Small software companies seek more govt assistance - Inergic CEO

by Gamini Warushamana

Harindra Ranaweera

Inergic is a small Sri Lankan software company engaged in the highly competitive segment of software market, the product based software development. Inergic also provides IT consultancy services for local companies. With several years' experience in the local market, Inergic is now ready to tap the opportunities in the vast international market and negotiations are now under way with partners in the UK.

Inergic CEO Harindra Ranaweera explained the challenges he faced in this knowledge business. This is a very competitive market segment because all multinational companies are marketing the same products and we have to compete with them. The price of these reputed software products are extremely high and therefore not affordable to small and medium companies.

This international market is very big. The local software market is too small and highly price sensitive. The local market is flooded with Indian imports and most of the local IT companies merely trade Indian products. Several reputed companies in Sri Lanka use Inergic's ERP systems. Our local companies are reluctant to purchase local software as their perception on Sri Lankan products is very low.

We experience this at most of our presentations to local companies and the final question they ask is who are your principals? But the fact is that they don't know that most of our local software companies produce for large companies in the US or UK markets, he said.

Ranaweera said that under this situation software product marketing is very challenging as it should have a reputed brand name to compete with other products. You should have a reference and your product should be proven. To build a brand name producers have to advertise and it is too costly.

Capital is one of the main barriers for software companies to capture the opportunities in the export market.

Though the capital requirement for machines is lower than other industries in this knowledge businesses, Ranaweera said entrepreneurs who possess IT skills, knowledge and experience face difficulties when they start their own business.

He said that government assistance for the software industry is negligible compared to the support given by the governments of other countries such as India. India is the most successful country in attracting outsource businesses and the software industry in India is growing rapidly.

Software companies do not have tangible assets to mortgage to get credit because their assets are intangible products, Ranaweera said. A few Sri Lankan companies who are successful in the business have strong support from overseas capital resources or the entrepreneurs are from rich families.

"We don't have venture capital companies that support the industry. The Banking system is conservative. The Government should float a venture capital company to fund innovative and upcoming IT companies. The software industry too needs assistance like the SME sector, he said.BOI facilities too are out of the reach of small software companies such as Inergic. To obtain BOI facilities software companies should provide a minimum 25 job opportunities.

This it is too much for a new company and to employ over 20 software engineers the company should be fairly big. Bill Gates started Microsoft in a garage with only four programmers and that's how this business starts and develops, Ranaweera said.

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