This is the third in a four part series pertaining to Sri Lanka’s Information and Communication-Business Process Management (IT-BPM) Sector. It’s based on a joint Sri Lanka Association for Software Services Companies (SLASSCOM)-Norwegian study of this sector and was released on SLASSCOM’s website on 5 May 2022.
While the first, published last week, gave, a broad outline of Sri Lanka’s IT-BMP sector, the second included the possibility of the sector moving beyond the Western Province, while this the third explores opportunities in the Norwegian market and the fourth and the last series, opportunities in the Nordic market as a whole, respectively.
“Transparency was cited as a key aspect in gaining confidence amongst Norwegian investors and the lack of consistency and transparency in laws and regulations deter investors planning on setting up in Sri Lanka,” a report released in May 2022 said.
The report titled “Norway – Sri Lanka Tech Industry Climate for Collaboration, Sourcing and Business Report 2022” released on the Sri Lanka Association for Software Services Companies (SLASSCOM) website on 5 May 2022, further said, Norwegian investors believe in transparency and require commitments that are financially feasible.
It also said that the administrative procedures for startups such as obtaining official permits, filling out forms, reporting and notification requirements can be time consuming in Sri Lanka.
“Further, the lack of direction for setting up a business makes it less attractive for investors in Sri Lanka. Difficulty in importing required machinery and equipment held by customs were also seen as time consuming activities,” the document said.
General Data Protection Regulations (GDPR) is seen as a major concern for Norwegian investors, which has encouraged the PDP Bill in Sri Lanka. The Personal Data Protection (PDP) Bill was issued in hopes of abiding by international data protection laws and to gain confidence of investors that data privacy is important for Sri Lanka, the report said.
Overall, several Norwegian investors suggested that it is important to showcase trust and predictability of the economy and Government sectors in Sri Lanka, the report said. It would also be beneficial for the Government to have a focused development plan for Sri Lanka, where they could prioritise on the comparative advantage of Sri Lanka to regional peers, the document advised.
“Considering the current economic situation, it would be important for Sri Lanka to build confidence and trust while focusing on sustainable development and climate change needs. It is believed that both the people and the Government of Sri Lanka (GoSL) should actively participate in this,” it said.
Norway has been a key partner in developing the Sri Lankan economy, investing more than USD 5.6 billion (NOK 5 billion) in Sri Lankan businesses, the document said. Interviews with Norwegian investors revealed that they have great recognition of the culture and trust they have with Sri Lankan companies. Nevertheless, there have been concerns over bureaucracy and corruption issues in Sri Lanka. However, the Government is actively trying to improve the ease of doing business for foreign investors, it said.
In an effort to tackle these concerns, measures such as the following are planned, attempting to ease doing business in Sri Lanka, the report said. “Sri Lanka has currently initiated the National Single Window (NSW) to facilitate ease of trading. Reports show that on average a trade transaction in Sri Lanka will involve over 30 different agencies and up to 200 data elements. However, this would reduce to a minimalistic procedure with the active implementation of the NSW,” the report said.
At present, the NSW of Sri Lanka is in testing stage with three trade regulatory systems being successfully developed and brought online for testing. The portal has the objective to provide a faster paperless facility to lodge online applications for permits and view the progress of their applications, it said.
Norwegians have a high trust culture and data privacy is of high importance, the report further said. “Norway being a member of the European Economic area adheres to the EU GDPR (The GDPR was incorporated to the national law by means of the Personal Data Act with effect from 20 July 2018), it said.
Sri Lanka recently passed the PDP Bill on 9 March 2022, paving a way forward for the protection of data in Sri Lanka, the document said. In drafting this Bill, the drafting committee had considered international best practices such as the Organisation for Economic Cooperation and Development (OECD) Privacy Guidelines, Asia-Pacific Economic Cooperation (APEC) Privacy Framework, Council of Europe Data Protection Convention, EU General Data Protection Regulation and laws enacted in other jurisdictions such as United Kingdom, Singapore, Australia and Mauritius, the State of California as well as the Indian Data Protection Bill, it said.
Hence, Sri Lankan companies in the near future would be equipped with high levels of data protection. “Sri Lanka could now consider proposing for the EU data privacy safe country list,” the report also said.
Meanwhile, Sri Lanka’s Department of Information Technology Management of the Finance Ministry intends to bring all regulatory agencies online by end 2022. This initiative will further simplify procedures and regulatory processes in the initial stages of trade and investment in Sri Lanka, the document said.
Streamline trade processes
Further, Sri Lanka aims to enter the top tier in ease of doing business in the World Bank Doing Business Index by reducing the bureaucratic nature of operational and routine procedures in trade. Hence, it has been understood that there is a priority requirement to streamline trade processes through digitisation, it added.
Enabling this streamlined process would lead to a more business-friendly environment that supports small businesses as well as foreign investors, the document said. Also, SLASSCOM has taken an initiative to create a simplified document on the “Know- How’s” of doing business in Sri Lanka, which will result in providing direction to companies who wish to do business in Sri Lanka, the report said.
