Boosting Sri Lanka’s economic prospects through a knowledge based economy

As Sri Lanka begins its gradual recovery in the aftermath of the Easter Sunday attacks, economists are weighing the macroeconomic impacts of 4/21. The damage to the country’s tourism industry – which accounts for about five percent of Sri Lanka’s GDP – is the most apparent; the government is predicting a year on year decline of 30 percent in tourism, which would translate into a US$ 1.5 billion hit to the industry’s revenue.

But many other industries in the country are linked to tourism; therefore, the overall economic impact could be much more severe.

In this interview, Viraj Mudalige – the Managing Director and Chief Executive Officer, and  chief payment solutions architect, of Epic Lanka – discusses the importance of a knowledge based economy, the opportunities and challenges associated with such an economy, and the pivotal role the country’s knowledge economy could play in resuscitating Sri Lanka’s economic development.

Q: Considering how Sri Lanka’s economy was impacted by the terrorist attacks in April, what is the most significant roadblock it faces in bouncing back from these challenging conditions?

A: I believe that what we’re critically lacking is leadership in major industry verticals. If you consider Sri Lanka’s IT industry, we’re very fortunate to have talented graduates who are fresh out of university. Unfortunately, nobody in the country is keen on the ROI of free education, and businesses lack interest and the expertise to include them in a knowledge economy.

In the short and long terms, the IT industry will play a vital role in helping the country overcome the current economic hardships and get back on track.

A proper strategy, leadership and planning are essential in retaining Sri Lanka’s brilliant young minds, as well as mentoring them so that they become critical pillars of its economic growth.

Today’s young generation is advanced, knowledgeable and up-to-date on global developments. IT graduates are in much more demand globally – so they will look at alternatives without any hesitation. This is why we need a proper strategy in addition to leadership to ensure a promising future for them in this country.

Q: What are your suggestions to resolve this issue – and what would you consider to be the right strategy?

A: The problem is that our graduates do not have the necessary domain expertise to demand high paying jobs or boost the confidence of key industries to invest in local IT companies.

The significant gap between the IT curriculum taught in local universities and the domain expertise required in the real world is a fundamental reason for the lack of locally built industry specific solutions.

Yes, developing a pool of talented software engineers is crucial for the industry to achieve its target of five billion dollars in exports; but it is not the right strategy. You need to groom them to become domain experts in different industries, enabling them to evolve into real forces that drive Sri Lanka’s economy.

Epic Lanka works with more than 300 young gifted Sri Lankans while partnering many public and private universities on internships, knowledge assimilation and joint R&D ventures. Over the years, the organisation has completed significant projects in the fintech sphere and exported its domain expertise to the Asia-Pacific region.

While the company has specialised and positioned itself as a leading software brand in the local financial services industry, cutting-edge software brands are absent in other vital sectors of the country.


Q: How important is it for the country to promote a knowledge economy?

A: A knowledge economy creates, disseminates and uses knowledge to enhance its growth and development. Knowledge has always been at the core of every country’s development.

A thriving knowledge economy is characterised by close links between science and technology; greater importance placed on innovation for economic growth and compe- titiveness; an emphasis on education and lifelong learning; and more significant investment in R&D, software and education. The application of knowledge is manifested in all areas such as entrepreneurship, innovation and R&D. Furthermore, the education and skill levels of people are now recognised as being among the critical sources of growth and competitiveness in the global economy.

A knowledge economy not only signifies advanced technologies but also how well economies are using knowledge to improve productivity and increase welfare. Over time, Sri Lanka has made gradual but limited improvements in its transition towards a knowledge economy. Meanwhile, other Asian countries such as Malaysia, South Korea, Singapore, India, the Philippines and China have made giant strides in developing knowledge economies.

If Sri Lanka wants to experience the rapid growth of some of its Asian counterparts, its leaders must formulate robust national knowledge economy strategies and reform the relevant sectors. The country needs to increase its investments and decide which type of inputs it must invest in to make the vision of becoming a knowledge services economy a reality.

Q: Over the last few decades, Sri Lanka’s IT industry has grown to become one of the most critical pillars of the knowledge economy. The government has also set an optimistic export target of US$ 5 billion for the industry by 2022. What steps must the industry take to achieve this milestone?

A: To achieve this target, all stakeholders of the IT industry must focus on developing a talent pool with industry specific domain expertise.

According to the Sri Lanka Association of Software and Service Companies (SLASSCOM), the IT industry was the fifth largest export earner for Sri Lanka last year, estimated at 1.2 billion dollars, and engages over 80,000 employees. It has also been identified as a thrust industry in the National Export Strategy (NES).

While Sri Lanka is emerging as a global destination of choice for knowledge solutions, industry stakeholders should focus on transforming the nation into a centre of excellence for multiple domains through diverse initiatives. Most industries concentrate on increasing the number of software engineers, rather than producing domain experts and strengthening key industry sectors through product engineering – including tourism, agriculture, apparel, manufacturing, hospitality and healthcare.

In a country blessed with a talented pool of software engineers, there has been a major outflow of Sri Lankan capital to acquire software solutions from international developers when the same solutions could have been developed locally.

For many years, different industry sectors have been paying exorbitant upgrade and implementation costs for solutions from international software providers. Sri Lanka’s IT industry has the potential to provide these same solutions to local industries, and generate capital inflows by offering world-class solutions to international markets.

Q: Epic Lanka recently launched its card management system – Epic CMS. Apart from this, what are
the other key products that have made Epic Lanka a premier fintech solutions provider in the country?

A: For the past two decades, Epic has been a pioneer in delivering numerous award-winning industry breakthrough products to both local and international clientele.

Apart from its CMS solution, Epic Lanka has built a suite of world-class software products including the Android Terminal Experience Management Hub, Epic Automatic Reconciliation and Dispute Management Solution, Omni-Channel Synchronizer, Epic 3D Secure and Epic Mobile Wallet.