In terms of outsourcing, there are always number of questions that a business manager would ask himself: Why should I outsource?, Is it just because of the benefits?, Where knowledge and research are available?, Can innovation be promoted even the teams are far away?, What are the success stories?
Generally, there are few factors to be considered before deciding to outsource or off-shore business functions:
- Reduce cost and increase margins;
- Access to skills;
- Experience new methods;
- Make time shifting;
- Access to additional markets;
- Send overflow work;
- Extend venture capital money;
- Other reasons.
There are number of technical and business changes lead to the offshoring market to boom such as telecommunication and infrastructure, changes in information technology, pace of innovation, downside corporation. Other business drivers can be highlighted as intermediaries, changes to work process, higher education system, free market economy, immigration etc.
Paterson (2010) explains how the technology, work processes, business models and other factors make a contribution towards success.
- Technology – Wider availability of low cost high bandwidth telecommunications and the standardisation of software platforms and business applications;
- Work processes – Digitisation of work and recognition of work processors such as ISO standards;
- Business models – Early adopter of off-shoring strategies that may reduce capital burn rate and the rise of intermediary companies;
- Other drivers – Worldwide improvement in technical education, increased movement of students and workers across borders, lowering of national trade barriers etc.
As a developing nation, Sri Lanka is moving up the value chain as it generally dwell all the above necessary facilities and skills for a cost effective off-shore market. Sri Lanka has been upgrading quality of people skills over decades offering access to most finest knowledge sources offering higher educations facilities through accredited world class universities. A study by Ovum for the department of trade and Industry , Brandsaw et al (2006) reported software and service export firms in South Asia are growing at 20 to 25% per year. And Sri Lanka offers a rapidly growing niche workforce which is highly adaptable, innovative, skilled in communication in English and loyal. Sri Lanka Export Development Board (2016) says that currently, over 60,000 are employed in the Information and Computer Technology (ICT) industry in Capital, Colombo and the workforce is growing at over 20% year-on-year. The workforce is stable with very low attrition rates ranging from 10-15%. There are around 300 ICT companies are presently in operation in Sri Lanka offering services to many European counties. Annual exports of ICT sector is around 400 million US dollars in 2011.