IT Traveler with Imal Hasaranga Perera, CEO at Treinetic

Welcome to another episode of IT Traveler with Redwerk’s founder, Konstantin Klyagin. Today, we’re chatting with Imal Hasaranga Perera, founder and CEO of Treinetic, to get insights into Sri Lanka’s burgeoning tech scene.

Meet Imal!

Imal leads Treinetic, a company deeply committed to delivering innovative tech solutions. With an engineering background and a knack for leadership, he’s driven Treinetic into new markets, nurturing long-term client relationships along the way. Dive into this enlightening conversation to learn how tech business is made in Sri Lanka — a region not as widely covered as Silicon Valley or Berlin, yet a significant player in the global tech workforce.

Today, I’m in Colombo, Sri Lanka, with Imal, the CEO of Treinetic. We’re in his office. Can you share some insights into your background and how you got started?

I graduated from the University of Moratuwa before shifting my focus to technology and eventually starting Treinetic. Would you like to hear about the entire journey, or should we focus on specific aspects?

It would be interesting to know at what age you began programming.

I dabbled in programming as early as 2009, even before I entered the university. My fascination with technology was purely out of curiosity. Here in Sri Lanka, there are government universities with technology specializations, so it was a natural field for me to delve into.

I enrolled in the university around 2011 and worked on various projects and products during that time, mainly for local companies, which ranged from large to very small.

While in university, I was deeply engrossed in my studies and particularly enjoyed hands-on technology. By the time I was finishing my exams, I felt well-equipped as a programmer. My subsequent internship at a less-renowned but high-quality Sri Lankan company was an invaluable experience, filled with amazing colleagues and a dynamic work environment.

However, I noticed that as an intern, my ideas and opinions were not highly valued. I understand it’s because I was part of a large project and held an intern position.

That experience led me to realize that I didn’t just want to be a programmer; I wanted to build things according to my own vision. I was about 25 then, and that’s when I decided to launch my own company.

The journey wasn’t as simple as I’d thought. I came to understand the significance of cash flows. Without adequate funding, hiring becomes difficult, making product development even more challenging. So, I started taking on client projects. We’ve also tried developing our own products, although most haven’t succeeded. Currently, we’re balancing both client services and product development.

The ultimate aim is to pivot back to being a product development company. This is what led me to start a trading company in 2004.

I heard from some locals that in Sri Lanka, people don’t commonly aspire to earn more money or establish businesses. What’s your take on that?

Upon graduating, usually around the age of 25, many of us face economic constraints and possibly unstable family financial situations. This prompts younger generations to prioritize stable employment to support their families.

So, it’s all about financial stability?

Yes, it’s about maintaining stability and generating a steady income for the family. Several startups have folded because they couldn’t achieve profitability or secure investors. It’s not that entrepreneurship is lacking; it’s more a reflection of our cultural and economic environment.

But it’s not uncommon for people to start companies in their twenties, and even in your thirties, it’s not too late, right?

That’s accurate. Age isn’t the primary barrier; it’s the cultural and economic pressures that discourage people from venturing into entrepreneurship.

Could you elaborate on your company’s business model?

We operate on a service-based model, offering services on a time-and-material basis, through dedicated teams, or at fixed prices. Our specialty lies in customized software development, particularly MVPs, and we often grow alongside the companies we support.

When developing features for an MVP, do you expand upon it or start anew?

We engage deeply with the client to discern the true needs of the project. We evaluate whether it’s an actual MVP or something intended to be scalable. The approach is determined based on the client’s budget and objectives.

Does your company specialize in particular technical stacks or areas of expertise?

We’ve transitioned our focus in mobile development to Flutter, after starting with native Android and React Native. For backend, we use Spring Boot, MongoDB, MySQL, and other on-premises technologies like Laravel and Spring.

So, you have a niche specialization in certain tech stacks?

Yes, we concentrate on specific technologies rather than trying to be jacks-of-all-trades.

And in terms of fixed pricing, how is that working for you?

We usually steer clients towards time and material as it’s more profitable for us. But for self-funded clients needing a quick MVP, we broadly assess the scope and set a budget. We may deploy a business analyst to nail down requirements, then refine the pricing before moving on to development. Sometimes the margins aren’t what we’d like by project’s end, but if the client secures funding, they often return, making it a success in its own right.

How often do startups secure funding after you’ve developed an MVP for them?

It’s rare, maybe one in ten.

That aligns with general startup statistics — about one in ten succeed.

