Three things Govt. needs to do before signing ETCA

So the Government of Sri Lanka (GOSL) cleverly diverted the public attention on the Economic and Technology Cooperation Framework Agreement (ETCA) formerly known as Comprehensive Economic Partnership Agreement (CEPA) with their little lyrical stunts over the Independence Day celebrations. While the masses are fighting over songs, the Government must be busy drafting the framework for the latest Indo-Lanka bilateral trade agreement behind closed doors. 

The public knows very little about the discussions and the direction of travel, which is a serious lapse by a Government that vehemently promised transparency and open access to information. Instead of allowing free and open public discourse on this important national matter, the top brass of the Government are quick to call anyone who questions it ‘racists, fascists and their usual list of catcalling’ which they conveniently use to silence dissidents.

India is a great country and I strongly believe we need to collaborate a lot more. I have lived, studied, travelled and worked in different parts of India for years. I have many Indian friends and colleagues whom I love and respect. This article is written as a reflection of some of the unspoken soft aspects of the ongoing debate and is not intended to hurt anyone.

The controversy is mainly with the proposed liberalising of the labour flow particularly between the ICT sectors of the two countries. The argument against this is that such agreement would lead to loss of jobs and lowering of salaries for the domestic ICT professionals. That’s a fair argument given that most bilateral labour agreements in the world have in fact led to loss of jobs and lowering of wages in one of the two countries. But good agreements can prevent such negative scenarios by having controls built into the agreement. 

Unfortunately we the public are uncertain about these actual clauses due to the lack of information which in turn adds fuel to the resistance. The Government really needs to up their game in managing communications with their stakeholders.

1. Level the playing field

One of the interesting counter-arguments made by the pro-CEPA camp is ‘why fear the Indians if we are confident about our capabilities?’ They are using the old reverse-psychology tactic by rubbing the ego of the Lankan ICT community and mocking the dissidents as ‘frogs-in-a-well and protectionists’. And it seems to be working. The last thing the ICT fraternity of Sri Lanka needs to hear is that they are afraid of competition.

But the undeniable fact is that Indian ICT professionals are certainly far better than Sri Lankans and most other nationalities, generally and volumetrically speaking of course. So the answer to the fear-tactic question above is that ‘well, we should be scared’. Those who know about the Indian ICT sector, very well know the competitiveness of their workers. Seasoned over decades by their own epic internal competition, the Indian ICT worker is a lean, mean machine equipped with multiple degrees, diplomas, a killer business instinct, an insatiable appetite for knowledge, ruthless career ambitions and an unforgiving attitude. 

Their English language skills are superior to our ICT workers. Their adaptability is probably the highest in the world. Their sense of work ethics, commitment levels and their ability to win any argument will crush the Lankans in our home grounds.

And that’s why they are so successful. That’s why Indian ICT workers are thriving around the world. That’s why the CEOs of some of the Lankan ICT companies are secretly loving the idea of free access to that resource. So should we be scared of them? We damn well should and there is no shame in admitting it. It is the living proof of the success of the visionary leaders of India who built the IITs, printed the cheap Indian editions of the thick computer books, and massively funded the pioneers of the software and BPO sector in India.

So the GOSL needs to consider this inevitable organisational culture-shock if this is to work to our advantage. There is no shame in trying to protect your people from a super-power. Just like the East-Asian countries are playing it safe with China, their regional super-power. I do think that such competition is good for the sector so that our people will also raise their performance. However competition is good only if the playing field is levelled. And to do that the GOSL needs to create the same level of access to ICT education as in India. 

We need to at least double the university intake for ICT courses not just undergraduate but also postgraduate. We need to radically transform the quality of ICT education and English language across the board. We need to cut the cost of ICT hardware and the cost of access to internet at least by half. We need to create large state venture capital funds to scale the local ICT start-ups rapidly. We need to get the big-wigs of the ICT companies to start voraciously competing in the global marketplace. 

We need to set higher standards for the paygrades and performance incentives. We need to update the labour laws to protect the local employees from these new scenarios.

2. Not build a new mafia

Sri Lanka is not a significant market for India. We’re too small for the size of their ambitions. But Sri Lanka is a nice place. It’s less populated, there’s less traffic on the roads, the INR is over two times stronger than the LKR, the cost of living is lower, the weather is good, people are nice, and it’s a much nicer place to live and do business. 

Once we sign this agreement, Indian investors will be able to setup companies or take over Lankan companies easily. Their purchasing power is too high for any big-or-small player in the local market to resist. That’s probably another reason why some local tech CEOs are secretly loving this move.

