IT business in 2022: COVID, foreign clients – Anuja Herath

We at Redwerk are not only passionate about technology and the latest trends, but also about traveling the world and meeting outstanding tech leaders. Join us as we explore the behind the scenes of successful IT agencies like Redwerk.

Today, we are going to introduce you to Konekt, an innovative Sri Lanka-based IT company that specializes in Mobile Application Development, Cloud Software Solutions, Web Design, UI/UX, and Server Management.

Meet Anuja!

Get ready for an engaging conversation as Konstantin Klyagin, founder of Redwerk, together with Anuja Herath, CEO at Konekt, talk about a transition from employee to CEO, Sri Lanka’s IT market, COVID impact on office work, and plans for the future. Buckle up for an insightful journey!

I’m Konstantin, and this is my hobby project – IT traveler. While everyone is familiar with how companies operate in Silicon Valley or Berlin, very little is known about companies in other parts of the world, such as Thailand, Egypt, or Sri Lanka.

Today, I am in Colombo with Anuja, the CEO and founder of KONEKT. This is not exactly an interview; it’s more of a conversation. Feel free to ask me questions as well. We are here to learn from each other and discuss various aspects of our business practices, such as sales strategies, talent acquisition and retention, salary structures, hourly rates, and more. The main objective is to gain insights into how other company owners, particularly in the service and IT industry, operate.

I’ll provide you with some background information about myself. I have a background in software development, having started programming at the age of eight. Now that I am 40 years old, that means I started programming 32 years ago. At the age of 23, I founded my company, Redwerk, which specializes in software development. Later on, I established QAwerk, a company focused on quality assurance, offering services such as manual testing, automated testing, and security testing.

In addition to my ventures, I am also a partner in a couple of other businesses. One of them operates in the field of industrial refrigeration, while the other is involved in the industrial drone industry.

Interesting! So, are you working there full-time or are you in a directorial role?

Actually, I hold a managerial position in my business. I try not to micromanage too much, but when it comes to paying attention to important details, I make sure to get involved.

Now, let’s talk about your personal background. I assume you come from a software development background, right? I’ve noticed that many founders in this field have a development background themselves. So far, I haven’t come across anyone who would be on the business side. Tell me how you started.

I’m the CEO of KONEKT, a software development company based in Colombo, Sri Lanka. I began programming at the age of 15, starting with Pascal and QBasic.

How old are you now?

I’m 31 years old. After my experience with Pascal and QBasic, I pursued further studies in Visual Basic, specifically versions 5 and 6 at that time. During this period, I mainly focused on smaller projects. After completing my higher education, I began working for two major development firms in Sri Lanka. However, I eventually felt the urge to venture out on my own and seize greater opportunities.

In 2015, I started my own business alongside two of my friends. We began with a basic infrastructure and later moved into our first office, where we have been operating for three years.

So, you developed an interest in programming at the age of 15 and then pursued a degree in Computer Science at university, right?

Yes.

After that, you worked for an outsourcing company here in Sri Lanka?

That’s correct. The first company I worked for was an outsourcing firm, and the second was focused on product development.

What prompted you to transition from being a full-time employee to becoming an entrepreneur?

Ever since my university days, I had a strong desire to pursue something bigger. Even while working for major Sri Lankan companies, I felt the urge to embark on my own entrepreneurial journey. The books I read played a significant role in motivating me.

Which books specifically motivated you?

Two books that had a profound impact on me were “Rich Dad Poor Dad” and “Think and Grow Rich” by Napoleon Hill. They sparked my curiosity, and I delved into reading more books and learning from video tutorials. It was getting quite interesting.

What was the triggering factor that led to the founding of your own company?

My partners and I had some connections in this area, which enabled us to secure some projects through our network.We teamed up and started working on those projects.

Initially, we didn’t make any capital investments. It was a zero-capital venture. We saved money from the projects and reinvested those earnings back into the company. We dedicated ourselves to reinvesting everything we earned, allowing the company to grow.

