Have you ever wondered how agencies that provide business IT services run their operations and attract talent? We have, and that’s why we travel the world and interview agencies like Redwerk offering business IT solutions for foreign or domestic clients.
This time around we’ll be focusing on Purple Software, a digital agency located in Colombo that offers technology development and IT consulting services. Let’s dive into the specifics of the Sri Lankan IT industry and gain some valuable insights from the CEO himself!
In this discussion, Konstantin Klyagin, founder of Redwerk, together with Thisaru Mahadurage, CEO at Purple Software, talk about Sri Lanka’s IT business, the most demanding clients in the world, and CEO’s struggles. Keep reading to learn more!
Here we are in Colombo, Sri Lanka, and I’m talking to Thisaru, who runs Purple Software. Please introduce yourself. Start with your own experience, your path.
We started in 2016, not as long ago as your company, though. Back then, there was a huge competition, so we needed to have a proper level.
We noticed that the name didn’t go into the market because it was hard to pronounce. In 2019, we came up with an easy-to-remember name “Purple Software ”. We were doing the same services, mostly cloud-based software. We don’t do any narrative software like .NET and Java.
Our focus is cloud software. Other than that, we are doing mobile development and IoT. We didn’t have proper staff until 2019. It was just me, Shazin, and two partners. We have been doing all the projects for about three years.
We were coding ourselves. Later on, with the proper industry networking, we got many projects, and we understood it was high time we hired more people. That’s when we actually went to the next step and we hired very well.
How about your own background? Did you start as a developer?
The directors of Purple Software are all from the same university. I studied at the University of Plymouth, affiliation here in Sri Lanka. It’s a funny story because we’ve been randomly put on the same list. But now we’ve started a pretty good business.
So, you went to the university together with other founders?
Yes, that’s right.
How many are you?
That’s four people.
All right. So, your background is software just like mine. I started programming when I was eight.
Yeah. How old were you when you started?
I think 14. Not paid.
How was the transformation from a software developer to a business person?
That was a rough road. When you are a software engineer, you need things in a certain way, and you feel like if you put someone else to do that, they don’t have enough knowledge to do that properly. It was one of the obstacles we had.
That’s the delegation dilemma. I had the same problem. I couldn’t delegate properly for the first eight years. I was doing a lot of stuff myself, such as project management and communication with customers, etc.
But I became much calmer when I started to delegate. At first, it’s not perfect. But then as you trust more, you see that other people can do this stuff. That’s very important.
It was difficult for me to trust other people to deliver the way I did. But the first person that we hired did beyond expectation. I was like “Is this real?”. I was extremely surprised. So, I started trusting other people to do it.
Do you only have software developers on the team or are there any other roles?
We have software engineers, project managers, QA engineers, and administrators.
Where are your customers mainly from?
The majority is from Sri Lanka. There are also some customers from Germany and the USA.
Well. Germans are difficult to work with. I mean, in order to get a project from them, you need to know them for ten years. It’s very difficult for them to trust.
Yeah, that’s true. Actually, I think the most difficult customers would be Japanese. We did a project for them, and they were always looking into small details. So, if compared with Japanese, Germans are alrigh
Yeah, but my question was more about starting to work with them. How did you get the projects in Germany?
There is a man called Dinesh. He’s giving us projects from his trust base there. People trust him in Germany.
He lives there?
I’ve lived in Germany for 15 years.
You were born in Ukraine, and then you moved to Germany?
Yes. And then I came back.
So, the Japanese project was straight from them. It was a website, but we felt like it was a software project.
How is Sri Lanka’s market?
They don’t really spend much on software, but the corporations do. A corporation would spend the same amount of money as a European or small business. You know what I mean?
Yeah. I got the scale between external and internal local projects. How much do you charge? By the hour?
It depends on the project. For example, we require this number of people for this project. And they give us that amount early or sometimes monthly.
Mostly, we do contracts. We tell them the price straight away and they pay in advance
So, you do fixed-price projects?
That’s very difficult. We dropped this about ten years ago because it was impossible to deliver. In the modern software world, you cannot precisely assess a project, because something happens all the time.