Exactly. When it does happen, it often leads to a long-term collaboration. We’re still involved with some products that were initiated when our company was founded, customizing and launching them in different sectors. We’re willing to accept that level of commitment at that stage.

Can you tell us about the products your company offers?

We’ve developed an educational platform called Examiner, a music platform, and a fintech product that’s still in the works. We haven’t fully launched these due to legal complexities.

How successful is the educational platform so far?

It’s garnered around 200,000 downloads with daily users ranging from 600 to 700. However, balancing service provision with product development is a challenge. Due to increased demand from the COVID situation, we’re prioritizing our services to allocate more resources for our products. Right now, we’ve even made the app free to use, as we don’t have the bandwidth to focus on revenue generation at this moment.

Have you received any external investments?

No, we haven’t. We’re entirely bootstrapped. Trust built with clients has fueled our growth.

Who owns the company?

It’s just me and a friend. We’re the sole owners.

Did you start hiring right after launching the company?

Initially, we hired one person, despite limited funds. An intern, who was still learning. At the end, I found myself working late nights, revising and often rewriting his code due to quality issues.

I’ve found that hiring senior talent can be more cost-effective than training juniors. What’s your take?

At that time, my only option was to train people. Some of those early interns now handle senior roles, which eases my workload considerably.

How long did it take for them to reach a senior level?

Over the course of four years, they became highly competent, capable of leading teams and solving technical challenges independently.

What’s the team structure at your projects?

Alongside developers, we have project managers and QA professionals. We also have a business analyst focused on sales and proposals. Usually, the project manager oversees the entire budget.

Do you employ a specialized HR or recruitment staff in your company? How extensive is the team?

We’ve come to the realization that a dedicated HR staff is essential. Until recently, a group of 20 to 25 of us managed the hiring process. Now that we’re expanding rapidly, we need specialized personnel for recruitment.

We already have dedicated roles for HR and finance, and we’re in the process of augmenting our management team as well.

Interesting. How would you assess the ease of recruiting skilled talent in Sri Lanka?

There was a time when finding skilled talent was straightforward. Lately, however, it’s become considerably more challenging. Many applicants seem to lack fundamental skills, which complicates the training process.

Do universities here provide a solid foundation in programming and mathematics?

Students generally study mathematics. However, the practical skills they acquire often don’t align with industry needs.

What about hiring more seasoned developers? Is that a smoother process?

Hiring experienced developers is generally less problematic. These individuals usually know what they’re doing, but the challenge lies in locating them.

Do you actively recruit them from other companies, or do they find their way to you?

We adopt a dual approach. We scout for talent and send out offers while also posting job ads. The issue is that our growth often necessitates quick hiring, and finding someone who can commence work within a two-week window is challenging.

How do you remain competitive in attracting top-tier talent?

That’s currently a significant challenge, especially given the economic landscape. We’re seeing a talent drain, with highly skilled individuals emigrating to countries like Australia and New Zealand.

Is it straightforward for skilled workers to relocate to countries like Australia and New Zealand?

Given the current economic challenges, it’s increasingly appealing for them to migrate and establish themselves abroad. This has created a talent vacuum at the senior levels here. Even when we aim to recruit, we find that salary expectations are soaring. Sometimes we have to meet those expectations to secure the talent we need.

We might promote a junior staff member to a senior role in order to fill that gap. While they may lack initial experience, they eventually grow into effective team managers. We do our best to negotiate salaries within our budget, but at times, we have to exceed our initial offers.

Ah, a salary race then. A similar phenomenon exists in Ukraine. Engineers can job-hop every couple of months for incrementally higher salaries.

Yes, it’s a similar situation here as well.

The competition for engineering talent is intense globally, isn’t it? Feel free to ask me questions too.

Of course. How do you manage your recruitment process?

We employ three full-time recruiters and one HR professional. We mainly use a Ukrainian platform called Djinni. Applicants post their CVs anonymously, and they have to approve our request to initiate conversations. We’re also investing in our employer brand, which seems to attract mid-level talent. We’ve implemented a screening process that evaluates both hard and soft skills.

So do you have a reserve pool of candidates for incoming projects?

Generally, we ask our leads and potential clients to understand that immediate resource availability is unlikely. There’s a lead time for gathering a suitable team, during which we assess project requirements. If we have unallocated staff, they can join a project right away, but that’s a rarity.

So you focus exclusively on time-and-material contracts?

