Vertex Ventures Japan (VVJ), a new entity within the Vertex Holdings network, has announced the first close of its inaugural fund, Vertex Ventures Japan Fund I (VVJFI), targeting JPY 10 Billion (approximately US$67 million).

Vertex Holdings, a wholly-owned subsidiary of Singapore’s Temasek Holdings, has joined as the anchor investor, providing a foundation for VVJ to facilitate Japanese startups’ access to major global markets and accelerate their expansion.

The new fund will focus on high-growth sectors, including deeptech, AI, digital transformation, and the creator economy.

As part of the Vertex network, which manages over US$6 billion in assets under management, Vertex Ventures Japan aims to serve as a bridge between global capital and Japan’s technological innovation, contributing to the establishment of Japan as a key global innovation hub.

Also Read: Vertex Ventures invests in Japanese firm StayX that converts single-use rooms into multiple-use rooms

VVJ will leverage the extensive global investment network and deep understanding of emerging markets within the broader Vertex group, including Grab, Waze, Geek+, and Horizon Robotics. Japanese startups can also access innovation hubs in Southeast Asia, India, the US, Israel, and China through the Vertex global platform.

Along with this, Vertex Ventures Japan has strengthened its leadership team. Naonori Kurokawa has joined General Partner and Akiko Kihara as Venture Partner.

Kurokawa brings over 15 years of experience as a deep-tech investor. His past investments include Microwave Chemical and 908 Devices Inc., with expertise across various sectors, including chemicals, semiconductors, and biotechnology.

Kihara, a founding member of ZOZO, played a pivotal role in its IPO and growth into a publicly listed firm with a market capitalisation of JPY 1 Trillion. She possesses extensive experience in business strategy, corporate development, and scaling operations, notably leading the launch of ZOZOTOWN.

Takashi Tomita will serve as a managing partner, acting as “a bridge between global capital and the Japanese market” and focusing on startups’ global scaling.

Chua Kee Lock, CEO of Vertex Holdings, will chair the Investment Committee, providing strategic guidance on growth markets and deep tech.

Chua Taik Him, former Deputy Managing Director of the Singapore Economic Development Board, takes on the role of Vice Chairman of the Investment Committee, specialising in building enterprise ecosystems and supporting strategic alliances.

The post Vertex Ventures Japan launches with US$67M fund to propel Japanese startups globally appeared first on e27.

e27 has been recognised by the Financial Times as one of the fastest-growing companies in APAC for 2025. This is the first time we’ve made the list and it is an honour and privilege. We have been diligently executing our Mission to create platforms that curate information and connect stakeholders, driving the sustainable growth of the Southeast Asia tech ecosystem over the past years and this recognition comes just after our biggest year ever.

The Financial Times, in collaboration with Statista, employs a rigorous evaluation method to spotlight APAC companies achieving exceptional growth based on compound annual growth rates (CAGR) from 2020 to 2023. Qualifying companies are required to demonstrate significant organic revenue growth, with a minimum revenue of US$100,000 in 2020 and US$1 million in 2023.

During COVID-19, we made a challenging transition from a pure events-only play to a hybrid offline and online business matching and ecosystem engagement platform. The last four years have been a good partnership between our clients, stakeholders and the ecosystem in figuring out what ecosystem building means today and how we can continue to support and develop financially sustainable companies.

Our growth has been driven by our passion to engage and support the SEA tech ecosystem and actively collaboration with the regional stakeholders towards creating impactful and sustainable programs.

Today, e27 offers a multitude of programs and services including:

• Echelon Singapore and Echelon Philippines, which is now the largest event platform in Southeast Asia for startups, SMEs, corporates, governments, and investors, designed to deliver impactful insights and forge meaningful connections.
• Flux, an intimate event with a workshop and masterclass format helping to educate the next generation of SME and Startup leaders.
• Innovation Programs across Southeast Asia with global companies such as Meta, Prudence Foundation, Branch to foster ecosystem partnerships and engagement activities between corporates and startups.
• Thought leadership content, access to startups and investor information across e27.co and our social channels to inspire and educate Founders. Our Contributor Programme, which is a strong community program between ecosystem stakeholders and e27, continues to power high quality thought leadership content for the SEA tech ecosystem.