Many of those things don’t really depend on you or your experience. Let’s say an update to your device or operating system comes out, a third-party library update comes out and so on. There are things that you cannot forecast or foresee in advance.
That’s why those fixed quotes are often rendered useless, in our experience. How do you manage that?
We set a monthly maintenance cost. We try to get a monthly amount to cover that expense.
Is that for the development phase or for maintenance?
After the deployment. We cover the sale cost and any changes. It’s not a huge change, maybe a 6-hour task, but we do it for free since we have a contract. Other than that, we’ll be going straight to CR – a change request.
And then you build on top of those 6 hours included into the maintenance fee. We do the same with certain customers who don’t have a recurring relationship with us every month. We offer them an SLA (service level agreement) where we say that you pay every month, let’s say 10 hours of our work. If nothing happens, you still pay them. If something happens, you come to us and we work those 10 hours. And everything that is extra, above those 10 hours, you’re gonna pay by the standard hourly rate.
I think that’s the best approach.
What’s the hourly rate that you charge?
It depends on the customer. We haven’t calculated the hourly cost for the whole team. In Sri Lanka, a software engineer has around ₹2000-3000 per hour.
How much is it in dollars?
Actually, that’s very low, around $15-20. It’s one of the reasons people give projects to Sri Lankan people because we maintain the same quality, but it’s fairly low.
How do you think Sri Lankan companies are different from those from India? You can also get low rates there. What’s the main difference?
Mostly, we get the projects that Indian people worked on, but screwed up after all. I’m not against the Indians, but that really happens. Those are the projects that come to Sri Lanka, as a rule. They do a pretty good job, but their UI and QA part is very bad.
Do you find the code well-written?
We haven’t got a chance to go inside the code but we can see the UI. We’re not actually getting the same project. We write from the very beginning.
We see the UI and bugs parts. They don’t really deliver it. They probably do the coding part pretty well. I mean, Indians are famous for programming. We learn a lot from Indians.
They do a lot of YouTube videos, tutorials, and stuff. So, it’s nothing against the Indians.
Tell me about your favorite projects.
It’s one of the IoT projects. We did that for Haley, but it didn’t go through. We still have the product. They have water filters and they wanted an IoT device to track if the filters run out.
Where were the filters used? The water tanks were designed for offices?
Yeah. It’s like a monthly subscription – ₹5,000 per month. Then they maintain everything. I think that’s pretty okay because you spend more than that in the office.
So, their promise is that people get the best quality of water possible. Our job was to calculate the liters that it passes through. We put up a sensor and calculated the flow, then converted that to liters. The indicators were sent to the dashboard in real time.
What type of sensors did you use?
A water flow sensor.
I can’t remember. I think it was a Chinese one.
What’s your biggest epic fail if you can remember?
I still don’t know if it was a failure because we did a project and the client just disappeared. It might be one of his problems, but I believe it’s one of our faults.
We did a demonstration, but we didn’t focus enough on it. I think we lost the client. He has sent me an email saying “We’ll be resuming back in March this year”. The situation happened in November.
I’m not sure if he’s actually dissatisfied. I think our team was very busy with other projects that we’ve got before. We couldn’t concentrate on that new one. But the sprint planning was complete. Everything was done. We had a demo but we had bugs.
So, it wasn’t properly tested.
All right. Now let’s talk about your products. You said and I also read on your LinkedIn profile that you have this gym product. Tell me more about it.
I think that’s the most interesting project that I’ve done myself. I did Gym Pal in about two months. That’s one of the reasons we got projects from outside. This product raised our reputation.
It was a good marketing tool as well.
Yeah. It’s actually an investment. If I didn’t do that in 2019, I don’t think we’d probably be able to be in our current position.
All right. And how successful is Gym Pal?
It’s not that successful. People come to many Sri Lankan gyms that are using Gym Pal, but we don’t have many international clients.
It’s pretty easy to move it to another top level.