Yes, we abandoned fixed-price contracts a decade ago due to issues like scope creep. We provide rough estimates based on team size and project duration. Software development is an evolving field; it requires ongoing financial and skill investments. Maintenance is unavoidable, whether it’s due to third-party updates or potential security issues.

What are the average engineering salaries in Sri Lanka?

For entry-level software engineers, the salary hovers around 120,000 LKR, roughly $600 to $700.

What about experienced professionals?

Senior roles command salaries between $1,800 and $2,000, depending on experience.

Speaking of talents, is it easy to keep talent here in Sri Lanka? How long do employees typically stay in the company?

I can’t speak for others, but in my experience, it’s hard to retain people. However, I have had employees stay with me since the company’s inception.

And that’s how many years?

Probably around eight years.

How many people are we talking about?

About ten to twelve people, from the very beginning.

Impressive. How often have their salaries been revised?

In the early stages of the company, we were small, and the salaries were modest. The bond within the team and the innovative projects we were working on were the main factors keeping people, not the salaries.

I get that, but suppose someone offers you a salary five times greater elsewhere, would you leave due to being underpaid?

While that’s a possibility, we try to distribute a significant portion of our annual profits among the team.

Do you share financial information with your team?

Not currently, but I’m considering sharing financial details with senior members in the coming months.

Will profits also be disclosed?

I don’t plan on doing that this year.

How do you justify bonus distributions without disclosing profits?

We’re working on an evaluation system that will bring more transparency to compensation.

Do you offer company shares to long-term employees?

That’s something I’m also considering as we continue to grow.

How did you navigate the challenges of 2020?

We did hit a rough patch in 2020 due to COVID-19, but had prepared by building a contingency fund since 2014. This fund was a lifeline when client projects were paused, allowing us to sustain operations for a few months.

In contrast, my 2020 was all about businesses going online and investing heavily in it.

I noticed a similar trend in the U.S. market around March 2020 when the pandemic intensified. Initially, clients put projects on hold, but I reassured my team we’d manage by focusing on existing work. We even had enough in the contingency fund to last us four to six months without new projects.

With Sri Lanka’s currency volatility, do you keep funds in U.S. dollars?

Initially, we had funds in a fixed deposit in rupees that offered a good interest rate. During the beginning of 2020, the interest rate was really good, around 12% for a normal fixed deposit.

In rupees?

In rupees, yes. But now the rate has plummeted to around five or six percent. So we’re exploring alternative investment options.

Crypto!

What are your thoughts on crypto?

I use it, and it’s been beneficial. You can earn up to 13.5% interest on a crypto account held in US dollars, and you can easily withdraw the money almost anywhere globally.

I haven’t fully integrated into the crypto world yet, but considering how traditional financial systems aren’t offering good returns, I believe many will eventually turn to crypto, causing a market boom.

I’ve heard that some businesses in Sri Lanka are accepting crypto as payment, like certain hotels.

That’s not legally sanctioned at the moment. The government isn’t encouraging the use of crypto here.

Government control is pretty limited when it comes to this global phenomenon.

So, how do you maintain quality in your work?

Are you asking about technology?

Both technological and functional aspects. For example, functional quality is easier to manage if key people oversee the processes, and software testing is straightforward. But what about code quality?

Since founding the company, I’ve emphasized rigorous coding practices. It was never about meeting the budget or time constraints; it was about delivering quality. If code was subpar, it had to be redone.

The senior team now reviews code, ensuring it aligns with best practices. It’s a layered process that involves both senior and junior staff, with the senior member acting as a gatekeeper for quality.

Is this a single tech lead assigned to the project, or is it one person overseeing the entire company?

One person is designated for the project, but we also have a senior individual in the company who has the capacity to oversee the entire team and provide direction.

Currently, tasks like mobile app deployments fall under productivity. For instance, many companies in Sri Lanka develop an Android app, upload it to Google Drive, and then send it to the QA team for testing.

We had an issue where a tester was using an outdated version while the developer believed the latest version was being tested. To solve this, we switched to Firebase for automated builds.

So, continuous integration?

Yes, continuous integration. Now, the QA team receives notifications for application installation and testing. These are the kinds of process improvements we’re implementing because we can’t afford such mistakes; we’re not a large company with extensive margins.

Understood. What has been your favorite project to date?

Currently, we’re working on a captivating project for a U.S.-based Christian social network. Though I follow a different faith, I find the app really engaging. It includes chat features, a social newsfeed, and more.

