporters Association (SEP); aim is to software exports in Sri Lanka.

d. Sri Lanka Association for Software Industry (SLASI); association of local software companies with the vision to develop opportunities domestic and international market for the benefit of its members.

e. Sri Lankan Computer Venders Association (SLCVA); association of computer hardware venders with the aim to promote, encourage, foster, develop, coordinate and protect the interests of companies enraged in the business of manufacturing, developing or providing service around computer hardware and related equipment.

f. IT Enabled Service Association (ITESA); aim is to association of BPO organizations with the aim to promote the BPO industry in Sri Lanka.

23. Problems. When considering the Business Process Outsourcing industry in Sri Lanka, there can be identified some negative effects to progress the concept, those are:

a. Don't have skilled workforce to employ in Business Process Outsourcing sector. Especially at the call center field. Main difficulty that identified was, limited of having English speaking-writing workforce. Even among graduated community lacking this ability, which is very essential to run most functions of Business Process Outsourcing.

b. Sri Lanka does not have enough facilities to train workforce to facilitate in Business Process Outsourcing field. Every year more than 125,000 of students are qualify to enter the Universities; but there are only 16,000 of student only cater to Universities.

c. Sri Lanka does not have pool of skilled labour to fulfill the demand of Business Process Outsourcing present requirement.

d. IT based Business Process Outsourcing is increasing in remarkable rate but, some other aspects of BPO is not high demand in Sri Lankan market.



24. When introduce the Business Process Outsourcing concept to Sri Lanka, we can fold the benefits in two ways. That is the benefits which getting to Sri Lankan business community once they adopt Business Process Outsourcing to their business operations. And in other way; how do get benefited Sri Lankan workforce by entering to Business Process Outsourcing job opportunities. In this service paper, the benefits of Business Process Outsourcing are listed in a general term as follows:

a. When introduce Business Process Outsourcing to the businesses in Sri Lanka, it will reduce the Operational cost and Capital expenditure. Management of the company cans concentration on core functions of the business and able to satisfy the customers.

b. Business enables to get quality work force at lover level. In addition, can be use advanced technologies at lover price.

c. Tax benefits, Beat competition and company can provide better quality products.

d. Since Sri Lankan labour costs are comparatively low, when compare with the western and other Asian countries, Outsourced business process would be less cost and it will lead more profitable and earn more profits.

e. When establish outsourcing vender companies at Sri Lanka, it will positively affect to the unemployment problem .specially in unemployment at the educated class.

f. Sri Lanka as a whole can operate offshore outsourcing and earn foreign revenues. Gain sophisticated technologies to the country.


25. Business Processing Outsourcing is popular business mechanism that adopt in manufacturing or other commercial organization, which outsource its business process functions to third party vender for smooth function of its business operations.

26. In that, company can effectively attend main operations through customer satisfactions earn more profits. At the same time when is implementing at the Sri Lanka, it can earn more foreign income while solve the problem of unemployment.


27. To develop the concept of Business Process Outsourcing in Sri Lanka:

a. Implement sound awareness Program Island wide to promote Business Processing Outsourcing concept at Sri Lanka. Starting from school level.

b. Improve English and IT study packages or include to syllabus to prepare future work force to make professional and knowledgeable. In addition, to make the BPO reserve for future BPO industry.

c. Government should involve in developing BPO. And should give inadequate facilities to develop Business Process Outsourcing sector in Sri Lanka.