None of this would have been possible without the amazing team at e27 and their passion and dedication towards wanting a better SEA tech ecosystem.

We will continue to push hard and our end Vision is a unified Southeast Asia tech ecosystem that drives collaboration, innovation, and global leadership.

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Key highlights:

• Global financial markets remain uncertain amid central bank indecision
• Corporate earnings and new US tariffs set to impact investor sentiment
• Energy markets show resilience, while equities and bonds signal caution
• Bitcoin sentiment is weak, while Ethereum shows potential for recovery
• April 2 tariffs could be a major turning point for global markets

The global financial landscape today, March 21, 2025, is a complex tapestry woven with threads of uncertainty, cautious optimism, and shifting economic priorities. Let’s unpack this and offer my perspective on what’s driving these dynamics, where things might be headed, and what it all means for investors, policymakers, and everyday people keeping an eye on their financial futures.

Global risk sentiment and central bank ambiguity

The global risk sentiment being described as “tentative” feels like an apt reflection of the moment we’re in. Central bank meetings, which are typically a cornerstone for market stability, seem to have left us with more ambiguity than clarity. It’s not uncommon for these gatherings—whether it’s the Federal Reserve, the European Central Bank, or others—to set the tone for monetary policy expectations, influencing everything from interest rates to currency strength.

But when they raise “more questions than answers,” as the Market Wrap notes, it signals a lack of consensus or a hesitancy to commit to bold moves. Perhaps central bankers are grappling with the same uncertainties as the rest of us: inflationary pressures that refuse to fully subside, geopolitical tensions exacerbated by trade policies, and a global economy that’s still finding its footing post-pandemic.

My take is that this ambiguity is less about indecision and more about a deliberate wait-and-see approach. Central banks are likely holding their cards close, waiting for clearer signals from corporate earnings and trade developments before making significant policy shifts.

Corporate earnings, tariffs, and market reactions

Speaking of corporate earnings, they’re poised to be the next big litmus test for the markets. Investors are hungry for guidance, and rightly so. With tariff fears casting a long shadow, the performance of major companies could either bolster confidence or deepen the unease.

In the US, where the MSCI US index slipped by 0.2 per cent, the energy sector’s modest 0.4 per cent gain stands out as a bright spot. This uptick aligns with the rise in Brent crude prices to US$75 per barrel, fuelled by OPEC+’s new schedule for oil output cuts.

It’s a reminder that energy markets remain a critical driver of sentiment, especially as supply constraints—like the US sanctions on a Chinese refinery tied to Iranian oil—tighten the screws further. For American investors, the upcoming earnings season will be a chance to see if companies can navigate these headwinds, particularly with new tariffs looming on the horizon.

Those tariffs, announced by US President Donald Trump to take effect on April 2, are a game-changer. The promise of both broad reciprocal tariffs and sector-specific measures suggests a continuation of his administration’s aggressive trade stance.

From my perspective, this move is less about economic protectionism in a vacuum and more about geopolitical leverage. Trump’s strategy seems to hinge on using tariffs as a bargaining chip—pressuring trading partners into concessions while signaling strength to domestic audiences. The timing, just over a week from now, adds urgency to the mix.

Also Read: Tariffs, Fed moves, and crypto: Navigating a volatile March 2025

Markets hate uncertainty, and with Asian equities already showing mixed responses and US equity futures pointing to a flat open, it’s clear that investors are bracing for turbulence. The delay of the European Union’s proposed tariff on American whiskey this week feels like a small reprieve, perhaps a diplomatic nod to avoid escalating tensions further, but it’s a drop in the bucket compared to the broader tariff storm brewing.

In China, the focus on bellwethers like Xiaomi Corp. and Tencent Holdings Ltd. is particularly telling. These tech giants have been at the heart of China’s recent stock surge, a rally that’s defied global headwinds to some extent. Investors are now asking whether this momentum is sustainable or if it’s a house of cards built on speculative exuberance.