A Christian social app, interesting. Does it incorporate Bible quotes and similar elements?

I’m not fully familiar with all the specifics, but it offers the same core functionalities as typical social networks.

What about your least favorite project or type of work?

I can’t identify a single project as my least favorite, even if it was unsuccessful. Each project has been a learning experience for me.

A candid response. Can you share an example of a major failure?

We once worked on a native iOS application for a Swedish company. Despite our team’s skills, we made a foundational error with the app. The mistake turned out to be a significant setback for us, particularly as it occurred around 2015-16, during the company’s early years.

So the app failed due to issues in the local environment?

Yes, that was the problem. However, I’d rather not go into further details about it.

It sounds like these are mistakes a junior developer might make. In the IT service industry, what would be considered a good margin in Sri Lanka?

Around 40% is generally seen as a good margin, particularly for projects involving foreign clients.

40% is an excellent margin. You’d need to optimize a lot to achieve that.

True. While we may not always hit that mark, we strive to maintain it as consistently as possible.

And what’s the highest margin you’ve managed to achieve?

We’ve hit the 40% mark at times, although it varies, especially when wrapping up a project.

Every year?

Not every year, and certainly not for every project.

In Ukraine, the average margin for many outsourcing companies is below 20%. We also aim for 40%, but last year we managed 27%. It’s decent, but we set higher goals and adjust based on financial analyst recommendations.

One change we’ve made this year is stricter budget management. Before, expenditures were often approved without much consideration. Now, we work within defined financial boundaries.

So, can you afford certain luxuries like MacBooks?

Used MacBooks are costly here unless imported from Dubai.

Even then, it’s several hundred dollars more, right?

Do you have a time-tracking system in place?

Yes, we use Microsoft DevOps along with a small plugin for time tracking. It’s project-specific, as we manage both time-based and dedicated teams. Financial calculations are based on this tracked time.

How do you manage that?

We log time directly in Jira, without requiring any additional plugins or software on our computers. The team is generally diligent about logging their time daily.

Do the developers make these entries in real-time?

It’s flexible. They can log time as they work, or do it at the end of the day. But it’s advised to log within a week, as memories can get fuzzy.

How accurate is that method? My concern is meetings might not get logged properly.

We have separate tickets for meetings where time can be logged. All work hours are recorded, whether they involve client projects or internal work. This provides a complete picture of how time is spent within the company.

So you track everything, aside from personal time?

Yes, every minute is accounted for, barring personal time.

It’s fascinating that you do that; it provides comprehensive data on tasks and time allocation.

Exactly, this data can be valuable for performance reviews at the end of the year.

Where are most of your clients located?

Primarily in the U.S., Sweden, and Australia.

Any local clients?

We have a long-standing relationship with a 200-year-old publication company based in Colombo. We’ve developed a Kindle-like product for them.

All right. How many percent of your customers from the US are in your portfolio?

It’s almost 80%. Most of them are US-based customers. Swedish clients are really good, but often communication issues and problems arise, and it can become too complicated for us to manage. We have not selectively focused on that, yet most of our customers are from the US.

How do you acquire these customers?

We currently lack a formal sales system. A dedicated team in Sri Lanka handles all prospecting, email marketing, and replies for us. This year, we’ve started setting up meetings. Before, it was all word of mouth—clients recommended us, and that’s how we expanded.

Word of mouth is effective but not scalable. To control your lead flow, you should have marketing strategies in place.

Do you have an in-house marketing team?

Yes, it includes two salespeople and a marketing team of two generalists, three SEO experts, two copywriters, and social media managers. It’s quite a robust group.

Do you focus on outbound email campaigns?

Not exactly. We concentrate on passive sales by optimizing our website, aiming to be visible to those seeking a software development vendor.

We’re doing the same — optimizing our website, creating tech articles, and engaging in content marketing. We’re writing pieces on ‘How to Build a Startup’ and ‘Scaling Your Business,’ specifically targeting those who are searching for such information.

It’s wise to choose article topics based on SEO recommendations. Collaborate with your SEO team for optimal keyword targeting. For instance, aiming for “flutter developers in Sri Lanka” could yield better results than a generic term like “software.” We’ve also created specific service pages, like one for code review, that include examples and pricing to attract leads. We’re considering adding more service pages like this.

Do you maintain an active social media presence?

Absolutely. It’s crucial for both HR branding and visibility to potential clients. For instance, a strong LinkedIn profile can help us stay top of mind.

