Sri Lankan Accountants Lure Global Outsourcers
Southern China has its assembly plants. India has customer support centers, research laboratories and low-cost lawyers.
And Sri Lanka’s contribution to global outsourcing? Accountants — thousands of them, standing ready to crunch the world’s numbers.
As this tiny island nation staggers back from a bloody, decades-long civil war, one of its brightest business prospects was born from a surprising side effect of that conflict. Many Sri Lankans, for various reasons, studied accounting in such numbers during the war that this nation of about 20 million people now has an estimated 10,000 certified accountants.
An additional 30,000 students are currently enrolled in accounting programs, according to the Sri Lankan Institute of Chartered Accountants. While that ratio is lower than in developed economies like the United States, it is much greater than in Sri Lanka’s neighboring outsourcing giant, India.
Offices in Sri Lanka are doing financial work for some of the world’s biggest companies, including the international bank HSBC and the insurer Aviva. And it is not simply payroll and bookkeeping. The outsourced work includes derivatives pricing and risk management for money managers and hedge funds, stock research for investment banks and underwriting for insurance companies.
Many developing countries have “one particular competency that they do better than anyone else,” said Duminda Ariyasinghe, an executive director at Sri Lanka’s Board of Investment. “Financial accounting is that door opener for us.”
With widespread use of English and a literacy rate of over 90 percent, along with rock-bottom wages, Sri Lanka hopes to transform its postwar economy from a sleepy tea and textiles island into a tiny, high-end outsourcing powerhouse.
Already there are thousands of other Sri Lankans working in more common outsourcing fields, like information technology and software development. About 50,000 people in Sri Lanka are now employed in one form of outsourcing or another, according to Slasscom, an outsourcing trade group, and that figure is growing by 20 percent a year.
But accounting is Sri Lanka’s specialty.
During the war, Sri Lankan certified accountants would often use their skills as a springboard out of the country. That is why there are now Sri Lankans sprinkled among executive suites around the world, including the vice president of global business services at American Express and a financial controller at Standard Chartered Bank in the United Arab Emirates.
Now, though, the government and business community hope the country’s young financial whizzes will have reason to stay home instead.
Sri Lanka’s government, headed by President Mahinda Rajapaksa, expects revenue from so-called knowledge-based outsourcing — which includes accounting — to triple to $1 billion in revenue by 2015.
The stark wage differences between Sri Lanka and America, or even Sri Lanka and India, are a big part of the country’s drawing card.
In the United States, the median annual wage for accountants and auditors in May 2008 was $59,430, according to the Bureau of Labor Statistics. Sri Lankan workers in the accounting profession receive an average annual pay package of $5,900, according to a 2010 survey by the Chartered Institute of Management Accountants.
Wages in Sri Lanka for financial outsourcing are about one-third less than in neighboring India, and hiring educated employees is easier in Sri Lanka, according to executives who do business in both countries.
“Skilled talent is accessible,” said Dushan Soza, managing director of the Sri Lanka office of WNS Global Services, an outsourcing company with about 350 people in the country. Because Sri Lanka’s accountants are still a relatively untapped asset on the global market, Mr. Soza said, hiring is easy and turnover is minimal.
In the Indian city Mumbai, companies like his would have to go far out of the city to hire because of the level of competition, he said, but here in Colombo “two miles from my office is my hiring range.”
Many international executives also quietly admit that Colombo’s colonial architecture, excellent seafood restaurants and proximity to miles of sandy beaches make it a more alluring business travel destination than India’s outsourcing centers.
Sri Lanka’s accounting specialty is rooted in the country’s history of colonialism and conflict.
State-financed universities here have traditionally not had enough places for qualified students, and they were often closed intermittently during the war. So students who could afford to attended private schools instead — in many cases accounting schools with British origins that date to Sri Lanka’s independence from Britain in 1948.
Over time, becoming a qualified accountant has become something well-educated, business-minded people in Sri Lanka do in addition to getting a degree in, say, physics or business management.
Now, though, many students choose accounting over another degree. When Nilushika Gunasekera, secured a coveted spot at a public university, she turned it down to go to a privately run accounting school. University students do not get any exposure to a real business environment, she said, and they have several years to “take things easy.”
“I didn’t think going to the university would add value,” she said.
After accounting school, Ms. Gunasekera joined an outsourcing company doing work in cash management and banking. She now works for the Chartered Institute of Management Accountants in Colombo, a trade group.
If the rest of the world discovers Sri Lanka’s pool of low-cost accountants, as the government hopes, the country could lose some of its competitive edge because wages will go up and there may not be enough workers to meet the demand.
But the government is offering various other incentives — including tax breaks, subsidized telecommunications and streamlined procedures for setting up new businesses — meant to encourage international companies to come here instead of India, Eastern Europe or the Philippines.
As foreign companies ramp up their presence here, local developers are building to accommodate them. In a neighborhood thick with tea warehouses and crossed by rail tracks, Jeevan Gnanam is turning the textile mills his grandfather built into a high-tech outsourcing center.
Orion City, as the development is called, is miles from Colombo’s slick World Trade Center skyscrapers, near a canal fringed with rundown buildings and palm trees. But it has already drawn big-name clients, including a division of the publishing giant Pearson and MphasiS, a technology company partly owned by Hewlett-Packard, which has said it will hire 2,000 people here in the next three years.
“Sri Lanka offers us a rich talent base that will allow us to serve our global clients,” said Dinesh Venugopal, chief corporate development officer for MphasiS.
Ultimately, Orion City will have three million square feet of office and retail space, including a 19-story building, said Mr. Gnanam, 28, who is the chief executive of the consortium that manages the development. It was difficult to convince his father and uncle that technology, not textiles, were Sri Lanka’s future, he said, but they have come around recently. Building the industry and attracting foreign investment is crucial, he believes.
“Economic development has to take place,” he said, “for people to put the war in the past.”