A number of challenges still exist if Sri Lanka’s IT sector is to attract the necessary pool of IT companies to expand the industry to its US$ 1 billion revenue target in the next few years, from its current US$ 600 million. Amongst these are a ramp-up in the supply of suitable IT personnel, market [...]

The Sundaytimes Sri Lanka

Consider supply, awareness, incentive and cost to attract IT companies : Virtusa GM


A number of challenges still exist if Sri Lanka’s IT sector is to attract the necessary pool of IT companies to expand the industry to its US$ 1 billion revenue target in the next few years, from its current US$ 600 million.

Amongst these are a ramp-up in the supply of suitable IT personnel, market awareness of the country as an appropriate IT destination, more incentives to choose Sri Lanka over very strong competing locales, and the competitiveness of costs associated with setting up locally, according to industry leader Madu Ratnayake, Vice President and General Manager of US-based IT company Virtusa.

Madu Ratnayake

Speaking to the Business Times, Mr. Ratnayake elaborated further that the IT sector needs to ensure the ratcheting up of the supply side of the engine, in terms of the availability of IT personnel coming out of universities, while the country’s educational system also had to grow to keep up. Adding to this, he said that there were approximately 6,000 graduates coming out of Sri Lankan universities, only for IT and IT related subjects, with total university graduate numbers being much higher. On the other hand, in keeping with 2010 demand estimates, the industry needed about 7,500. And this does not even account for the demand that would emerge should Sri Lanka’s succeed in attracting the larger, or even mid-size, IT companies needed to grow into a billion dollar industry and beyond. Additionally, he also stated that, when talking about IT talent specifically, these were almost global citizens. And some of these people would end up getting employed in other countries, so there would never be an over-supply of this group. Technology is a fundamental business driver and that will not change for a long time going forward, so Mr. Ratnayake said he had no qualms about recommending someone get an IT education.

Commenting on the other challenges the local IT industry faced, Mr. Ratnayake noted that there needed to be a greater market awareness of Sri Lanka as a BPO destination. The country was losing out since it still was not top-of-mind when it comes to considering where to set up an IT, or IT related, company.

At the same time, he signalled that many countries, such as the USA, were offering a variety of incentives for companies to set up there, from free rent to even paying the salaries of company employees for a specified grace period. And, while Sri Lanka had a great tax incentive scheme, the country had to get even more competitive to be considered by the bigger players. In addition, the costs associated with electricity and telecommunications services were higher in Sri Lanka, compared to other regional competitors, and this could negatively impact decision-making, especially when it came to wooing larger IT companies.

Mr. Ratnayake also stated that pricing for consumer Internet options in Sri Lanka was not really restrictive, as people can go online for as little as Rs. 500. However, it was the prices of commercial Internet that needed to be reconsidered; especially with the bigger IT players needing high-volume, knowledge-based services, like video streaming, etc., to carry out operations, which will also need to be accessed, cost-effectively, should companies decide to set-up shop in Sri Lanka.

He also indicated that there were a lot of opportunities in terms of emerging markets like India, Sri Lanka and other countries in this region. Especially since products and services desired could not come from any other region. Innovations can only happen in the places where the need for these new goods and services are witnessed. As such, innovations for this region would have to, by necessity, come from this region itself, so the potential was huge.

Another opportunity for IT entrepreneurs stemmed from the area of new millennials, the term for the newest generation, now in their early 20s, he said. With new millennials coming out of universities, getting into the workforce, and becoming consumers, they will demand things that are vastly different from what has previously been demanded. This group rarely uses traditional methods to access services, such as banking in person, looking through phonebooks for information about restaurants, etc. They will want to bank on their phones, access government services and even pay taxes online, look for restaurant information on Google, etc. They have a more global experience-based outlook, especially compared to previous generations, which were more local in their exposure. And this millennial generation will push many companies to adopt a more digital way of working, which will give the companies that are prepared for them a heads-up in the marketplace.

Talking about how private IT companies could contribute to the improvement of the IT workforce, Mr. Ratnayake noted that many companies had to take a more strategic view of their Corporate Social Responsibility (CSR). One way of doing this is helping create good quality teachers in universities. For example, give incentives for the best people to stay and teach. Given the disparity of teacher salaries, the best people tended to leave academia. And this has significant long-term implications. As such, the industry and education systems had to work closely, because if academia was not connected to industry, it could become irrelevant in as little as five years, thus further negatively impacting the quality of IT graduates.

Concluding, Mr. Ratnayake spoke about Virtusa, saying that the company’s strength had always been its ability to adapt. He also noted that it had always grown above the levels of the market. And, to date, it was doing well. Commenting on his expanding role at the company, he stated that he was now looking at millennial-enabling the company, creating a technology platform and culture that better integrated the needs of this group into the existing workplace. Revealing that 86 per cent of Virtusa’s employees are millennials, he added that they had expectations about how technologies had to be delivered that must be met. As such, the company had introduced a similar infrastructure to what was found on the Internet, including services like Yammer chat, Vplus collaboration services, Vingo search, etc.

Further, he noted that their search functionality was also helping drive knowledge, much the same way that Google’s was, allowing insights to be mined and shared amongst all. Additionally, based on these experiences, millennial services had become one of the big new services that Virtusa was providing to its customers, helping them become millennial-enabled in turn. At the same time, Vplus collaboration services were also coming on as a new offering.

Mr. Ratnayake also highlighted a number of leadership opportunities that Virtusa had been creating, as well as its global leadership programmes, which was now in its second year. He made special note of the role of segment leaders at the company who had been given the opportunity to oversee a quarter million dollars book of business, as its de facto mini-CEO, with all the responsibilities and benefits that this position entailed.

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