What was the first project?

Our first project involved web development for a movie company in Sri Lanka. While it wasn’t a large-scale project, it served as a starting point for us. Typically, newly established companies often secure significant projects and long-term clients right from the beginning, but that wasn’t the case for us. We had the passion and drive to start something.

What platform did you use for that project? Was it a CMS?

Yes. It was WordPress. After that, we began working with notable companies in Sri Lanka, particularly Wisdom Business Academy. As we gained visibility, our network expanded, and we started receiving more inquiries. Initially, there were three of us, and now our team has grown to around 20 individuals.

How long did it take for your team to grow to 20 members?

15 years. We had plans for further expansion, but due to the COVID situation, we had to put them on hold temporarily. However, we have now resumed our expansion efforts.

All right. So, you started with the WordPress project, which is quite cool. How is the current Sri Lankan market? If we talk about working with local customers, do the prices differ compared to working with clients abroad? Is it easier or more challenging to work with local customers compared to those in the US or Europe?

There are different customer segments. The segment we mainly target is corporate clients who possess a good understanding of technical aspects. They are continuously educating themselves and have a clear understanding of why they need a CMS (Content Management System), particularly in the context of marketing automation.

We have been working on marketing automation projects for large corporations that prioritize data science. These clients aim to gather valuable insights from their websites, such as user behavior and analytics.

When it comes to working with customers, is it easier to collaborate with local clients or those from foreign countries?

I don’t see any difference at this moment. It’s mostly the same for us.

Where do the majority of your customers come from?

Most of our customers are local, but we also serve clients from the UK, Australia, Singapore, and Canada.

That’s quite a broad geographic range, which is beneficial for diversification.

Indeed. Nowadays, our services extend beyond web development. Starting from our second year, we also ventured into mobile application development, which has become one of the key areas we focus on for our expansion.

We recognize significant opportunities in the realms of mobile application development and Software as a Service (SaaS). Even local customers and startups are increasingly focused on developing SaaS solutions. We assist them in turning their business ideas into fully-fledged products.

As a company, do you specialize in a particular technology stack or industry?

We have not specifically focused on any particular industries but are constantly seeking new technologies that we can master and utilize to assist our customers.

Currently, we do mobile application development. We initially worked with Ionic and then transitioned to React Native and Flutter. When it comes to SaaS and portal development, we employ React for front-end development and Laravel for back-end development.

In the local market, many clients are reluctant to use .NET due to its higher cost. In such cases, we utilize PHP as an alternative.

Are those mostly self-hosted solutions, or do you make use of PHP hosting?

We primarily utilize self-hosting solutions.

Okay. Speaking of emerging technologies, is there any presence or interest in blockchain technology within the Sri Lankan market?

Yes, blockchain technology is present in the Sri Lankan market. People are aware of it, and there are numerous ongoing projects related to blockchain. We collaborate with several partners on AI and data science projects, and when it comes to mobile application development, AI integration is a prominent element.

There’s machine learning in the Apple SDK already.

Yeah.

Apart from client projects, do you have any internal products that you are currently working on?

Yes, we have developed a product specifically for the microfinance industry. We have been selling it for the past five years, and it has been adopted by numerous large companies in the field.

Is that a white-label product that you can launch your microfinance solution on or is it a microfinance organization? Whose money does it distribute?

The microfinance product is used by money lending companies who utilize it to manage their loan portfolios and customer information. It includes a mobile app for their field offices, allowing them to issue receipts to customers once payments are collected.

Nice. How many organizations are using this product?

About 10 clients.

How do you manage the development of these products alongside your main outsourcing activities?

We have a separate team specifically focused on product development, while the rest of our team works on various outsourcing projects.

When did you begin hiring employees? Was it from the very beginning?

Initially, it was just the three of us, and we received some assistance from a few individuals on a part-time basis. However, we started actively hiring employees in our second year.

Who was your first hire?

Our first hire was the head of engineering, and he is still with us.

