Jaffna uniquely positioned for dual-hub IT strategy: STAX

Sri Lanka’s leading management consulting firm, STAX, recently launched a research report outlining a dual-hub IT strategy for northern Jaffna. In collaboration with Market Development Facility (MDF), STAX released this report with a view to fostering the region’s substantial potential for IT-related services in line with the national drive to develop a globally-competitive IT industry in Sri Lanka.

Earlier this year, the Government unveiled its plans for Island of Ingenuity (IOI), a Rs. 300 million investment in the ICT/BPM sector. By 2022, Sri Lanka’s IT/BPM sector is expected to reach US$5 billion in revenue, create 200,000 direct jobs and encompass 1,000 start-ups. STAX’s report highlights that Jaffna is uniquely positioned to capitalize on the sector’s growing momentum, ultimately expanding its own contribution to the sector and the wider national economy.

“Among the noteworthy attributes, we observe a positive and entrepreneurial attitude among the Jaffna communities, who also retain a strong connection to the Sri Lankan diaspora – which could lead to opportunities for investment and knowledge transfer. The region also maintains a high literacy rate while already possesses the necessary ICT infrastructure and a range of opportunities for IT education,” the report, extracts of which were released to the media, noted.

The report has called for the dual-hub strategy to be centered on the development of an Outsourced IT Hub together with the establishment of a Start-up Hub—both of which could be concurrently fostered while delivering returns along different timelines.

The Outsourced Hub would involve relatively low-risk activities capable of garnering quick returns in employment, productivity, revenue and IT skilling. Initially, the report envisioned its implementation within the format of a 1,000-person managed services operation that matches local talent to outsourced demand with a gradual focus on upscaling to accommodate new market opportunities.

“When considering the implementation of this hub, there are at least three potential avenues through which a Managed Services operation in Jaffna can carve a niche for itself in IT/BPO outsourcing, both globally and islandwide: Quality Assurance, Tamil Call Centres and KPO for Accounting Services,” the report added.

Comparatively, STAX envisions the Jaffna Start-up Hub as providing greater long-term returns for the region and the national economy, initially focusing on the development of complex and strategic areas of expertise in specific innovations and creating a strong network of IP skills that would shift the focus from importing foreign technology to encouraging and embracing homegrown innovation.

“The viability of this strategy is already borne out in the organic maneuvers of prominent Sri Lankan IT start-up accelerators like Yarl IT Hub and NCIT and IT companies like WSO2, Microimage and InfoMate. The current challenge, however, is that many such forward-thinking players operate in isolation or do not benefit from adequate access to resources. Through the formal inclusion of these organic activities in a dedicated strategy for Jaffna, the goal is to build momentum and focus in terms of investment and activity being channeled into this space, whether via global or local investors,” the report stated.

As STAX’s Managing Director Ruwindhu Peiris argued “Global success stories like Malaysia’s Cyberjaya make it clear that digital hubs are the product of a catalytic movement where investors and digital companies grow to a critical mass. For this to happen, all key stakeholders need to come together in a cohesive move. Otherwise, there’s only dispersion.”

Mano Sekaram, CEO and Co-Founder of 99X Technology pointed out that, “for a long time, the biggest drawback we’ve faced as investors and stakeholders is the absence of a bankable document to promote Jaffna as an IT hub - this report is a step in the right direction and an important conversation starter.”

MDF, which supported the research study, is Australia’s flagship private sector development programme.