If you’re on Facebook, chances are high you’ll have seen at least one  CEPA-related post by now.  What started out as an argument by a few high-level commentators has now evolved into video campaigns, a Facebook group with 21,000 members and actual physical protests. There’s even a profile picture template. It’s all over the Sri Lankan Internet.


The backstory behind CEPA is complex* (which is why it’s at the bottom of this blogpost).

Nobody knows exactly what CEPA contains, but by all accounts, CEPA is an agreement about an agreement (Agreementception).  Part of the agreement that, uh, the agreement is about will enable IT professionals to work across borders – which means the Indians get to work in Sri Lanka. Technically, ETCA is what we’re dealing with right now – but because CEPA rolls off the tongue so easily, everyone’s using that, so we’ll continue with the term.

Now, on with the story. Keep in mind that much of this has been covered elsewhere in bits and pieces and various blogs, so if you’ve read them all, you can spare yourself my opinion. Disclaimer: I work for WSO2, so make of that what you will.

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The Internet first blew up when the rumor of CEPA was leaked. The government of Sri Lanka, bless their little transparent souls, went to the media with word of a agreement that had been conducted after discussions with ‘the private sector’.

The private sector, who had apparently missed the invite, resented this.

We have been made to understand that any agreement in relation to labour liberalization will take place only after consultation with respective industry bodies, which has not taken place yet. SLASSCOM will with utmost caution evaluate any trade agreement and we reiterate that we will not support any agreement that is detrimental to the Industry and the country.     – SLASSCOM Sri Lanka, January 20th, at 11.04 AM.

Other industry leaders, like Sanjiva Weerawarana, were a lot more vocal and a lot less polite in how they said this.  In fact, the earliest inklings of the CEPA debate seemed to be  Facebook arguments between Muthunthan Canagey and people like Sanjiva who are vociferously pro-Sri Lankan. The tech circles, most of whom I have on my newsfeed, promptly split themselves into two camps:

  1. The Revolutionaries
    Battlecry: What do we want? Indians! When do we want them? NOW! This camp is made largely of two surprising bedfellows: ICTA employees and businessmen**.  Government employees cited the ‘vastly more advanced Indian IT industry’ and spun the possibility of Indian IT companies setting up shop here, providing more jobs; the businessmen stated that costs were costs and that if Sri Lankans were as good as their salaries, we didn’t have anything to fear from the Indians.Screen Shot 2016-02-15 at 12Muhunthan Canagey, after a bit of calling people ‘narrow-minded and non-liberal’, took to Facebook asking why people were so afraid of CEPA – aren’t Indians what made Silicon Valley awesome?
  2. The Stalwarts
    Battlecry: the Indians are coming! Gandalf! The Indians are coming!The Stalwarts are a simpler mix: they’re mostly racist or mostly afraid, and mostly both. Most are worried that, given Indian unemployment rates, a mass inbound swarm of skilled workers will cause wages and standards to plummet. Organizations are the OEA are in this category, pointing out that CEPA / ETCA should not be signed without a proper socio-economic study. The GMOA also made a fuss along these lines.
    Screen Shot 2016-02-15 at 12There are a few who seem to be considering this from the Yahapalanaya angle as well, bringing whatever election bias they had into the field.The majority of private sector employees in the CEPA debate are firmly in this camp. Their argument is twofold: a) Sri Lankans are better than Indians at this software business and b) this is going to seriously, seriously mess with our job market. Whoever they are, they’ve also got a few good videographers and riot organizers in the mix, because when they’re not protesting they’re pumping out videos mocking the Indians.Diversity is a wonderful thing.

Let’s apply a scalpel to the matter.

Now, much has been said about CEPA – from newspapers to Indi’s hasty (and to my mind, mistaken) blogpost. I’m going to try and filter out the political rhetoric and present the brass tacks.

Firstly, let’s dispel the myth that Sri Lankan software engineers are afraid of global competition. Please.  The software industry of this country exists because of global competition, and every engineer knows it. Who do you think buys most of the software? Butter Boutique?

Let’s also dispel the myth that the Indians  have better technology (or better engineers).  Analysts like Gartner have for years rated Sri Lanka as being right up there among the top outsourcing destinations.  Universities like Moratuwa, Colombo and IIT Sri Lanka pump out smart people by the hundreds. Spend some time on Quora and you’ll find so many people bitching about the poor quality of code churned out by Indian outfits.