How did you come across him?

He applied for the position, and we conducted an interview. I was impressed by his attitude. Looking back, I believe my decision was the right one. He has always shown a willingness to learn new things.

He initially had expertise in PHP, but now he works with technologies such as React Native, Flutter, and AWS. He has become a full-stack developer. It’s great because not everyone is open to working in different directions. Some individuals prefer to stick to a single technology, saying, “I know PHP, and that’s enough for me.”

Yes, continuous education is indeed important. Besides developers, what other roles do you have in the company?

Apart from developers, we have three salespeople, including myself. Additionally, we have project managers and a quality assurance (QA) team.

Can you tell me more about your company culture?

Like most IT companies, we maintain a flat organizational structure where we emphasize mutual respect among team members. Everyone is encouraged to freely communicate and interact with one another. We also organize parties and games to foster a positive work environment.

That sounds fun! What kind of games do you play?

We often have office game nights, and one of the popular games we play is the Carrom Board game.

Which one is your favorite?

I’m not much of a gamer myself either, but I can handle car games quite well.

Me neither. But we have PlayStations in every office in case someone wants to play games like Mortal Kombat.

What do your parties look like? You just gather in the office and have drinks and pizzas?

In the past, we used to organize outings and events outside the office, but recently we have been spending more time within the office.

Speaking of COVID, many companies have left their offices. In early 2020, we made the decision to cancel our office rent and transitioned to remote work for about six months in Kyiv. Meanwhile, our other location was operating in a hybrid office mode, with only a few people coming to the office while the majority worked from home.

There were people with little kids at home who needed an office space to work from. So, we rented a new office for them in Kyiv. But it’s still quite big. Perhaps it’s worth considering downsizing our current office because there’s so much space not used right now.

Working without a physical office during that period was quite fun, and we found ourselves becoming highly productive.

During those days, we were also adapting to remote work.

But it’s pretty difficult to work remotely for 2 years in a row.

Indeed, but some individuals find working from home comfortable and their productivity remains unaffected. However, those who have children often prefer coming to the office. Some employees even told me that they were tired of working from home and asked to come to the office. We opened a small office space where they can come and work whenever they need.

Speaking of people, is it easy to find talent here in Sri Lanka?

Oh, it’s not that hard. We have numerous IT universities, so there is a steady supply of talent. We haven’t encountered significant challenges in this regard. However, the IT industry in Sri Lanka is quite competitive, with hundreds of IT companies operating in the country.

Which channels do you use to attract candidates? How do you look for candidates?

We primarily publish our vacancies and utilize platforms like LinkedIn to attract potential applicants. We also receive referrals through our network.

Speaking of the quality of candidates. Let’s say out of ten candidates, how many do you hire?

From the CVs that we receive?

For example.

Sometimes we receive hundreds of CVs for one position.

Then I’d call it hard. Do you primarily hire junior, middle, or senior specialists?

Our focus is mainly on middle-level professionals. Currently, I don’t see the necessity of bringing in more senior individuals. We collaborate with them more in a consulting capacity.

Coming from a software background myself, I’ve observed that new people often possess more knowledge than the senior ones. In the past, we didn’t have resources like YouTube and other platforms that juniors have today. Nowadays, if you’re searching for something, there are hundreds of videos on YouTube to gather information from.

How do you retain talent? It’s not enough to only hire talent, but it’s also important to be able to keep it.

Retaining talent is a challenging task. We strive to provide opportunities for career development. Our company has established a career development community where we organize events and offer guidelines on enhancing skills. When individuals join our organization, they typically have a desire to grow professionally. The first hire that we were talking about has grown with us.

Are there any standard incentives or standard social packages that come with every company in Sri Lanka?

Yeah. So, we adhere to those standard practices.

What’s included normally? What kind of perks?

Apart from salary, we provide bonuses and additional benefits such as tea and coffee in the office.

What about gym membership or English classes?

Currently, we don’t offer that.

And what about medical insurance?

