Sri Lanka’s 2022 economic crisis caught most businesses off guard with the speed of its unfolding and the multifaceted risks it exposed. Here John Keells group’s Executive Vice President and Group CIO Ramesh Shanmuganathan reflects on the crisis’s enduring impact and how one could integrate risk strategic action in managing same.
No organization had a risk matrix that accounted for the speed and severity at which Sri Lanka’s economic troubles unfolded in 2022 in the aftermath of a prolonged pandemic. Everything happened at lightning speed, from an acute foreign exchange shortage, import restrictions, breakdown in electricity/gas supply and transport due to the fuel crisis, and loss of income topped off by galloping inflation and the rising interest rates coupled with unprecedented political instability and social unrest due to the shortage of basics and essentials. Any one of these would have been difficult for a business to model in a risk matrix in assessing the same vis-à-vis proposed strategic action, leave alone all of them.
In this interview, Ramesh Shanmuganathan discusses how the Year 2022’s economic crisis became a period of great learning and reflection, from how to redraw and remodel the business risk matrix to taking a holistic view of our business with an especially empathetic view towards employees given the team had to perform under incredible circumstances to make sure the clock kept ticking and our stakeholder needs were fulfilled without any compromises. At John Keells group Shanmuganathan leads the organization and teams that serve the group’s Digital & Tech requirements whilst managing clients across SAARC, MENA, and APAC as Chief Executive of John Keells IT (JKIT), a boutique consultancy organization.
Despite the challenging environment, JKIT accelerated its global expansion, realizing opportunities in the home market were restricted. Taking the risk head-on reaped rewards. JKIT’s Middle Eastern and North Africa (MENA) unit based out of Dubai has managed to secure new clients and grow at a much faster rate than what the pre-crisis strategy for the region had envisaged. Here Shanmuganathan discusses how they created this opportunity to manage the risks that they faced in Sri Lanka.
When in a crisis, leaders must roll up their sleeves rather than give directions. Your interpretation of what’s going on and what you hear from someone else can sometimes be very different
What are your reflections on how the pandemic and subsequent economic crisis changed your perspective as a leader?
The key reflections were to stay grounded and in doing so not take anything for granted and not to rule out anything that could unfold. As businesses, we emphasize a lot on planning which usually involves things that we are in control of, but past events have taught us that anything and everything can change, and it is important for businesses to plan to operate during a crisis. In a way, the Covid-19 pandemic taught us this lesson, without which we wouldn’t have been prepared enough to respond to the economic crisis that we are experiencing today.
Although agility and nimbleness are overused terms in conversations today, the present context has forced us to revalidate the basics – Are we focusing on the right things? Are we getting the basics right? Do we have the right people in the right roles to navigate the maze in a crisis? Do we have the necessary information to make critical decisions? Are we picking the 20% that gives us the 80% of impact? Are we bold enough to say no? Are we empathetic to what people are going through? Are we taking care of our employees and doing what’s necessary so that they could give their best to us? Are we geared to change course arising from any eventualities? Do we have the visibility and information to make a conscious assessment of the opportunities we have and take calculated risks on which paths we wish to pursue and contingencies planned for the same?
As for JKIT’s perspective, we’ve had many of the above in place which helped us to manage our risks and accelerate our growth by managing our geographies as a portfolio to manage any challenges that we may have to face due to the present economic crisis in Sri Lanka. We initiated our international expansion about five years ago and accelerated the same postCovid-19 by expanding into SAARC and APAC in addition to MENA which was a blessing in disguise that helped us cushion the impact that the crisis could have had on us, and helped us accelerate same.
The crisis has also helped JKIT to become more human-centric as an organization – be it our employees, customers, partners, etc. We’ve been very conscious of the impact of the prolonged phase of the pandemic followed by the economic crisis and the circumstances under which people were juggling a multitude of things both in their personal and professional lives. We tried our best to be more empathetic as an organization helping each other be it an employee, customer, or partner. This earned us the greatest goodwill from all stakeholders and helped strengthen relationships across.
When did you start doubling down on John Keells IT’s international expansion?
We commenced our international expansion five years back but started doubling down post-Covid-19. The reason being Covid-19 also accelerated the opportunities for Digital/IT-led investments and we capitalised on them together with our strategic partners such as SAP and Microsoft in expanding into newer geographies where we felt the opportunities commensurate the risks – MENA, SAARC and APAC. Whilst we made inroads into SAARC and APAC we strengthened and consolidated our operations in MENA by strengthening our team and investments to grow our business on an aggressive footing to double-digit growth.