My view is that China’s market resilience reflects a mix of domestic policy support and a pivot by companies to diversify away from US-centric supply chains—a direct response to past tariff pressures. Xiaomi’s push into emerging markets and Tencent’s dominance in digital ecosystems could provide the earnings firepower needed to keep the rally alive. But if these reports disappoint, it might expose cracks in China’s economic facade, especially as US sanctions and tariffs tighten the noose on key sectors like refining.

Financial indicators and the energy-crypto divide

Shifting to the financial indicators, the US Treasury yields dropping—with the 10-year at 4.24 per cent and the 2-year at 3.96 per cent—suggests a flight to safety amid the uncertainty. Lower yields typically signal that investors are seeking the relative security of government bonds over riskier assets, a trend reinforced by the US Dollar index’s 0.4 per cent gain as it consolidates recent losses. Gold holding firm above US$3,000 per ounce further underscores this cautious mood—it’s the classic safe-haven play.

Yet, there’s a paradox here: Brent crude’s 1.7 per cent rise indicates that not all risk assets are out of favour. My interpretation is that we’re seeing a bifurcated market—energy and commodities holding up due to supply-side dynamics, while equities and bonds reflect broader trepidation about growth prospects.

Now, let’s dive into the cryptocurrency angle, which adds another layer of intrigue. Bitcoin’s market sentiment hitting a two-year low, as per CryptoQuant’s Bull Score Index of 20, is a stark warning. This index, blending ten metrics like network activity and investor behaviour, paints a picture of a “weak environment” unlikely to support a sustained rally.

Historically, Bitcoin needs a score above 60 to fuel significant price surges, and prolonged periods below 40 align with bear markets. As someone who’s tracked crypto’s rollercoaster ride, I see this as a natural ebb in the cycle. The euphoria of past bull runs—often tied to macroeconomic stimulus or institutional adoption—has given way to a sober reality.

Regulatory scrutiny, energy cost debates, and now tariff-induced economic uncertainty could be dampening enthusiasm. For Bitcoin holders, this might feel like a gut punch, but it’s not necessarily a death knell. Markets move in waves, and a bearish phase could set the stage for a stronger rebound if fundamentals like adoption or halving effects kick in later.

Also Read: When tariffs danced with Bitcoin and markets held their breath

Ethereum, meanwhile, offers a glimmer of hope amid the gloom. Its price hovering around US$1,970, with a key support level at US$1,861, suggests resilience. The nine per cent recovery earlier this week, followed by a 3.5 per cent dip, shows volatility but also potential. If that US$1,861 support holds, a push toward the March 7 high of US$2,258 isn’t out of the question. The technicals back this up: the RSI climbing to 40 from an oversold 30 indicates fading bearish momentum, though it needs to break 50 for a confirmed recovery.

The MACD’s bullish crossover and rising green histograms above zero add to the case for upward strength. From my standpoint, Ethereum’s outlook hinges on broader market sentiment and its ability to differentiate itself from Bitcoin’s struggles. If tariff fears ease or corporate earnings surprise to the upside, ETH could ride that wave. But a break below US$1,861 would open the door to a drop toward US$1,700—a level that could test the resolve of even the most ardent HODLers.

The interconnectedness of markets

Stepping back, what strikes me most about this Market Wrap is the interconnectedness of it all. Tariffs don’t just affect trade balances; they ripple through equity markets, commodity prices, and even cryptocurrencies. Central bank hesitancy amplifies the noise, leaving corporate earnings as the next beacon.

My point of view is cautiously pragmatic: we’re in a transitional phase where old playbooks—whether for stocks, bonds, or crypto—are being rewritten. Investors should watch China’s tech giants for signs of durability, lean into energy’s relative strength, and brace for tariff-driven volatility. For crypto enthusiasts, patience might be the best strategy—Bitcoin’s malaise and Ethereum’s teetering recovery suggest a market in purgatory, awaiting a catalyst.

In conclusion, the global economy today feels like a tightrope walk. The stakes are high, and the safety net is fraying. I see my role as cutting through the noise to spotlight the data and trends that matter. Right now, that means recognising the weight of tariffs, the pivotal role of earnings, and the fragile state of risk assets like crypto.