Yeah, but I did it for Sri Lankans in the first place because they don’t have proper software. It’s very easy to convert it to USD. I’m not sure if I’m going to do it in the future, but I feel like keeping it as it is for Sri Lankans.
Well, the usual launch plan is that you first get big in your own country and then you go international. And for that you probably have to reach out to more gyms throughout the country and get them on board.
I’m not sure how it would react to a huge crowd coming in at once. We get signups from the U.S. mostly, but the retention is not that much. Sri Lankans are everything.
What’s your dream project? What would you like to work on for a customer?
I think it’s the hotel and tourism part. We have a pretty good idea and I believe it would work. It’s similar to GuestU. I’m not sure if you know this software.
The guests who are coming to the hotel can have a mobile application to set up certain things.
Stuff like room service?
Yes. They can also navigate to certain places.
In Dambulla, I stayed in the hotel and it was very difficult to navigate because it’s huge. Its length is one kilometer.
I think it’s best if you have an application to guide you to certain places. In the Khandala hotel, if you need to go to a pool, you need to ask six people. It’s easy if you have a mobile application.
Back in my days as a software developer, I worked for Nokia in Berlin. I was working on the navigation system.
Already back then there were plans for indoor navigation. Since that time, there have been some developments, but this kind of navigation hasn’t become very popular.
So you’re saying it might not work out. That’s true. But it’s a part of the mobile application, not the main focus. It’s more about room reservations and stuff.
All right. Now back to Thailand. Are you doing something to keep the talent? Is there big competition on the market of Sri Lanka?
We have WSO2, IFS, and 99x. Those are the top players. Normally, the studio would choose to go to one of those places. It’s like Google and Facebook in Silicon Valley. So, to counter that, we came up with something called “work with Purple Software”. WSO2 and others have their rules.
In Purple Software, you can do whatever you want. I mean, we don’t care if you are at lunch, in a hotel, or anywhere else. Even if you’re on the beach, our primary focus is the deadline. If the person can deliver that to the deadline, that’s enough. You are free to do whatever you want.
What happens if you find out that there is a chance of not meeting the deadline or if there are legit reasons that it won’t be met? What would you do in this case?
That is to be communicated before the deadline. I mean, if they are sick or something has gone wrong in the family, they can always communicate that.
There can also be technical issues or problems.
Actually, that happens a lot. That’s why we have a fake deadline.
That’s called an internal deadline.
Yeah. So, we have an internal deadline. That’s the deadline we communicate to most of the juniors. The senior people would know the deadline. They are very responsible.
Junior and middle employees finish everything before the internal deadline. The seniors go through everything and then we deploy.
So, you’re promoting your advantages to the employees as a small company.
How much are the salaries in the IT industry in Sri Lanka?
We have to follow the same salary structure. I mean, for interns it’s around 10000-15000 LKR ($50-75). For associates – 45,000-60,000 LKR ($225-300). For senior software engineers – 125,000-180,000 ($625-900). That’s the salary scale.
– 100,000 LKR is $2,000?
– No. That’s actually $500.
That’s very cheap.
Yeah. That’s the industry standard.
That’s very inexpensive. Do you know how many software developers there are in Sri Lanka? Roughly.
I don’t know for sure. There are many software engineers. I think the number is growing every day.
Are there any cultural differences that you’ve noticed working with Germany, Japan or any other country outside Sri Lanka or Asia?
Yeah. There’s a cultural difference. Many foreign clients have their own sprint plan. Actually, it’s hard to work with something like that. Though after the deployment, we prefer that because Sri Lankan clients are all right with everything. They just let us do anything.
They are dream customers.
Yeah, that’s true. But after the deployment, they’re like “Okay, we needed this and that”. You got it, right?
And that’s why it’s very difficult to do fixed quotes. That’s why we dropped them 10 years ago.
What are your business plans for this year?
You know about the situation in Sri Lanka. The economy is falling now. It’s a huge problem. I mean, we don’t have what you call a foreign reserve. It’s depleted. I think we have about $1 billion.
The whole country?
Yeah. That’s pretty bad. Because of this many people are migrating.
Where are they going?