But it is unlikely that the Ivy-League of the Indian ICT companies will want to move to Sri Lanka. Why should they? If they still have to employ Indians (because the Lankans are not good enough, and that’s why we are signing the agreement in the first place...), adding airfare and accommodation costs etc. doesn’t really make any business sense for them. It can be reasonably assumed that the value of the Lankan ICT companies are relatively low when compared to the Indian ones, it’s unlikely the best investors will want to buy them. 

Even if they do, it is unlikely they’ll send their best workers to Sri Lanka. They’d rather send them to the US or the UK where they need their best to work in/from/at.

And most importantly will the Lankan ICT companies realistically be able to afford the best of the Indian talent, when in fact they can’t even afford the best of Lankan talent from migrating?

So we’ll end up with the lower-end of the bargain in every aspect.

Let us not forget that with some good ones will come a lot of bad ones. How many of you can remember the ‘Seagull Scam’ which happened sometime in 2006 – the Indian BPO company that hoodwinked the very ICT workers and just vanished without a trace with the hard-earned money of the gullible software developers of the top ICT companies in Colombo?

When there is no clear value proposition or a strong bargaining power, the deal would skew to the benefit of opportunists and con-artists. We cannot deny the risk of more organised scams, crimes, money laundering, smuggling and human trafficking to forge in the guise of ICT companies.

We just might create a new international mafia hub like in Malaysia where all kinds of notoriety happen behind fancy corporate branding on top of fish markets. And so the GOSL needs to make sure that proper controls in the form of strict and fall-back clauses in the agreement, strengthening of local laws, border control, customs, taxation etc. are put in place to prevent such unwanted new trouble in the future. After all, we are very famous for creating our own problems.

3. Start the long-term solutions

NIIT was a flop. Mphasis was a flop. Airtel is barely holding on. Indian ICT companies don’t really have a good track record in Sri Lanka. So perhaps all this worrying about Indians taking over could be a farce. Partly driven by their megalomaniacal arrogance and partly driven by the lack of empathy to the local market dynamics, Indian companies will probably lose their investments quickly. 

And it is unlikely that this agreement would create a large number of new jobs for Sri Lankans at home, unless there is some kind of guaranteed FDI incorporated into this agreement. There is a remote possibility that some of our people will get jobs in India. But will that be even close to fill the Lankan Prime Minister’s ageing promise of the one million jobs?

It’s hard to think of any significant reason for this labour component of the agreement. The GOSL has so far failed to give any compelling reason either. If it is a genuine talent crisis, then the GOSL needs to address that problem domestically while temporarily filling the gap. So it can be speculated either as being Prime Minister Modi’s agenda (of which the reason is unclear) and/or as a wishful attempt by the GOSL to create jobs or something else which they only know. 

Assuming that this part of the agreement was not conceived with the consultation of the local ICT fraternity, it is reasonable to believe that it’s more of an Indian push. If so we are all missing something big here.

Why would they want this? Do they see our slowly developing IT-BPM sector as an imminent threat? Do they want to secure their share before somebody else does? Or is it the start of Modi’s long-term plan to make Sri Lanka a hub, a common place to do business with Pakistan and Bangladesh? Or do they want to position their people at strategic information and communications vantage points in Sri Lanka as a way of gaining political advantage over China? Or is it just as simple as somebody in the team thought let’s all collaborate on ICT? (Computer related Services as they would call).

There is no doubt that we need to start competing in the global marketplace. But we need to do that with the acceptance of our own strengths and weaknesses. If done right, trade agreements can turn our weaknesses into strengths. And all such agreements should seriously consider the long term impact on the country as a whole. Is the government clear on what kind of IT/ICT/BPO/BPM/IOT industry we should develop in Sri Lanka in the next 10-20 years? 

Will this trend of service outsourcing continue in the future? And what will the impact of labour flows really have on the future trends? Should we continue to focus on service or should we up the game to technology products? How can we make sure there is technology and knowledge transfer into Sri Lanka? What happens when the job market is saturated? What are the implications of this agreement on possible future agreements with other countries?

It’ll be useful if ICTA spend more time on answering these strategic questions and bringing the brightest minds together to develop a holistic plan for ICT in Sri Lanka. Similarly, it’s rather poor that a government which has been unsuccessful in getting PayPal to Sri Lanka, the most basic of ICT requirements in today’s e-commerce, is trying to sign intergovernmental agreements on ICT for labour.

Finally I would like to request the GOSL to welcome the differences of opinion on this important matter. There are plenty of internationally experienced people in the country that can add a lot value in shaping this agreement to be more rounded and more beneficial to us. Let’s all work together to draft a good agreement and also to create the necessary internal systems to control potential ill-effects. 

In the meantime let’s mobilise the ICT fraternity to solve the causal problems like the shortage of Lankan talent by addressing their root-causes. National representative organisations like SLASSCOM need to do a lot more to shape the future of Sri Lanka. It’s made up of some of the best minds of our time. We are not making the best use of that collective power and resources.