Think outside the capital: How to stop the brain drain and make more money

Kalinga Gunawardhana and Damith Amarakoon have set up their IT businesses in Bandarawela, proving that a business solution that brings them quick returns can also help the local economy

Kalinga Gunawardhana and Damith Amarakoon are the two young co-founders of Law Envoy, an online case management system for lawyers. Gunawardhana is also founder of CeyDigital, a product engineering company. They are interested in good business that not only brings them impressive profits, but contributes to the expansion of the IT industry. For two ventures with a combined valuation of just over Rs20 million, this might be a tough call, but the duo have an unlikely key to their scope: a bustling town in the heart of Sri Lanka’s central hills.

Bandarawela, best known for its cool climate and vegetable farms, is home to less than 8,000 people – a negligible fraction of Sri Lanka’s population. Hardly Silicon Valley, but to Gunawardhana and Amarakoon, childhood friends who both call the town home, a rich opportunity to build a business and contribute to economic development in the region and in Sri Lanka.

“As a country, we need to stop the regional brain drain,” Gunawardhana explains. “If we are able to do that, it will automatically reduce the country-wise brain drain.”

As a country, we need to stop the regional brain drain. If we are able to do that, it will automatically reduce the country-wise brain drain.

– Kalinga Gunawardhana

Gunawardhana made his contribution to developing Sri Lanka’s employment market by setting up shop in Bandarawela. He started CeyDigital, a product engineering firm, in 2012 while he was still an undergraduate studying computing and information systems for a B.Sc. in IT at Sabaragamuwa University. The business was launched with one employee out of a basement space for which he paid Rs7,000 monthly rent. CeyDigital broke even within just over a year, and has since grown to a venture of 20-plus employees.

Then, in 2015, while on an idea-hunt, Gunawardhana was introduced to lawyers’ unique problem of having to acquire, store and manage masses of law case files that aid them in their work. He was left with the impression that lawyers spend more time on knowledge management than they do on applying that knowledge at hearings. He approached Amarakoon, who specialised in Electronics and Telecommunications Engineering at Moratuwa University, about developing a product, and with just over Rs3 million in venture funding, Law Envoy was born.

Both these businesses now run out of offices in Bandarawela, not only helping create diverse employment opportunities in regions other than Colombo and the suburbs, but contributing to another factor the duo consider important: the decentralisation of the IT landscape in Sri Lanka.

“Since we are running a tech business, it’s all about connectivity,” Amarakoon begins explaining. “If we have good connectivity, a good place to stay and good human resources, that’s the best place to set up!”

If we have good connectivity, a good place to stay and good human resources, that’s the best place to set up!

– Damith Amarakoon

He feels the IT industry especially should provide more opportunity for home-based employment, and that there is also an undiscovered IT workforce distributed across the island that needs to be harnessed. Decentralisation is his solution to both problems. Instead of setting up business in a locality that is known for IT, they figured low-cost space and other utilities in a locality that they are familiar with would make more business sense.

“If a company in London or the US can outsource a project to a company in Colombo, why can’t they outsource it to a company in Bandarawela?” Gunawardhana questions.

Bandarawela made sense for the company on a number of counts that also help it work along a cost-based strategy.

“Simply put, we don’t pay for AC!” Gunawardhana says, half joking. “That’s our competitive edge.”

The new Law Envoy and CeyDigital office in Bandarawela occupies a 2,000-square foot property in the heart of Bandarawela town. For this, the company pays less than half of what they would have had to in Colombo’s suburbs. Not needing air conditioning creates a similar saving on their utility bills. The savings translate to breaking even quicker, and they are already reinvesting profits from CeyDigital in infrastructure development. In addition, they work with SLT fibre optic cables and 4G internet from Dialog, SLT and Lankabell, and enjoy the privilege of sharing bandwidth with only small businesses and homes.

If a company in London or the US can outsource a project to a company in Colombo, why can’t they outsource it to a company in Bandarawela?

In addition to saving on company rent and utilities, Gunawardhana and Amarakoon save on salaries by employing locals who would have otherwise migrated to Colombo and Kandy looking for work. They are looking to grow the team, and have already made negotiations to bring locals back from Colombo “for half the salary they get there,” Gunawardhana claims.

Living at “home” and not having to pay rent makes a difference to their potential employees. Young adults in Sri Lanka leave rural areas in droves, for higher education and employment in the capital and suburbs. A taste for the city and more high-profile work than is available back home make them reluctant to return, except on holiday. Amarakoon is convinced that many young professionals migrating to the capital sacrifice decent living conditions for the sake of better employment and earnings.

“Although people leave for better earnings, it’s doubtful that they get better living conditions,” he says. “We know how hot it is in Colombo, and how people waste three to four valuable hours each day on roads, stuck in traffic. We know how difficult it is to find land for a reasonable price to build a house in Colombo. So why do they leave, knowing all these awful things? Simply because they do not have a choice.”

Living in the capital becomes frustrating after a while, Amarakoon continues. This, he says, is the reason many then seek foreign employment, and how Sri Lanka loses its most efficient professionals.

“If we have a way to provide opportunities for these young people in areas like Uva to earn a decent income, most of them will stay here,” he says. “It will not only help develop the area, but stop the national brain drain.”