The availability of Government resources in Sri Lanka is an advantage compared to its peer countries such as Thailand. Further, as there is a relatively high level of English fluency in the country, it eases operations and the process of hiring resources, without communication barriers, the document said. Investors also commented on the Sri Lankan infrastructure and greater accessibility to Government departments and ministers, it further said.
Sri Lanka being an attractive offshore destination has been providing IT services globally for several years. Although capturing markets such as Norway comes with its challenges, several Sri Lankan companies have successfully ventured into the Norwegian market, the report said.
Sri Lankan companies are highly attractive based on cost and knowledge services. The Norwegian market is primarily focused on the value that can be provided rather than the cost element. Hence, the supply of value based services by Sri Lankan companies is paramount while enabling them to quote higher charges to potential clients, it said.
It is also important for Sri Lankan companies to understand the Norwegian culture and market before entering business, the document advised. At present, there are few companies who have been able to excel and maintain their relationships with Norway. Based on discussions, it was understood that Norwegians are passionate about inclusivity, diversity, equity, work-life balance and social responsibility. The Norwegian Government is also aiming to achieve their SDGs by 2030, like that of Sri Lanka’s.
Hence, it would be particularly important for Sri Lankan companies to highlight their diverse and inclusive workforce while being socially responsible corporate citizens, the report advised. Further, Norwegians possess a high trust dependency, a direct and relationship-based culture. Many successful companies also stated that Norwegian clients are least fond of high attrition rates, as they prefer to maintain and build their existing relationships. Therefore, it is important for companies to retain their relationship with managers and employees, the report said.
Certain companies have trained reliable backup individuals who are on good terms with relationship managers. Norwegians also place a high preference to open and honest relationships. Therefore, it is important to always be straightforward with the work carried out and meeting deadlines. Additionally, it would be advantageous to practice a slowed down work culture where everyone is working together i.e., deviating from a command-and-control structure, the document said.
Many local companies suggested that operating with a local Norwegian partner gives Sri Lankan companies the necessary adequate exposure to effectively cater to the exact needs of the IT business process management (BPM) sector.
The Norwegian partner maybe in the following forms: Norwegian Investor, recruiting an employee who is based in Norway, commission based partners – Although this was a tried and successful method in the US and Sweden, the same approach did not work in Norway, the report further advised.
Nevertheless, having a Norwegian partner enables smoother front-end communications and confidence to potential clients. Companies that have tried to capture the Norwegian market without local partners have often not succeeded, the document warned.
High trust dependency culture
With Norway’s high trust dependency culture, aligning data management processes to adhere to data protection and privacy is one of the most demanded compliance regulations when operating in the Nordic region. The GDPR is the uniform procedure applicable for data management and data protection procedures. Successful companies train their staff in understanding parameters of personal data and how to be in line with the GDPR. Sri Lanka’s data protection rights were a key concern for many Nordic companies. Howbeit, the recently passed data protection bill is expected to gain the confidence of potential clients.
As Norwegian’s value relationships, many companies took the approach of building a strong relationship with potential and existing clients, the report said. This was done through visits to Norway and bringing potential clients to Sri Lanka, which helped in understanding and embracing the Sri Lankan culture, it said. Further, building strong relationships have also resulted in future business prospects and the willingness of existing clients to act as a referral whenever required, the document added.
It is important for Sri Lankan companies to identify and specialise in offering unique services to Norway. Although certain companies believe that supplying a multitude of services would be beneficial to the client, successful Sri Lankan companies have mentioned that their ability to specialise in a particular service and catering services to a specific country only proved to be more successful which resulted in expanding their business operations, the report advised.
Further, language was seen as a barrier for companies that act as offshoring centres to enterprises for a particular service such as accounting / bookkeeping. Hence, it is important for staff to be trained in multiple languages, although they need not be fluent. However, a working knowledge of the language would be required for staff to be able to converse in moderation and process documents, it said.
But, on the contrary, companies with a technology-based clientele did not see language as a barrier due to technology being a global market and workers in the technology industry were fluent with English cited as a globally recognized language.
Key competitors to Sri Lanka are the Eastern European countries. This is mainly due to closer proximity to the Nordic region and similarity in cultural aspects. Therefore, it is important for Sri Lankan companies to highlight the knowledge and service value they can provide to customers along with their commitment to an inclusive workforce and being a socially responsible corporate citizen, the document advised.
Meanwhile, the highest level of attrition of the Sri Lankan ICT workforce was reported from ICT companies at 9.7 per cent. In the case of non-ICT companies, the level is at 5.5 per cent in 2018. When compared with the ICT workforce, the BPM workforce has reported a higher level of attrition amounting to 15.4 per cent, the report said.
(Next Week: Openings in Nordic Countries for IT Labour)
By Paneetha Ameresekere