#ETCAcrisis – The IT industry needs Indians, but they might not come

The apocalypse is upon us. At least that’s the sense you get if you follow my friends in software on their social media channels. The industry is getting their knickers in a twist over the proposed Economic and Technology Cooperation Agreement (ETCA) with India. The proposed trade deal according to them allows for low-wage demanding “Indians” to come into Sri Lanka and threaten their jobs.

A few revelations since the initial blow out warrants that they calm down. First, what’s in discussion now is a framework agreement, which is to say that it’s an agreement to make an agreement sometime in the future. Secondly, SLASSCOM has been told that consultations will take place before reaching any finality on the matter. Finally, the Deputy Foreign Affairs Minister has said the so called Mode four liberalization — which allows for ‘natural persons’ to cross the Palk Strait looking for jobs — is not part of the agreement.

All of the above should make this a non-issue. But the underlying discussion is an important one. Because I really do think our grand visions of Sri Lanka as a technology hub cannot be fully realized without ‘foreigners’ being allowed to work here at least somewhat freely. Most of those foreigners are likely to be Indian.

The fears of my friends in the industry are unfounded. I don’t think if an agreement is penned today, opening the doors for foreign IT professionals, there would be swathes of Dosai eating, slipper-wearing, will-code-for-food Indians on the immigration line at the BIA by next week.

Leaving one’s country is a complicated process. Moving is expensive. You need to get a decent paying job, and it also requires all sorts of arrangements with one’s personal life. This is partly why most of us are still here, even though there are opportunities out in the west, Singapore and Dubai. People really only move to countries that offer significant benefits over their own. There’s a reason why Sri Lankan professionals are not queuing up to go to Croatia, Romania or Mauritius even though those countries have around double the GDP Per capita than Sri Lanka. Double clearly isn’t good enough. Similarly, the average Indian IT guy will also be making those calculations.

In fact, according to my back-of-the-envelope calculations using payscale.com data for India and Sri Lanka, the median pay for a software engineer is only about 40% higher here compared to India in absolute terms. If you compare our relatively high cost of living — about 40% higher than India according to this site — the advantages are basically wiped off.

You may argue that’s just one data point. But the fact is SLASSCOM – the industry body promoting Sri Lanka as an outsourcing destination — routinely tout Sri Lanka’s ‘low wage appreciation’ as an advantage to invest in the country. Here’s a chart from SLASSCOM’s 2014 report that shows IT programmers are in fact earning less than their Indian counterparts.

SLASSCOM Sri Lanka IT/BPM Industry 2014 review Report. Page 6.

Yes, these are average wages. Sure, people will still move outside the median. That’s after-all the whole point. But the wage pressure through the introduction of a new source of IT labour is going to be nothing like the fear-mongers of this deal make it out to be.

There will not be a mass exodus. Sri Lanka is a nice place. But Colombo is no California.

On the other hand there are many good reasons to be supportive of a more open jobs policy towards the rest of the world, not just India. Sri Lanka desperately needs foreign investment. Especially if we are to fulfill the ‘IT hub’ ambitions.

I do have my share of skepticism of the purported ‘hub strategy’ for almost everything. Yet the very definition of a hub is a place where goods, services and people meet to trade. In IT, this mostly means trading services of skilled people.

No people come. No hub. It’s really not that complicated.

Think about a company like Google. Their operation in Hydrabad alone has more than 6,500 people as of last year with plans to double the headcount within the next three years. If a company like that, or one of the other giants want to invest in Sri Lanka, can we provide the numbers? A couple of years ago we only had 75,000 or so people in the entire IT/BPM sector which included non-IT personnel, accountants and such like in the BPM industry.

Can we really find a room full of decent UX people in Sri Lanka? How about Python developers? These are the type of questions potential investors will ask. Those promoting Sri Lanka must be able to answer in the affirmative, and the only way that can happen is if we have a set, stable way of attracting the needed talent from abroad. Through either a trade deal that includes Mode four liberalization with a sizable market like India, or a general more open jobs policy toward everyone.

Well-meaning people have suggested some kind of a mass education drive as the way forward. The problem with that is, there is already a fairly high focus on IT education and even if you can meet the numbers this way, — which is highly unlikely — it will take years. This is to say nothing of the job-preparedness of people who will come out after being ‘educated’. Sri Lanka needs investment now. Not ten years later.

I must say I was taken aback by the ferocity of the backlash to the entire episode. I thought as professionals of an industry that so clearly benefits from globalization and freer movement of people, we would be more supportive of competition and openness. Clearly not so.

Not a month goes by without my seeing at least a few of my industry colleagues in one U.S. city or the other, selfie-ing away or checking into airports on Facebook. Clearly, by the same logic, we have been stealing American jobs. At the very least those crying about the impending Indian invasion must admit they are being hypocritical. Even if they don’t think they are wrong.

I understand where the fear is coming from. No one likes someone else taking their lunch. Especially, the fellow countrymen of Virat Kholi. The stories of, shall we say, “cost-conscious” Indians are deep rooted in the Sri Lankan psyche. IT professionals have one additional gripe. As freelancers we have competed with Indians on project bidding sites like Odesk or Elance and have lost in a race to the bottom. “How on earth do they bid for a dollar-a-hour?” we wonder and walk away in disgust. Then there are the stories of the swathes of unemployed graduates that conjure up the images of a mass exodus, that drives the fear.

But as I’ve tried to show, these fears are largely unfounded. We must not let our primary instincts or our insecurities come in the way of our cosmopolitan future. If Sri Lanka is to be known as a place where interesting things happen in technology, a country that comes up in conversation in Silicon Valley, the way perhaps Singapore does, then we need to change our attitudes towards people that may not look or sound like us.

Sri Lanka has a potentially bright future as a kind of a better India — India’s Hong Kong if you will — if we choose to embrace it.

If we are able to naturally attract investments, people opening shop because Colombo is awesome, and not courted investments through BOI, well then the first benefactors will be local Sri Lankans before our neighbors to the north.

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