We’re not in freefall, but we’re not on solid ground either—April 2, when those tariffs hit, could be the tipping point that defines the next chapter.

—

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

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For one reason or another, Western markets, especially the US, dominate headlines about hybrid and remote work. But two recent articles reporting on a Brookings study took another look at the topic, spotlighting the rest of the world, including Asia.

In a The New York Times story essay called “Where in the World Are People Back in the Office?“ a global team of reporters share how Asia is officially behind on global markets regarding workplace flexibility.

“Many Asian countries have lower levels of remote work than countries in Europe and North America. Asia’s work-from-home levels were the lowest, with South Koreans working less than two days per month remotely, Japan two and Taiwan under three,” the article recaps the findings of a global study on work-from-home.

I was honoured to provide some context for the article, sharing with reporter Emma Goldberg that virtually all companies are back in the office in Vietnam and providing one of the reasons why: “A lot of people here don’t have their own places. Working from home at the kitchen table with three generations running around is not the best environment to be productive.”

Apartments, offices, and lockdowns

Matthew Boyle’s article in Bloomberg, “Return-to-Office Is a US$1.3 Trillion Problem Few Have Figured Out,” echoes this: “In Hong Kong, tiny apartments and an efficient public transport system have given residents fewer reasons to work from home. There, subway ridership surpassed 2019 levels in March, and empty office space is more tied to decreased Chinese investment than remote work.”

How long and intense COVID-19 hit each country played a massive role, too.

The NYT article quotes ITAM economist Jose Maria Barrero, who helped lead the Brookings study: “There were many countries in Asia that controlled early waves of COVID-19 pretty well without extended lockdowns. They didn’t have this experience where they had to hunker down for months on end working from home and get adapted to it.”

This lack of extended lockdowns explains why many workers never left their offices in countries like South Korea and my “home” of Vietnam. 

In Singapore, with its extensive circuit-breakers, it was a very different situation. But it’s not only because Singaporeans worked from home longer than others in Asia during COVID-19 that explains the widespread adoption of hybrid work in the red dot.

Also Read: Is hybrid work arrangement the future of work?

The active promotion of the hybrid work model by the Singaporean government, the professional work culture, and the high level of digitisation all contributed to the uptake of flexible working models. 

As a result, when surveyed towards the end of 2022, one in two Singaporean hybrid workers said they would consider quitting their job if they could no longer work hybrid.

This attitude starkly contrasts with Vietnam and other more developing markets in the region. Strong micromanagement and a lack of trust in employees, limited digitisation, and –as mentioned above– impractical work-from-home setups make widespread hybrid work adoption impossible.

According to Glints and MHV data, even early-stage startups, usually the first to adopt workplace flexibility, are back in the office full-time in markets like Vietnam (83 per cent) and Indonesia (33 per cent).

That’s not to say hybrid won’t happen here; the countries just have to mature, as I discussed with Home Credit Chief People Officer Alexis Pham in a recent CEEC Event. Alexis made excellent points about how we’re so early in Vietnam’s development that we must train companies’ readiness to go hybrid in the following years. 

A highly diverse region

As I recently shared with Jeremy Au on the BRAVE podcast, when I first moved from Chicago to Singapore in 2014 in a regional role for the advertising agency Ogilvy, I learned quickly that Asia is much more diverse than I could have imagined. 

Yes, this is a cluster of geographically close countries, but the cultures and levels of development are vastly different. That’s why you see such extreme differences between countries in South-East Asia.

A recent Center for Creative Leadership (CCL) highlighted eight key elements that shape the way Southeast Asian countries adopt hybrid – or not: 

• National culture: “Indonesian people may need more control, so we can’t let them work independently.”
• Organisational culture: “Implementing hybrid was not too hard in our organisation since the culture mainly centres on trust and empowerment.”
• Industry: “Our line of business is banking, which is closely related to operations and service; therefore, some units are unable to do hybrid work.”
• Function: “While we have transitioned our customer service teams to hybrid, other functions are expected to come into work.”
• Role/nature of work: “For gaining knowledge/information, we can do a hybrid work style; however, for harnessing wisdom, a face-to-face mode is still more effective.”
• Leader level: “For negotiations at a top-management level that require not only logical communication but also emotional communication, face-to-face is essential.”
• Generation: “The seniors needed more time to adapt to the new situation since they were used to doing everything face-to-face. Meanwhile, the Millennials didn’t have much problem embracing the hybrid policy.”
• Leader personality: “As we left the hybrid discretion to our managers, we realised that some leaders transitioned quite easily while others struggled.” 

