IFS develops enterprise software for global companies, and IFS Sri Lanka plays a key role as an R&D hub for its global holding company. In an interview with Echelon, IFS Group’s global Senior Vice President of Research and Development Thomas Säld and IFS Sri Lanka’s Senior Vice President/COO and Head of World Operations Ranil Rajapakse discuss the factors that have contributed to the success of IFS in Sri Lanka and its contribution to IFS Group, IFS Sri Lanka’s extremely successful university partnerships, as well as the future of the IT industry in Sri Lanka.

How does IFS Sri Lanka fit into the global group?
Thomas: Looking at Sri Lanka’s importance to IFS as a whole, we would not be able to offer world-leading products without our operations here in Sri Lanka. First, this is our largest site, with more than 1,000 people. We are around 3,500 people globally. So, judging by the number of employees alone, around 30% of our staff is here in Sri Lanka.

When it comes to actual development of products, it is even more important. Around 60% of the development is done here in Sri Lanka, in addition to 80% of product support. So, Sri Lanka is very important to IFS Group and is an integral part of global IFS operations.

What makes Sri Lanka attractive for IFS?
Thomas: First of all, as someone who is responsible for research and development at IFS, I need to ensure that we run efficient product development. When looking for development centers around the world, cost is an important aspect. But, it’s also important to see how it changes over time. Because Sri Lanka’s economy is growing rapidly, the cost benefit of being in Sri Lanka was bigger 10 years ago than it is today. This also means that the focus is moving away from having a cost benefit to actual improvement in efficiency, productivity, competence, skills and talent, which add higher value to our products through the work done in Sri Lanka. The highly skilled talent pool we have in Sri Lanka makes this possible. It’s also interesting to see how the country has developed and how the younger generation coming out of universities is adapting to that. To get access to the right kind of talented young people, the excellent collaborations we have had over the past 20 years with universities in Sri Lanka have been very important for us.

How important is attracting the right talent?
Thomas: In the IT industry and in product development, we are very dependent on access to talented people. To attract and retain that talent is a challenge for many IT companies around the world today. In Sri Lanka, we have access to very talented, young and motivated people, which is critical for us. At the same time, from our point of view, we have been successful in attracting those people to work for IFS.

Since we are developing large, complex applications that are used by global companies, we need people who will stay with us over a long period of time and develop themselves within the company. So, it’s also important that the talent we attract stays with us for more efficient development. I can safely say that, without the operation we have going in Sri Lanka, we would not have been able to grow as IFS has.


How difficult has the process of attracting and retaining talent been here?
Thomas: Our operation in Sri Lanka has a strong employer brand and a very low employee turnover, so people are staying with the company. This is an important indicator that people are enjoying working for IFS, which makes operations more productive and efficient. Turnover is a figure we are looking at and comparing with different countries. I get offered to buy a lot of offshore services from other countries, but if you look at the turnover in developers in such operations, it can be up to 50 percent. For me, this would obviously make it impossible to run an efficient product development operation.

How do you make a connection with the needs of a sophisticated client, and the R&D and software development teams here?
Thomas: That is interesting, because I think that if you look at it from a technical point of view, we can find all the skills we need right here in Sri Lanka, but when it comes to having industry-specific business knowledge, we can’t find the skills here for all the industries we are targeting. That means that we have to add this understanding of the customers’ business needs for the industries that we are developing for. The development of the software is done in teams, which very often comprises people from different countries.

The important thing is that the team in total has the right competence mix and understanding of the task at hand,  and it is a benefit to then be able to form the team with people from different backgrounds and experiences. Our processes also include a customer representative: someone who understands the customer’s needs that we are trying to address with the development and who works with the team to give feedback on what is being developed. This is helpful in meeting the client’s exact requirements.

We also have many of our staff in Sri Lanka travelling overseas to meet our industry experts and customers, and discuss application development. Our process involves gathering many people from different teams and working together, and asking ourselves why we are doing this and why the customer needs this. When you have gone through this process a number of times, you build knowledge and make the connection with the needs of clients.

Has IFS Sri Lanka contributed to product innovation?
Thomas: Yes, if you look at innovation, we do three different kinds of development. One is where we have a vision and idea of where we want to take the product; that is something customers don’t ask for. We develop a proof of concept so we can test it with our customers, and see if they can see the business value in that.

We have a special unit called IFS Labs, whose task it is to look at new technologies and trends in IT, business and society, and see how these can provide value to our customers. So they are at the forefront of technology and dealing with the internet of things, artificial intelligence, blockchains, Holo Lenses, drones, etc. Most of the development that takes place at IFS Labs is done here in Sri Lanka. Second, we develop new cutting-edge product functionality to give us an even better solution fit for the industries we serve. Here, we are collaborating and listening to our strategic customers. Third, we do enhancements of existing functionality based on customer feedback. With 60% of product development done in Sri Lanka, our staff in Sri Lanka are very much part of this process and contribute in terms of innovation and product development.

How has product development and meeting clients’ needs evolved over the past few years?
Thomas: Customers expect a tighter and better solution fit today, and they expect the software vendor to understand their specific business. When it comes to product development in Sri Lanka, we are trying to get more of our people to meet with customers, sometimes through visiting customers or international customers visiting our team here. We also do a significant amount of travelling, so staff here can meet with colleagues in other countries to discuss customer requirements.