Yeah, we are in the process of securing medical insurance. We are in discussions with several vendors, and we plan to implement it soon.

Perhaps attendance at conferences?

Yes. Whenever we have the opportunity, we join the training programs and conferences. These opportunities are provided by the company.

What are the average salaries for junior, middle, and senior positions in Sri Lanka?

The salary range varies. If you are working with foreign clients and generating revenue mostly in USD or other foreign currencies, the salaries tend to be higher. When working with local clients, the salaries are generally average. Additionally, there are some small-scale companies that offer lower salaries. So, there is a variation depending on these factors.

What are the salary ranges?

I can’t tell you exact numbers as they vary depending on the specific company and project.

Alright. How do you ensure the quality of your work?

We have a fully-fledged project management cycle in place, covering all stages from initiation to closure. We maintain a Continuous Integration/Continuous Deployment (CI/CD) pipeline. We also have a QA team.

That covers the functional quality, but what about code quality?

For code quality, we conduct code reviews. Depending on the technology used, we employ various automated tools to check the code.

You mentioned hiring middle specialists, but also having juniors on some projects. What is the typical structure of your project teams in terms of the number of juniors, middles, and seniors?

It depends on the scope of the project, ranging from 5 to 10 members. We typically have a mix of juniors, middle-level professionals, seniors, and tech leads.

In my experience, working with juniors can be more expensive than solely relying on seniors, as seniors may need to redo their work, leading to increased delivery costs. It can also potentially cause burnout among the seniors. Does it happen to you?

I agree with you. It also depends on what type of development we deliver. We carefully select projects that align with their skill level.

What’s your favorite project so far?

All are my favorite projects. These days, I’m much more focused on mobile application development.

Is there any specific project that stands out to you as a favorite?

It’s one of the projects that we recently released for Wisdom Business Academy. It involved creating a mobile lab for them. They were so interested in getting it done and having those new things.

We incorporated real-time chat and notifications into the app. We integrated it with various platforms like Moodle LMS, enabling students to engage in chat conversations with lecturers and collaborate within their group chats. It’s quite an interesting project.

In projects like these, having a well-designed UI/UX is important.

Yes. For mobile applications, we offer customers a fully-fledged prototype. We utilize Figma to create an interactive experience, allowing them to click and navigate through each screen.

Alright. What do you consider a good margin for a company?

I would say 30%.

And how much do you get now?

Around 30%.

That’s a very good margin.

But it differs from project to project.

No. It’s overall. When you wrap up the year, there’s just one figure.

Yeah.

How do you feel about the cultural differences working with your foreign customers?

We haven’t encountered significant cultural differences that pose problems while working with foreign clients.

There are always difficulties working with clients.

Yeah. One aspect where we can notice differences is in the approach to processes. With local clients, they might not place much emphasis on the prototype plan. They just want to get it developed. However, foreign clients tend to delve into the details, provide suggestions, and offer feedback during the process.

They’re more involved, right?

Yes.

Okay. Have you ever worked with Indian developers?

No.

And with their code?

Yes, we worked with that.

There are sometimes projects developed in India and the customer would come to you and tell you to continue working on it. Has it ever happened to you?

Yeah, it happened to us. We had an experience with an e-commerce project where the customer said that they were using a backend product developed in India. When we examined the script, it turned out to be unsuitable for the client’s needs. We gave up that code base.

Returning to the topic of cultural differences. Many people who work with Indian teams notice that the Indians usually say “yes” to everything. It’s in their culture and it’s very difficult for them to say “no”.

For instance, if you ask an Indian person whether a task will be completed by a certain deadline, they might initially respond with a “yes.” However, when the deadline approaches, they might then say that it was not realistic to meet it. So, could you have told me before? And this is the main challenge that people are having with Indians.

How is it in Sri Lanka?

We usually follow the process. Our project managers thoroughly review the scope and see whether the project can be delivered on that time. We don’t give them unrealistic timelines.