These reasons, combined with some structural challenges highlighted by the New York Times and Bloomberg articles, explain how the (non) adoption of hybrid and remote work varies so wildly by market.

What hybrid and remote employees want 

For companies that did embrace hybrid and remote work, it remains a puzzle to make the flexible models work. We recently surveyed hybrid and remote employees in the US and noted that less than half of them are satisfied with their current schedules, managers, and support.

Also Read: Myths vs reality: Remote and hybrid managers report high productivity and trust

Common best practices, as introduced by ‘remote pros’ like Gitlab and Buffer, such as clear communication, documentation by default, and attention to diversity and inclusion, are not widely practised yet by managers.

This lack of strong hybrid management muscles echoes the manager research I shared here on e27 earlier this year, in which one in two managers said they wanted more training in communicating and collaborating with their hybrid teams. 

It also shows that beyond Asian markets lagging, even countries and companies that have embraced hybrid still have a lot to figure out. And that’s fine – things have changed so significantly in the past three years. 

To make it work, leaders should continue to listen to their teams, understand what works and what doesn’t, implement new efforts, listen, and improve further. 

We’re all on this journey together. 

—

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

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This article was first published on September 26, 2023

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The article presents Calcey’s bullish case for Sri Lanka as the next breakout premier hub for the global IT industry. It highlights several factors that contribute to Sri Lanka’s position, including:

• Strong education system with a cultural affinity for STEM: With many students in STEM programs and Western education brands offering English-taught courses, Sri Lanka excels in STEM education. High English literacy rates further bolster this advantage.
• High ranking as an outsourcing destination: For several years, Sri Lanka has been recognised by a myriad of organisations and associations such as Startup Genome, A.T. Kearney, IBM and many more for its affordability, and diversity of its talent. 
• Democratising tech skills: Led by one of the wealthiest businessmen in Sri Lanka, who has launched an initiative providing free STEM education online and on national TV to enhance the supply of engineers, scientists, and more. 
• Rising interest in remote IT jobs: There’s a growing demand for remote IT jobs. Many seek global companies offering USD-pegged salaries, with families encouraging careers in software engineering.
• Thriving tech companies: Companies like WS02 and Virtusa are showcasing Sri Lanka’s potential in the global IT sector, reflecting a vibrant and dynamic tech ecosystem.

A cultural affinity for STEM

When you think of India, particularly South India, you immediately think of the abundance of technical talent, and rightfully so. Sundar Pichai, Satya Nadella, and Indira Nooyi all hail from South India, and the region is a renowned hub for producing top-tier tech talent. Sri Lanka and the southernmost part of India are separated by less than 100 kilometers.

In many ways, Sri Lanka has cultural traits and practices similar to South India’s. Many South Indians, and in general, Indians have a strong inclination towards the fields of Science, Technology, Engineering and Mathematics (STEM). India boasts the 2nd highest number of total graduates from STEM per year and fifth for the highest percentage of STEM graduates.

In Sri Lanka, there is a similar trend towards students selecting STEM fields for their secondary and higher education. Like South India, most parents in Sri Lanka encourage their children to pursue these fields. As a result, the country has many prospective students studying and pursuing STEM fields. 

 

Our analysis of the University Grant Commission’s latest data shows precisely that. In 2022, undergraduate enrolment for STEM courses in Government/State Universities accounted for 34 per cent of total enrolments.

Similarly, STEM faculties in Sri Lanka combine to produce more than a quarter of all undergraduates coming out (i.e., completing) of state universities. Although this figure is not as high as India’s (34 per cent), it is on par with France (26 per cent) and higher than the percentage produced by the US (20 per cent). 