We’ve not been able to focus on this due to our smaller team.

Investing in sales and marketing is ongoing work. SEO doesn’t yield instant results; you need to invest in specific keywords over months.

Have you noticed any cultural differences when working with U.S. or Swedish companies compared to Sri Lanka?

As for holidays, we often hear comments about how frequently we take them. If you check our calendar, it seems like we have two or three holidays every month.

Yeah, that’s quite a lot.

Many people think we take an excessive number of holidays!

Have you ever tallied up your annual holidays and compared that number to the U.S.?

No, we haven’t.

I recommend doing that. Once you have the yearly total, compare it to the U.S. It might just be a perception issue. In Ukraine, we found out we have nearly the same number of holidays as the U.S. when my friend did the comparison.

Aside from the holiday situation, I haven’t noticed major differences in communication or other aspects.

Let me share a cultural example. Asian developers, particularly in India, often agree to deadlines they can’t meet. Saying no is culturally difficult for them, especially to a customer. Businesses operating out of India often have to train their managers to manage this dynamic. Is that similar to what you experience in Sri Lanka?

I think we’re ahead of the curve in this regard. My developers evaluate tasks and inform me if they’re achievable. If issues arise, we communicate that mid-project rather than at the last minute.

But what if you initially think a deadline is feasible and then encounter obstacles? How do you handle that?

That has happened to us. When we run into unforeseen challenges, we promptly inform the client. We’re transparent about what has changed and why we need more time. The key is early communication.

How often do you have idle staff?

We usually keep around three developers on our own products. If a client urgently needs developers, we can allocate those devs to the new project. These are highly skilled developers, given the complexity of our internal product.

But sometimes you’re maxed out and have to decline new projects, right?

Yes!

And in such cases, it’s okay to say: “Sorry, we can’t start right away.” It’s crucial to manage customer expectations properly. If you have a strong portfolio and reputation, clients will wait.

We’ve consistently focused on developing our products. We can usually accommodate incoming customer requests, especially if they align with our expertise. If necessary, we hire additional staff during the project, which also generates revenue.

There are limitations, though.

Absolutely.

New hires need time to learn the product, which can delay progress. It’s optimal to maintain the same team whenever possible.

I completely agree.

What’s the average lifespan of a customer project in your company?

It varies. We have products that we’ve been building since 2014, which are still live and profitable. On the other hand, some fixed-term projects last around eight or nine months.

So, moving your internal product team to a new project would disrupt work on your internal products for about eight months, correct?

Yes, that’s a fair assessment.

How easy is it to do business in Sri Lanka?

In Sri Lanka, it’s somewhat complex. Doing business internationally is far easier. While the local infrastructure is improving and attracting investors, it’s been a slow process compared to other places.

What I’m asking is, do you deal with excessive bureaucracy or corruption when doing business here? How straightforward is it to incorporate a company, hire employees, and start operating?

We’re not particularly focused on local clients.

I’m not asking about local clients. I mean maintaining a team here while providing services from Sri Lanka to the rest of the world.

That aspect is relatively smooth for us. Foreign revenue is tax-free when brought into Sri Lanka.

Yet, you do face a 20% tax due to the exchange rate difference. Have you considered incorporating outside of Sri Lanka to sidestep that?

We’re actually in the process of doing that. We’re waiting for our U.S. bank account to be set up, then our U.S. incorporation should be complete.

Where are you incorporated in the U.S.?

It’s not Delaware, but… I can’t recall the name of the state at the moment.

But generally, U.S. banks require a physical presence for account setup, right?

Not necessarily. There are services that can handle the incorporation and even the banking part remotely at no extra charge. However, if you want an account with a more prestigious U.S. bank, a physical visit is usually needed. Otherwise, there are online options like Mercury.

Stand with Ukraine

This interview was conducted before the full-scale invasion of Ukraine disrupted life as we know it. We at Redwerk want to assure you that despite the profound challenges our country and industry face, we remain resilient and committed to innovation.

The Ukrainian tech industry has long been a beacon of ingenuity and reliability. Hiring us was always a smart business decision; now, in these trying times, it’s also a powerful way to make a positive impact.

So, if you’re looking for a way to support Ukraine, consider this—partnering with us not only contributes to your own business growth but also bolsters an economy under siege. Your support helps keep families fed, communities intact, and spirits unbroken.

We invite you to get in touch. Let’s build something remarkable together, even as we rebuild our beloved nation.

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