What is IFS doing with universities to make students more creative and innovative, and inculcate a culture of entrepreneurship among them?
Ranil: IFS is already working with some universities to create an entrepreneurial mindset among students. At a leading university, we sponsor a Chair for Innovation and Entrepreneurship, and recently signed an MOU to establish an Innovation and Entrepreneurship Incubator within the university. The facility will be used by students to have their startups incubated, as well as to host and facilitate mentorship programmes and get advice from experts, etc.

We also have an active programme with different universities where we bring in students for a six-month period to the company and provide firsthand practical experience. We do around 40 such internships every year. The work they do and the exposure they get during this programme are designed to stimulate their creative, analytical and innovative thinking. Taking this a step further, we are also now looking at having cross-disciplinary student teams from different faculties work together on internship projects. During the last five years, we have seen a change in the entrepreneurial mindset. We see more and more student startups and innovations taking place. This innovative mindset, where they are willing to take risks, is encouraging. Sri Lanka as a society has been such where people prefer to be comfortable, but that has been changing over the recent years, and we would like to drive it forward together with the universities.


Can you talk to us about new technologies at IFS?
Thomas: We are all a part of the whole digital transformation that we have seen in our daily lives. We are streaming movies instead of downloading, we have Airbnb for travel, Uber and PickMe for transportation, etc. If you look at what has been happening in the industry, it is similar things. For example, we started with internet of things at IFS Labs, which is now a part of the standard product.

We see companies going through different phases of IoT. The first phase is where you try to do more efficiently what you are already doing, so you are not changing your business, but looking at the process and seeing where you can get more efficiency through data. The next phase is to think of how you can add new services and products based on the new data. Finally, it’s where you transform the business, where instead of selling machine equipment, you would actually sell machine hours. Another thing being discussed in media is how blockchains, the technology behind Bitcoins, can benefit business applications.

Most of the use cases so far have been around different kinds of financial transactions, but we are looking into how blockchains can be used to 100% guarantee the traceability of critical parts, for instance, in an aircraft. The aviation industry is heavily regulated, and there is a need to know the specific history of millions of individual parts. The problem is that these parts during their history are handled by many different companies and legal entities from the manufacturer of the part, one or more logistic companies, the operator themselves, and many times other companies that do service on the part or repair it. Still, you need to have 100% control over that part’s history, and we are investigating how blockchain technology can be used to do that, which would lead to cheaper compliance and even more secure flights. Another new technology we are looking into is different forms of AI and how our business application users can benefit from that.

What can Sri Lankan firms learn from IFS’ success?
Thomas: We all learn from each other. Within Sri Lanka, we are very active with SLASSCOM, where we share our experiences and we learn from each other. When talking to other software companies outside Sri Lanka, they are very interested in hearing about IFS’ experiences here since they know it has been an important success factor for us.

One reason for our success is the way we have integrated our Sri Lankan operations into our global operations. We are all working together in the same way and it makes no difference if you sit in Sri Lanka, the UK, the US or Sweden. Within R&D at IFS, we never use the word “offshore”, because when you say offshore, it changes people’s mindsets and expectations. To be efficient, we believe in working together across countries.

Are people eager or reluctant to set up operations in Sri Lanka?
Thomas: I see an increase in interest in Sri Lanka as a country and as a place to develop software. We are contacted on a regular basis by other companies who are interested in hearing more about our experiences. And if you look at international rankings, Sri Lanka is quite high up when it comes to software development. When we do customer presentations around the world, we always tell the IFS story about Sri Lanka. It sets us apart and people are interested in learning more about Sri Lanka.

Finally, what do you see as key success factors in the IT industry in Sri Lanka going ahead?
Thomas: Sri Lanka has done many things right in the IT industry. Having been here many times over the years, I have seen that development. I think we as a company has also contributed to the overall development of the IT industry in Sri Lanka. I believe the more IT companies you have here, the more beneficial it is for all of us. I think our partnerships with the universities over the past 20 years have also helped us in securing the right kind of education and people.


Ranil: There are a lot of companies in Sri Lanka doing great things, but there are not many people outside of Sri Lanka who know of it. Sri Lanka is well known as a destination for tourism and tea. Whereas we are ranked high on several global listings as an offshoring destination, we are not commonly known out in the world as a country for its talent.

We can do more to establish ourselves as a country with a knowledge and innovation industry. This is where the IT industry, industry bodies and the government can work together to create a strong country brand. Recently, the government together with industry bodies launched the “Sri Lanka – The Island of Ingenuity” brand, which positions Sri Lanka as a global center of excellence in high-end product engineering, IP creation and knowledge process outsourcing. This is a first step.

We have done a lot of things right when it comes to the education and the kind of graduates we produce, which has enabled the industry to grow to where it is right now. We need to further strengthen our talent pool in terms of numbers and quality of those coming into the industry. This is where the government, industry, universities, and other higher education and vocational training institutes can work together to expand and create a world class talent pool with an analytical, creative and innovative mindset.

We also need to move away from this purely exam-oriented approach and reform the education system, and gear it towards a system that fosters a better creative mindset. Whereas there are other factors, such as better facilitation in the ease of doing business, better infrastructure support, labour law reforms, etc, that will contribute to the success of the industry. I see having a strong “country brand” and a “creative and innovative talent pool” as key success factors for the industry going forward.