Suppose a situation arises where, despite careful planning, it is discovered along the way that the original estimate is no longer feasible. What happens then?

There may be instances where the scope of a project changes.

Let’s say the scope hasn’t changed. But an unexpected technical obstacle arises.

In our experience, we have not encountered such situations frequently. Before promising things to the customer, we typically conduct thorough research on the libraries and technologies we plan to use in the project.

Allright. Let’s imagine a situation where you begin working on a web project and a new browser update is released, causing significant changes in browser behavior across all platforms. As a result, additional time would be required to accommodate these changes, and it may not be possible to deliver the project by the initially agreed-upon deadline.

So, in that case, we have to inform the client about the situation. I think they would understand the need for additional time.

Which business models do you practice in your business? Is it outstaffing or maybe outsourcing?

I would say we have a combination of both. We have our in-house products and we also utilize the outsourcing model.

Well, the question is different. How do you bill your customers?

Some projects have fixed rates because certain customers prefer this approach, primarily local clients. Even foreign clients, particularly startups, often request a fixed rate. Since they are securing funding, they want to ensure that the development can be completed within their available budget. Additionally, we offer hourly rates.

How often does it occur that there is scope creep, and the initial price estimation for fixed quote projects is not met?

It does happen, primarily due to the customer relationship.

Is there a difference in hourly rates between Sri Lankan customers and foreign ones?

We maintain a consistent pricing structure for both local and foreign clients, but we do have different rates for various services.

And what are the hourly rates?

I would say we are in the average range.

But how much is it?

Around $25.

Do you engage in any marketing activities to promote your services?

Yes, we have a sales team and a business development team. For local clients, we utilize strategies such as cold calling and other approaches.

So, that’s sales. Marketing involves attracting customers from outside sources, generating leads.

We haven’t done anything for the foreign marketing. Our network plays a significant role in acquiring clients. I have friends from Canada and Australia. They send us referrals.

Do you get a bench sometimes?

If someone doesn’t have an outsourcing project, we involve them in product development, ensuring they are not left on the bench.

Do you keep track of your utilization?

Yeah, we do the project management side. We keep track of those things.

What’s the average utilization rate of billable resources?

I would say around 80%. We are not a very big company and we don’t have a big staff. With a larger workforce, the utilization rate might be higher.

It usually goes lower. There are a lot of internal processes to take care of and the utilization goes down. How well are your projects documented? How do you document your projects?

We follow the standard practices for project management. We maintain project charters and utilize SRS to document our projects.

Do you use any knowledge base for all of your projects? Where do you store project-related information?

We utilize Zoho Projects as our knowledge base, and we also have repositories in Google Drive where we store project information.

I saw a bunch of certifications on your website. How did you get them and how are they useful in your work?

We have partnered with ESET Internet Security Virus Guard and Kaspersky. Also, we sell Microsoft Office 365.

Regarding Kaspersky, how has it been beneficial for your business? Do you resell licenses to your customers?

Yes. We mainly resell licenses.

What’s your plan for 2022?

We have plans for team and revenue expansion. Since we are currently serving clients from the UK, Australia, and Canada, we are also targeting the international market for further growth.

What steps are you planning to take in order to achieve this expansion?

International marketing is a new area for us. While we have been focused on sales and marketing in the local market, expanding into the international market requires a different approach.

We are currently working with a consultant who specializes in international marketing to explore this field. We are optimistic about implementing our plans in the near future. We are committed to improving our processes and aiming to double the size of our company. It’s hard, because we think the COVID problem will persist.

I don’t know. In my experience, COVID has actually generated more interest in IT services because many businesses went online. Before COVID, I had to travel to my customer’s location in the US for face-to-face meetings. However, during the pandemic, Skype calls proved sufficient, and contracts worth $1-1.5 million could be secured remotely.

You might have time to travel as well. You can even talk to customers from the US. That’s cool.

Well, the choice of countries you could travel to has been reduced.

Have you traveled to Sri Lanka before?