They are going to Canada and Australia because there’s a great Sri Lankan community in those countries.
It’s probably very difficult to immigrate if you only make $500 a month.
Yes. But they’re actually finding jobs there.
This is how you’re losing talent.
We are losing people in the country, and even current employees are hesitating whether it’s the right decision to stay in Sri Lanka.
I think if the country has only $1 billion and you have 2, then it’s probably a good thing.
Yeah. That’s one of the plus points of migration. It’s a mass migration now. There’s a queue in the passport department.
Wow. I didn’t know that. In the one month that I’ve been here, no one told me about it.
Really? That’s very general knowledge. It’s like the government is trying to do everything they can, but…
That explains the exchange rate difference on the street and in the bank.
That’s right. I didn’t know about that before coming to the country.
I only know about the exchange rate.
But it’s not really reflected in the people.
Because if you make your income in LKR, then you don’t have to change money.
Yes. Due to that reason, we are planning to pay our employees in USD, probably at the end of this year.
How are you going to make it happen? Where are you going to get the cash from?
That’s one of the problems we have. But I think we’ll be able to find the solution.
I have a question. Do you have dollars coming into your company?
Well, yes. But for that, many IT companies in Ukraine get incorporated somewhere else. Some get incorporated in the U.S., some in Estonia.
You can, by the way, get incorporated in Estonia, and get yourself a bank account with Transferwise or any of those payment systems. This is how you can invoice your customers in U.S. dollars or euros. That’s up to you how you get them into the country.
But in your bank account, there will be legit dollars and euros. You can also do crypto. Crypto should also be very easy.
Have you incorporated that into your company?
We’ve been testing this and if someone wants to get paid in crypto, we experiment with that. But it’s not like the full-scale payment option for everyone.
You mean for the employees?
Are the employees asking for crypto?
Some prefer that. If you go somewhere abroad, if you’re traveling or something, it’s the easiest way to get paid. So, we can do this as an exception.
There have also been customers who pay us in crypto, but those are mostly sponsors for open-source projects and so on. They are like “Can we contribute with bitcoins into the development of this open-source product?”. We’ll process that, no problem. Money is money.
I think it went down by 50%.
Oh, you mean bitcoin.
Well it’s been up and down all the time, so it’s not the first time. It depends on you. When they send payment, you can sell everything or you can keep it.
But you can just fix the price on the day of payment. You can consider this a prepayment and every month you take a certain amount that corresponds to the hours that you’ve spent on the project. So, consider it as a prepayment fund.
I have another question. If you have other employees outside the country, how do you manage that?
Well, we don’t have proper international hiring. I would like to explore that better. But right now we have Ukrainians who work from anywhere in the country and there are some people who moved abroad and have been working from there. That’s sort of the structure right now. Probably 100% of employees are Ukrainians.
If you feel like hiring from Sri Lanka, I can help you out. That’s actually one of the things you can do. I mean, it’s going to benefit you.
Well, it depends. We need to interview the people and see the skills. But that may be an option.
Is there anything you can tell these entrepreneurs who start their services business?
I guess the most important thing you can do is to have persistence. That’s the key point. If you feel like working for 12 hours, are you going to have anything in the future? That’s something I think everybody shares.
There are two options. You can either give up or you can just stay there, stay on the same path. If you don’t give up, the doors are open for you. I think it magically happens for some reason. So, you should keep going. That’s my advice.
On your website, I saw different certifications. Remind me what you have there.
That’s actually our partners’ certification. I think you’ve read about Nova Corp. When we build software, we consult with them on some of the projects, but not every. The client should be able to afford their consultation fees.
So, some of the projects require an extra layer of protection. In that case, we ask our partners to go through the code and everything. That’s what Nova Corp does for us. It’s a partnership.
All right. Because I was wondering how a small team like yours could get ISO certification. Actually, we never got to do any certification like that because I still don’t know how that influences marketing and sales.
I don’t know clients who would go from side to side, from one website to websites of different software agencies, checking for a particular badge or certification. We have never come across such customers.
