Speech by Naoko Ishii, Country Director, Sir Lanka, The World Bank
I am honored to be invited as the Chief Guest at the 10th Private Sector Forum, organized by the ICT Agency – an impressive platform of leading private sector stakeholders of the ICT (Information and Communication Technology) industry in Sri Lanka. I hope that today you will exchange ideas, network, and at the same time learn about ICTA’s achievements and challenges as they continue to spearhead ICT Development Road Map of the Government of Sri Lanka.
The twin role of private sector and Information and Communication Technology (ICT) has long been recognized by the World Bank as critical to development efforts around the world. The recent World Bank flagship publication “Building Knowledge Economies” (2007), argues that, whatever their level of development is, countries should consider embarking on a knowledge- and innovation-based development process. In these times of accelerated globalization, “grey matter” is a country’s main durable resource. Its exploitation for economic and social well-being is increasingly at the center of development strategies. Three key messages sum up the growing consensus:
1. With globalization and the technological revolution of the last few decades, knowledge has clearly become the key driver of competitiveness and is now profoundly reshaping the patterns of the world’s economic growth and activity. Both developed and developing countries should therefore think, with some urgency, about their future under a Knowledge Economy (KE) heading.
2. To become successful knowledge economies, countries have to rethink and act simultaneously on four pillars, namely, first, their education base, second, their innovation systems, third, their information and communication technology infrastructure, and fourth, building a high-quality economic and institutional regime. Policies for these four pillars have to reflect the country’s level of development. However, experience shows that some successful KE champions have been able to achieve spectacular leaps forward within a decade.
3. Many if not most of the countries that have made rapid progress have staged nationwide KE-inspired programs of change. Such programs have been pragmatic and country-specific, yet some common points emerge: the need to promote trust and societal cohesion around the KE program; the need to work at the four pillars through a combination of top-down reforms and bottom-up initiatives; and the need for a well-communicated KE vision.
It is encouraging to see that the Government. of Sri Lanka espouses this new paradigm as evidenced by the on-going e-Sri Lanka initiative. Efforts at varying degrees are underway towards addressing the four policy pillars: education, innovation, ICT and the prerequisite economic and institutional regime - to realize the KE agenda.
In recognition of the Government’s commitment, the World Bank has provided financial and technical support to the e-Sri Lanka project for the past three years. The initiative provides access to ICT services to Sri Lanka’s rural poor as well as supporting public and private sector efforts to transform the island into an off-shoring hub for the region.
Key successes include establishment of around 600 telecentres as part of the Nenasala program which aims to increase access to ICT and thereby empower rural communities. ICTA is working towards supporting sustainable business models. Simultaneously, alternative options toward development of the broadband backbone infrastructure to help reduce the cost of internet connectivity are actively being explored. The Re-Gov program for providing e-government services - by far the largest and the most complex component – is beginning to make inroads. E-Society program is producing tangible social benefits in a fairly short period of time. For instance, the e-Society flagship Shilpa Sayura - e-curriculum software for grades 6 through 11 developed by eFusion – has been installed in 20 Nenasalas, and recently won an award at eIndia contest for innovation.
Today’s program focuses on ICT Education and Industry Promotion component, which is being implemented through a ICT Capacity Building Fund (ICBF). This component’s principal objectives include strengthening ICT management and professional skills in the private sector; training and workforce initiatives to increase private sector competitiveness; industry promotion and market creation strategies; and strategic and innovative development. The principal target groups for this program are ICT industry, ICT training institutions, SMEs, and ICT-related professional associations.
We are happy to note that good progress is being made on a myriad fronts. Training schemes have been launched to grant vouchers to pre-workforce and new employees to obtain basic business communication/ICT literacy skills. To meet the Human Resource needs of the BPO industry, an ITES (information technology enabling services) training scheme is offering scholarships to prospective ITES employees to attend courses at accredited training institutions. SMEs have benefited from company quality enhancement grants in the form of subsides to meet the cost of accreditation. It is hoped that these initiatives shall contribute towards enhancing competitiveness of private sector, particularly in the area of knowledge economy.
Due to ICTA’s relentless facilitation and coordination with key stakeholders, several BPO companies have invested in or are in the process of investing in Sri Lanka, along with a few global IT principals. The Agency has been also engaging with global research and consultancy companies to expand Sri Lanka’s profile as an IT-BPO destination. Hewitt, IDC, Springboard Research are examples. A.T. Kearney included Sri Lanka at the 29th position in their latest Global Outsourcing Location Index Report and Tholons Ranked Colombo at the 5th position for most attractive for destination for Finance and Accounting Outsourcing operations.
There are tremendous opportunities for the private sector to invest in the IT-BPO Offshoring industry. The IT-BPO Offshoring market is currently estimated at US$100 billion market and growing at more than 30 percent per annum. In India, a global leader in this area, IT exports account for close to US$20 billion and almost half of total export revenues. The total number of jobs created in the Indian IT industry is close to one million, many of them filled by women.
Developing IT and BPO opportunities should be a high priority for a development oriented country such as Sri Lanka. Not only will the development of this industry segment create job and export opportunities, it will also create positive spillovers such as: enhanced incentives for education, technology and knowledge transfer, environmental protection and an improvement in the quality of locally provided services.
Services that will be offshored in the future will go far beyond the traditional call-centers and back-office functions and will include; investment and financial services, human resources, health services, retail functions, logistics and customer support functions. It is estimated that this will result in 18 million jobs being offshored with a multiplier effect that could in turn create a further 60 million jobs in developing countries.
It is important that Sri Lanka takes advantage of this opportunity and it is well placed to do so. Sri Lanka boasts some of the cheapest labor and office rental costs in the region but high telephone and electricity charges as well as rigid labor legislation remain the key challenges. Despite these challenges several large multinationals have set up or are considering setting up BPO operations in the country. It appears that the demand is unlimited for a small country like Sri Lanka and the only important bottleneck is being able to offer the educated human resources that will staff these enterprises.
Due to its small population size, the island cannot offer the sheer numbers of ICT and professional employees that India and China can. But it can compete in niche markets and it needs to align all stakeholders including policy-makers, industry leaders and academics in order to successfully tackle this important agenda. I am delighted that ICTA is leading this challenge and I hope all the participants will be taking away a cache of knowledge that will enable them to contribute to making this endeavor a success.