Research firm Datamonitor recently came out with an intriguing report about Sri Lanka as a potential business process outsourcing (BPO)/offshore contact center hub.

Intriguing in that there may be a strong case for that island nation to become a BPO center despite its small (relative to neighboring India) population of 20 million.  Intriguing is that it has been the media lately on account of an ongoing civil war: which is not exactly the kind of development that assures potential investors and clients.

Datamonitor points out that Sri Lanka shares many of the attributes that has made India such an attractive location for BPO including an affordable and a plentiful pool of educated and English-speaking workers, high literacy levels, and a legal system that is based on a Western model.

The country through its IT trade organization Slasscom is wisely is focusing, however, on a few key strengths, such as accounting and finance (approximately 50,000 Sri Lankans qualify as accountants each year) rather than trying to be 'all things to all firms' that India's huge population can afford that nation to be.

Yet only farther down does the paper touch upon Sri Lanka's 20+ year old civil war, one like many such conflicts based on longstanding and deep-rooted issues between dominant and minority populations...after a discussion about costly telecom, doubts about cities outside its capital to support BPO/IT, and competition from other nations.

This is the wrong focus. Civil conflicts are top of media and top of mind. Because these are issues that must be addressed head on and up front in this post-9-11-01 world.

Here's what the CIA World Factbook says:

"Tensions between the Sinhalese majority and Tamil separatists erupted into war in 1983. Tens of thousands have died in the ethnic conflict that continues to fester. After two decades of fighting, the government and Liberation Tigers of Tamil Eelam (LTTE) formalized a cease-fire in February 2002 with Norway brokering peace negotiations. Violence between the LTTE and government forces intensified in 2006 and the government regained control of the Eastern Province in 2007. In January 2008, the government officially withdrew from the ceasefire, and by late January 2009, the LTTE remained in control of a small and shrinking area of Mullaitivu district in the North....

"The 25-year civil conflict between LTTE and the government of Sri Lanka has been a serious impediment to economic activities. By mid February 2009, the LTTE remained in control of small and shrinking area in the North. The conflict continues to cast a shadow over the economy."

Yes, companies set up shop and do business with firms located in many dangerous and conflict-ridden parts of the world. That can include our own back yards. As was remarked to me when I was writing about Northern Ireland as a contact center location 11-12 years ago "you're safer in Belfast than in Boston".

There is, however, a difference between civil wars and criminal activity. Terrorism is a tactic to conduct warfare, including civil warfare. The state is the target, and to destroy or neutralize it or to force it to change policies or redress grievances terror is aimed at the institutions, infrastructure, the economy, and the support of its population through generating fear. The latter can also include tourists, and executives sent there to support operations.

In contrast, criminals don't care about politics. They want what others have and they do what it takes to get it.

I used to live in the UK during Northern Ireland's 'Troubles' including during bombing campaigns. I used to also live in Boston and have visited the city many times before and since, travelling throughout the city on its transit system and on foot. There is no comparison in the on-the-spot fear between being checked out on an MBTA subway train and the shuddering terror of having to evacuate a train station in Manchester, England.

And while firms often take such risks--with civil conflicts and with high criminality--on manufacturing, resource extraction, and trade the rewards are usually there to match. Can the same justifications to put staff and assets in danger be made for comparatively low-value BPO, which the Datamonitor report admitted can be and is done in other parts of the world?

I wish to see an end to the conflict in Sri Lanka. For the Datamonitor report is correct in that the country has strong potential, just like Northern Ireland has. There are firms such as WNS and RR Donnelley there. And yes it will take a long time for Sri Lanka's war to cease even when there is a settlement, as there will be factions that will try to undermine it, as demonstrated by a recent bombing in Northern Ireland.

There are reports of the Sri Lankan government's recent military successes. Yet as this article from the Financial Times points out, "Most analysts argue it needs to do this by following up its military success with measures that would bolster the position of minority Tamils in Sri Lankan society, which is dominated by ethnic Sinhalese, comprising 74 per cent of the population, and ease the ethnic tensions that gave rise to LTTE."

For a country or region to be truly successful in drawing easily transferable BPO/IT business there must be a commitment to stability including creating and maintaining a functional society. BPO/IT investments can firm that up by creating employment--which has been stressed in Northern Ireland to create work for large jobless pools --but the civil foundation must be there for these structures (like contact centers) to hold up over time. And that means taking steps including compromises with the sides involved to resolve the issues that had led to or exacerbated to the point of violence the civil conflicts in the first place.