Access to foreign institutions

The numbers we’ve mentioned above include only State Universities. In Sri Lanka, enrollment your to enroll at a State University, it depends on your performance, with preference given to top-performing A/L students. As a result, many students are denied the chance to attend government universities due to a lack of available openings.

So what happens to everyone else? Fortunately, Sri Lanka is also home to 27 Private Universities that offer programs affiliated with many well-known Universities in the UK and Australia. The students who don’t get accepted to State University, and those who completed their secondary education at private institutes can attend these universities.

Also Read: From civil war to innovation: nVentures’s Chalinda on the rise of Sri Lanka’s entrepreneurship

A majority of the private universities in Sri Lanka specialise in offering STEM programs. For example, the largest private institute — the Sri Lanka Institute of Information Technology (SLIIT), has 10K students and is accredited by the Institution of Engineering & Technology, UK. Students also have the luxury of choosing programs from Universities such as Monash, University of London, and Deakin University among many more. 

Furthermore, early this year, to improve its competitiveness and position itself as an education hub, the Government of Sri Lanka approved a proposal by the Ministry of Education to enter MOUs with several foreign universities from the US, UK, China, and Australia.

In another win for the IT industry, the globally renowned Information of Information Technology (IIT) India announced that Sri Lanka would be the destination for their 3rd foreign branch. IIT has produced several Indian business leaders, notably Sundar Pichai, Narayana Murthy, and Bharat Desai. The introduction of foreign programs to state universities and the entry of well-established foreign institutions such as IIT significantly improves access to quality education, particularly around STEM fields, and will further enhance the technical capacity of Sri Lankan talent. 

Democratising tech skills

Along with the availability of private universities that focus on technology and engineering (e.g., SLIIT. SLTC, etc.), students in Sri Lanka have also had the opportunity to participate in and attend several other IT programs that enhance their technical skills.

These programs provide students access to world-class global material and courses from institutions such as Google, Harvard University, etc., accelerating their tech career and enhancing their competitiveness within the global talent pool.

Some notable programs in the country include: 

• Google Summer of Code: Google Summer of Code is a global, online program focused on bringing new contributors into open source software development.. Participants work on a programming project lasting 12 or more weeks with an open-source organisation, receiving guidance from mentors. Now in its 20th year, Sri Lanka has been one of the most famous participants, participating since its inception in 2004. The University of Moratuwa has led participation in the program for many years and accounts for one of the highest total participation by a single university in the program. 
• DP Education: Founded by one of the wealthiest men in Sri Lanka, DP Education, founded by Dhammika Perera, is an initiative focusing on increasing quality and access to digital education and learning. The platform has partnerships with Microsoft, The University of Moratuwa, UNICEF, Age of Learning, and more, and it provides a variety of courses across programming, coding, robotics, and general technology skills. D.P. Education received ‘The Disruptor Award‘ by Bett Asia in 2023 for its innovation in reshaping the education landscape. According to a recent article, the program has helped boost the IT sector by empowering 30K students through 142 campuses.
• Springboard: Founded by Calcey in 2023, Springboard is a no-strings-attached scholarship to students who participated in MOOCs (Massive Open Online Courses) from the world’s best universities, curated by Calcey’s engineering leaders. The curriculum, which consists of courses from universities and organisations such as Harvard, Georgia Tech, IBM, University of Michigan, and TUDelft, was delivered via its exclusive partner, EdX.com. The program concluded in mid-2024 and provided more than 20 students with a blended learning approach, equipping them with adequate skills for the demands of the global tech environment. 

Advanced english proficiency

Sri Lanka has a higher literacy rate than its neighbours in Asia boasting a rate of 92 per cent. The government has two official languages, Sinhala and Tamil. However, English is considered a link language between many people in the country. In practice, English in Sri Lanka plays a significant role.

It is used in the Supreme Court, is prevalent in media and advertising, is resurging in education, and is the preferred language in private business and commerce. Among many people, especially in the capital of Colombo, English is considered a native language. This should be no surprise, as the island was a British colony for over 100 years. 