This is my first time here. I decided to pick something new because last winter I was in Mexico and Costa Rica.

What made you choose Sri Lanka?

Half of Ukraine is here. There are many Ukrainians in Sri Lanka this winter.

Do they have a positive impression of the country?

Yeah. They love it here. Otherwise they wouldn’t come.

How long have you been here?

1 month.

Which places have you visited here?

I started in Mirissa, where I spent a day playing golf. Then, I spent seven days in Ella and three days in Kandy. Afterward, I stayed in Dambulla for four days before coming here.

Now, tell me, what have you heard about Ukraine aside from the current situation?

The majority of people coming from Ukraine are travelers. In terms of IT services, Ukraine is among my competitors, and I keep an eye on the competition.

Which companies are you following?

I’m not specifically focused on individual companies. I have general knowledge about Ukraine. Although I haven’t traveled there yet, I hope to visit in the future.

You’re always welcome to visit Ukraine. Now, let me ask you about Ukrainian tourists. How do the locals in Sri Lanka perceive them?

The Ukrainians were the ones who initially started coming, attracting other tourists to visit Sri Lanka as well.

We normally don’t give a shit about quality. We’ve seen scarier things than that. We are not afraid of a small virus.

It was a big thing. You attracted the tourists back to the country

What have you heard about Ukrainian developers besides that they are competing on the same market?

Although I haven’t had the opportunity to work with them directly, my understanding is that Ukrainian developers are well-versed in up-to-date technologies. They have expertise in areas such as blockchain and AI.

In Sri Lanka, people do learn about these technologies, but they often tend to migrate and work abroad. There aren’t many companies in Sri Lanka that handle projects in these areas. I have several friends who work in blockchain, but they live in Canada, Norway, and Sweden. They have migrated there.

It’s a very hot technology on the market. Alright, is there anything else you would like to ask me?

How did you start your company?

Well, when I was six years old in 1987, I saw a computer for the first time. At the age of eight, I got interested in programming and wrote my first program.

By the time I was 15, I had developed software that was used in bulletin board systems (BBS). These systems provided connectivity before the widespread use of the Internet. Users would dial each other’s phone numbers using modems to access file bases or messaging boards online. If you had multiple telephone lines, you could connect multiple users at once. However, if you had only one line, it operated on a first-come, first-served basis.

I developed the software that made all of this possible. During my school days, I was actively working on this project, collaborating with my customers to fulfill their feature requests and more. The software I created was offered for free. I was just an enthusiast, but my software got really popular.

Most of the former USSR chose my software for their bulletin board system. It was called Tornado BBS. Then I got interested in Linux and open source because it was very techy. At the age of 17, I created a few projects for Linux open source development.

It was an ICQ multiple messaging client in text mode for Linux. I reverse engineered their protocols and created a solution that enabled connectivity and messaging across various networks.

At 17, I started my first job as a software developer. I briefly worked for a police station. It wasn’t a good experience. But then I worked at one of the first outsourcing companies in Ukraine, back in 1998.

How old are you now?

40.

You were born in 1981?

Yes.

I was born in 1991.

Well, it was nice talking to you. I enjoyed our conversation.

​​Thank you for sharing your experiences and insights.

Work With Ukraine

This interview took place prior to the unfortunate events of February 24, 2022, when Russia launched a brutal invasion of Ukraine. The war in Ukraine has emphasized the impact of the Ukrainian IT industry on the country’s economy.

Ukrainian tech companies have risen to the challenge with remarkable adaptability and resourcefulness. Even in the face of war, Ukrainians continue to push boundaries, harnessing the power of technology to drive progress and make a lasting impact on the global stage.

Our Redwerk team goes above and beyond to maintain the quality bar of our services high. Despite the ongoing war, our team is still going strong, sharing long-standing expertise with startups and established businesses across North America, Europe, Australia, and New Zealand.

If you are looking for a reliable partner who is not afraid of challenges and hard work, do reach out. We’d be happy to contribute to your business growth.

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