Yeah. I think we’ve never got customers coming from our websites or suddenly calling us. I’m not sure if that happens to other software companies.
Have you got calls through the website?
Of course. I get a lot of inquiries via the websites, but we have been also investing a lot. So, at least our marketing and sales cost us 20 grand a month. And we’ve been investing into SEO, listings, different social media activities and things like that.
We produce a lot of content. We also do content marketing so that people interested in certain subjects can find us on Google. It’s a lot of work and it’s very expensive. But this is how you can get real leads from the website.
I think we should start doing that.
In my experience, my advice is to start as early as possible. If you can think about doing something less expensive, you can submit your website to different directories. You can publish articles on your website. This is how you get more visible.
Do you have a Sri Lankan version of the website or only in English? By doing a Sri Lankan version, I’m pretty sure you can cover more of the local market.
In Sri Lanka, if someone’s looking for software projects, they are actually very good in English.
I understand. But can you teach or learn programming just in Sinhala?
No. YouTubers are doing that, but most of the engineers are good in English because it’s hard to know the terms. We don’t have terms for some things.
Database, interface, abstractions?
There’s a word for database.
We don’t have it.
Well, that’s something new to me, because in my country, people learn in their native language.
Not the same thing here. Even locally, it is English.
Well, I’m done with my questions. If you want to ask something about our work in Ukraine, I’ll gladly answer all your questions.
I think we have a lot of stuff to learn from you. You know, you have 70 employees.
It took me 17 years. You’re just at the beginning of the journey.
My other QA business is seven years old. But I grew it on top of the software development shop.
So, you provide QA services?
Yeah. We do have a few products and I think we’re gonna extend our offering. For now, we only have one app for Android that lets you test Android applications. It lets you measure, record, take pictures, this kind of stuff.
And I’m also thinking about packages that would be mostly automated. Let’s say you’re a startup and you need to check many things on a daily basis.
If something falls off all the time, certain links or forums stop working, etc. And then if you had a whole toolset or a subscription with us, that would check it on a daily basis. I’m pretty sure it will save you a lot of money.
Yeah, that’s nice. Was it your idea?
I’ve been pondering the idea. There are similar products. But I think if it’s a hybrid product between an automated toolset and manual labor, then we can price it accordingly and sell it as a package.
Is it project-based or?
Well, I’m pretty sure those packages will be tailored to fit every type of startup or every type of business. But for now, we’ve been selling manual and QA automation.
And also security testing. It’s also priced by the hour. There can be an SLA. Let’s say if you’re not a recurring customer, we put you on an SLA and you have to wait 10 hours every month. And then we can be available on a short notice if something needs to be tested.
So you hire separate people for that project?
Not really. We have our own employees, and out of those at Redwerk there’s a certain amount of QAs. We sell them through the QAwerk brand.
It’s actually very good. Something like the PickMe app may benefit a lot from your services. Maybe you guys should send them a letter.
By the way, what we do with products like PickMe is we take a product every week, test it, and publish a bug report on our website. We call it a bug crawl.
And this is how we got a few customers because they liked our reports.
So, you do that for free?
Just to gain customers.
And this is also a good way to keep our QAs busy, because whenever they are between projects or if there’s a lower load, there is always something they can do – find an app, test it, publish, and report.
Okay. I guess that’s it.
It’s been a very good conversation. Thank you, Thisaru!
It was a pleasure talking to you. Thank you.
Work With Ukraine
This interview was recorded before russia brutally invaded the territory of sovereign Ukraine on February 24, 2022. Despite the hardships, Ukrainians have demonstrated resilience and innovation in the face of adversity.
The efforts of the russian terrorist forces to destabilize the country’s economy fell short. The Ukrainian tech industry continues to thrive even in wartime. Our IT specialists keep delivering high-class solutions and services to clients around the world.
By choosing Ukrainian IT service vendors, you can contribute to the economic growth of our country during these challenging times. The specialists at Redwerk have strong technical expertise and innovative thinking to successfully deliver top-notch services to our customers.
Stand with Ukraine by working with Ukraine!