Though most of the population use Sinhala as their primary language medium during their education, they begin to learn English at the start or during pre-school, as shown in the figure below. The data from British Council also show that students are also spending considerable time learning English in school, with 50 per cent of students spending between 3-6 hours per week on English. The report also found that 75 per cent of students chose to study English outside school.

 

Furthermore, according to the latest IELTS data,  the standardised English language proficiency test for non-native English speakers globally, Sri Lanka ranks higher compared to other countries in the Asian region. As shown in the figure below, the average performance by Sri Lankans in the Academic exam ranks 7th highest in Asia. It significantly outperforms the average score of 6.1 among Asian students.

Also Read: Small market, big dreams: Meet the 30 Sri Lankan startups that are punching above their weight

The government of Sri Lanka is placing further emphasis on English proficiency and hopes to roll out the’ English for All’ by 2030. These initiatives, combined with many young Sri Lankans consuming digital content primarily in English, show that the country is well on its way to further increasing the number of people ready to contribute to the global economy. 

The allure of USD salaries

Traditionally, for companies employing Sri Lankan workers, remuneration was paid out in the country’s local currency, the Sri Lankan Rupee (LKR). In 2022, when Sri Lanka went through an unprecedented economic crisis, the Rupee reached an all-time low relative to the US Dollar. While many companies were struggling to stay afloat, the tech sector was mostly facing a brain drain. Many of the highly skilled personnel in the country were seeking opportunities abroad.

As a result, these companies, primarily those offering software outsourcing services, decided to provide salaries pegged to the USD. Calcey Technologies was one of the first companies to start paying salaries adjusted to US dollars in 2022; here is what CEO and Co-Founder Mangala Karunaratne had to say:

“We started moving towards USD-pegged compensation in the early part of this year. As with all our other great ideas, this too was actually suggested by our own people. The fact that 70+ other IT/BPO firms have since done the same suggests that we were right.”

The currency has stabilised, but the trend of employees seeking USD or Euro payouts is prevalent. According to an independent analysis, more than 192 companies out of 300 currently offer remuneration pegged to a foreign currency. As the employees of foreign contractors are exempt from local income taxes, it makes them even more attractive to prospective employees. Consequently, many young and aspiring individuals look to work in the tech sector, specifically for companies offering these benefits. 

As a result, there is a significant opportunity for companies to enter and operate in the Sri Lankan market, specifically companies that can offer Sri Lankan IT talent the ability to work with a global clientele, compensate them in foreign currency, and enjoy economic benefits. 

Where do the top minds land?

I’ve made the case for why Sri Lankan IT talent ranks among the best in the world for companies looking to augment their operations or begin an evergreen venture. But where does all the top-tier talent work? Throughout the article, we’ve drawn several similarities between Sri Lanka and South India.

However, one instance where the difference is evident is the presence of large multinational IT companies. Several cities in South India are home to offices from Google, IBM, Amazon, and Microsoft, among others. The presence of large MNC’s results in many IT workers in India preferring to work for these global giants, as well as unicorn local startups that offer employees equity.

However, in Sri Lanka, there are no FAANG offices or delivery centres. As a result, the top-tier talent tends to go to companies that can offer them competitive forex-pegged salaries and the ability to work closely with foreign clients, and they are most often the IT/software outsourcing companies.

While Sri Lanka lacks the presence of the FAANGS of the world, Sri Lanka is home to some notable success stories. For example, early this year, Colombo founded, open-source software company WS02 was fully acquired by one of the largest Private Equity companies in the world, EQT for 600M. In 2021, global engineering services giant Virtusa, founded in 1997 in Sri Lanka, was acquired by Baring Private Equity Asia for US$2B in 2021, marking one of the largest tech deals in Asia.

Sri Lankans also developed ‘The Millenium Exchange’, the Electronic Trading Platform responsible for powering the London Stock Exchange, and many other exchanges across the globe. In 2009, Millennium IT, the company that developed the product, was acquired by the London Stock Exchange Group for a deal estimated to be worth US$30M.

Despite these companies’ global successes, they are still deeply rooted in Sri Lanka. WS02 and Virtusa are headquartered in the US, and LSEG in the UK, but all of these companies still maintain their primary delivery centres in Colombo.  This is a testament to the overall technical capacity of Sri Lankan talent, and its ecosystem.