So no – just because India has a million more warm bodies than we do does not make them ‘advanced’ or vastly superior. Watch the video below. We’re pretty good at what we do.

1) India is a large country, and if unemployment rates are high enough, that’s going to be a lot of (relatively) cheap labour eyeing Sri Lanka for a job.  The highest level of employees (director / Cx-level) have never been hindered by much regulation; at those salary pay grades, they can go wherever they’re hired and throw money at problems until they go away.

No, this is chiefly going to affect the engineers, developers and call center staff on the lower end of the scale.  And whatever rich expats will tell you, this can and will badly damage the Sri Lankan job markets.  At the end of the day, we have our own unemployment rates to deal with. There is an entire gray area between ‘graduate’ and high-falootin’ big-company Software Architect that people just don’t seem to be aware of that will get destroyed.

Whatever ETCA is, I hope it has a clause that keeps the minions out and brings only the big guns in, because we have enough of those.

2) However, just because it can do damage doesn’t mean it has to.  At the end of the day, India is a larger country with far more opportunity in the tech sector. Go to Bangalore and you’ll see why. Historically, people have moved towards opportunity, not away from it. In fact, I don’t see why Sri Lankans can’t move to India and secure high-paying jobs there.

Businesses have been outsourcing business for years now. I’m pretty sure that if the Indians were cheaper, Sri Lankans would be outsourcing to them. Those unemployed PhDs should technically have driven down prices in India to the point where a Sri Lankan job would be a promotion. Do we see that happening? No. Instead, Towers Watson charted Indian salaries rising at a little over 10%. Indians are migrating to Silicon Valley, to the UK, and elsewhere. A look at the Economist’s Big Mac index should show why.

The silver lining in this cloud is that Bangalore (and other tech hubs) are growing; a free trade agreement, if structured right, might allow Sri Lanka to tap into that growth.

3) Will Sri Lankan IT companies hire cheap Indian labour? I know quite a few that would, if given the chance.

However, software engineering, and especially software product engineering, is not about numbers – it’s about quality. It’s a fairly cutthroat business out there and the big boys, like Gartner, look for quality -anyone who hires a cheap, unskilled engineer, Sri Lankan or Indian, is building a business on quicksand.

The real question is, as Eranda Ginge put it, will Sri Lankan companies be able to afford  the best Indian talent? I think not.  Will Indian companies be able to afford the best Sri Lankan talent? Definitely.

So ETCA, if done right and followed through (remember – it’s still just an agreement to have an agreement), could be more opportunity than burden. But not in the way people seem to think. Indian companies probably will not come here – why cross an ocean to get to people who don’t like you, anyway? No, instead, our guys will go there and end up scoring big jobs.

I know the usual argument; that India has a lot of people, and it’s really going to be hard for a Sri Lankan engineer to find a job there. Yes, but America has a lot of people, and there’s still a lot of Indian people and Chinese people running shows in Silicon Valley. Because  having people is one thing: having smart people is another. And I believe Sri Lanka has more of the latter. We’ll go there, we’ll get rich, and we’ll come back to protest against Indians.

 


Recommended reading:

GMOA’s history of the agreement (http://www.gmoa.lk/index.php/2015/12/indo-sri-lanka-economic-and-technology-cooperative-agreement-etca/)
Nishan’s statistical post
(warning: bias towards socialism apparent and acknowledged)
Himal Kotelawala’s piece on ECTA for Roar.lk
Sanjiva Weerawarana’s detailed analysis of the Lankan IT industry.
YAMU’s FAQ on CEPA (food’s not the only thing they review)


*According to Dr Palitha Kohona, CEPA, built on the back of the India Sri Lanka Free Trade Agreement, was meant to be signed in 2008 (under Mahinda’s regime).  The government backed down due to rising anti-Indian sentiment, and all was forgotten until the present government dug it up and decided to present it as the Indo-Lanka Economic and Technical Cooperation Agreement (ETCA). See http://asiantribune.com/node/88460 for more details.

**Let’s not use entrepreneurs – that word is tiring as of late