Sri Lanka is fast becoming a useful business process outsourcing centre, according to analyst firm Datamonitor.
But the country still needs to develop its own strengths and attract high profile technology suppliers, Datamonitor said in a new analysis.
While India continues to be the dominant market player, Sri Lanka was being increasingly considered by IT service providers as a useful location, Datamonitor said. India remains the central hub of many providers, it said, but firms are also using facilities in other parts of Asia, as well as Eastern Europe and Latin America, as 'satellite hubs'.
'Sri Lanka shares many of the attributes that make India such an attractive location for outsourcing work,' said Ed Thomas, an analyst at Datamonitor.
'These include a low cost of labour, a plentiful pool of educated and English-speaking workers, high literacy levels, and a legal system that is based on a western model.'
The country has focused largely on finance and accounting BPO, as well as knowledge process outsourcing, Thomas said. It was 'sensible' for Sri Lanka to focus on narrow areas, he said, because of its relatively small population - 20 million - and the large number of qualified accountants. Some 50,000 Sri Lankans qualify as accountants each year.
But Sri Lanka faces its own problems, aside from the tough competition, Thomas said. High telecom costs were prohibitive, he said. And second-tier cities were unlikely to have the resources to support the capital, Colombo.
On top of this, the security situation was a worry, he said, citing the 'sporadic civil war' that began in the 1980s. Last week Doug Brown, principal of outsourcing research firm The Brown-Wilson Group, stated Colombo was the sixteenth most risky outsourcing hub in the world. Delhi came sixth on the list, which was topped by Bogota and Bangkok.