The pearl of the delivery world?

These success stories and the abundance of highly skilled technical talent have helped accelerate Sri Lanka’s overall IT capabilities. Sri Lanka is typically an outsourcing destination for back-office services (BPO).

However, many foreign companies are realising the untapped potential that Sri Lanka has to offer vis a vis their strong English proficiency, focus on STEM, and the inclination for employees to showcase their talents on the global front. In the recent past, we’ve seen several well-known brands set up in Sri Lanka, looking to capitalise on the talent pool.

Notable examples include: 

• OceansXYZ: Oceans hires operational talent in Sri Lanka and matches them with world-class startups around the globe. Founded in 2022, the company employs more than 250 people from Sri Lanka. In a recent interview, this is what OceansXYZ Founder Ian Myers had to say about Sri Lankan talent.

“I realised there is nowhere on the planet with a better price-to-talent ratio than Sri Lanka.There are a few reasons for this. One is their strong university system with close ties to the U.K. university system. You have a very Western-educated population. The difference between Sri Lanka and for instance, The Philippines, is that remote workers typically handle customer service roles. In Sri Lanka, the workers are experienced in accounting, growth marketing, sales, admin operations, and finance. This island probably has the most CFAs per capita out of any country worldwide.”

• Ernst and Young Global Delivery Services (GDS): In 2021, EY established a GDS delivery centre in Sri Lanka, employing over 250 personnel in roles across finance, accounting, analytics, human resources, consulting, and more. The company aims to double its workforce by 2025.
• HCL Technologies: In 2020, HCL established a global delivery centre in Colombo. In 2021, HCL expanded its presence in Sri Lanka by opening a new facility that can house around 4000 employees.

“Sri Lanka is one of HCL’s key global delivery hubs and we are very excited to continue expanding our operations in the country with the opening of our new office here,” – Prateek Aggarwal, Chief Financial Officer, HCL Technologies.”

Also Read: Singapore, Sri Lanka named as top Asian emerging ecosystems for cleantech startups

Although the total number of companies present is still less than in other major outsourcing hubs such as India, Vietnam, and the Philippines, global companies entering Sri Lanka to establish delivery centres and capitalise on talent is not a recent phenomenon. 

Many of these companies use Sri Lanka as their primary delivery hub or use the abundance of talent available to augment their overall delivery capabilities. Regardless of the model deployed, almost all of them have doubled down on their Sri Lankan operations and continue to enjoy the benefits of both cost arbitrage and engineering arbitrage (i.e., the benefits of software engineering and cost reduction as a part of it).

Conclusion

If you’ve made it through to this section, congrats! I bet we’ve laid down a fact-based and objective analysis of why Sri Lanka is the next breakthrough destination for servicing the global IT industry. This little island and its picturesque scenery offer some of the best talent you can find in the world, along with robust infrastructure to support it.

The cultural attitudes that drive students to pursue STEM fields and occupations, the quality of its private education system, the emergence of impactful tech focused micro education programs, and strong English proficiency are all positive factors that contribute to Sri Lanka’s position as a premier hub for the global IT industry. 

In addition, the growing demand among the prospective and current working population to work for global companies and earn in foreign currency provides international companies looking to enter the Sri Lankan market with a highly competitive advantage. 

Calcey is proud to be a part of this thriving ecosystem, and remains deeply rooted in Sri Lanka. We specialise in transforming legacy systems, building scalable products, and guiding companies through the complexities of software development. We specialise in creating successful outsourcing partnerships based on:

• Skilled, remote-ready developers: Access a global talent pool of passionate developers who thrive in remote environments.
• Independent, self-managing teams: Our model empowers teams to work autonomously, fostering ownership and accountability.
• Focus on tools and communication: We ensure your team has the tools and clear communication channels to collaborate seamlessly.

Want to learn more? Our free eBook, “The Remote Team Blueprint” explores our proven strategies in depth.

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This article was first published on August 2, 2024

The post Exploring Sri Lanka’s potential as a premier global IT hub appeared first on e27.