The international expansion was focused on establishing and nurturing key partnerships within the geographies whilst consolidating delivery from our main one based out of Sri Lanka. The other centres are planned as satellite centres depending on the need and availability of resources to be hired locally wherever we have our physical presence on a need basis. The emphasis on scaling up our team in each market and specifically MENA was also driven by opportunities that we saw with Expo2022 as well as FIFA World Cup 2022. Our investment in building a stronger team did pay dividends in terms of strengthening our strategic partnerships in the territory; increasing our account coverage; as well as strengthening the brand overall. We were bold where we needed to be, but also frugal at other times. Besides strengthening our operations in MENA, we’ve also expanded into APAC with a specific focus on countries such as Australia, Malaysia, Bangladesh, and Maldives during the last two quarters. We’re in talks with some big players in the region for possible partnerships which could be a game-changer for us if it works out as intended.
Could you share more about your international growth during the past two quarters?
We’ve driven our growth internationally through our strategic partnerships that we had established in Sri Lanka with the likes of SAP and Microsoft, and by expanding with them into the territories that we were focusing on and helping them to grow their market share through the ready capability and capacity that we had built back in Sri Lanka. This has also earned us their recognition and respect which augurs well for our future growth with them.
We have been able to secure significant contracts together with them and are working with them closely to develop the market by supporting them in their presales, requirement analysis, solutioning, delivering proof of concepts, etc. across their portfolio. This has put us in a good place in UAE, and now we are looking to extend the same to other countries in the region.
Would it be fair to say that, hadn’t it been for the crisis here, you wouldn’t have expanded as aggressively overseas?
I would say so. Otherwise, we would have been content with incremental growth. Naturally, there were questions about the abrupt expansion of the team, but we were confident in justifying the same given the circumstances and were open to taking any course correction if it did not yield the desired outcomes with our fail-safe-failfast which helped to create something big.
A company’s greatest asset is its team. How has this past year contributed to evolving empathy and a human-centric approach? What new perspectives have you gleaned from this experience?
One of the biggest learnings is the realisation of how quick we are to assume things. It’s easy to assume that every team member has a space, a proper desk and chair as well as privacy to take part in meetings and work from home. This isn’t the case. As an organization, realizing that our assumptions aren’t all valid, being considerate, and having empathy towards each other is a welcome shift that has carried through post-Covid. It has strengthened our team and their ability to build on each other as well as help one another.
People are our biggest asset as a professional services organization and losing them is our greatest risk. Under the current circumstances, the tendency is for most to look for greener pastures, which is the greatest risk we face. The second would be sustaining our current customers and initiatives while in the middle of the prolonged economic and energy crisis that we had to go through.
Being in the tech space, you’re expected to be available 24×7. I’ve had to face the harsh reality every time I speak to a client overseas in addressing concerns they would raise about the country and its stability in doing business with us. Their main concern has been our service quality under the trying circumstances that we were going through. We’ve reassured them by showcasing our robust organization, people, operations and contingencies we had in place as well as how we navigated through Covid-19 in facing similar challenges in the past. The only way to solve that is through conviction. Our credit risk and volatility were a couple of other aspects requiring us to be mindful of. Any payment delays, due to difficulties in sourcing dollars to pay suppliers, could quickly escalate beyond a cashflow issue to one of credit risk from a customer or supplier point of view.
Challenges and risks would usually make an organisation cautious. What insights have you gained while facing these challenges and risks?
We’ve learned a lot over the past few years. I believe that when in crisis, staying ‘put’ is the worst thing you can do. You’ve got to take a step forward, but with caution and constant re-evaluation, mapping your path forward.
The importance of good leadership was also something that had my attention as well. When in a crisis, leaders must roll up their sleeves to lead rather than give directions. Your interpretation of what’s going on and what you hear from someone else can sometimes be very different.
This is especially important for strategic initiatives. I’m a strong believer in the Pareto Principle, pick the 20% that creates 80% of the impact and focus on that, although I wouldn’t stop at 20, maybe 40%. You could say this has translated well for engaging with strategic partners, and customers as well as employees. They see the commitment of the CEO and the leadership commitment and cement the confidence in JKIT, that we can follow through on our commitments.
Things like making myself available to have conversations, both physically and virtually, to discuss any concerns and having more frequent leadership meetings for faster turnarounds really helped build that connection which helped build confidence in us.
Technology can help create solutions to facilitate working together across borders. A good example of this is a smart office platform developed and deployed across John Keells as well as other customers across the region
Given the highly specialised expertise involved in tech, how challenging is it for the tech industry when so much talent is migrating?
I think having the tech perspective makes us better prepared to handle such a situation. Especially after the pandemic, I believe we are better positioned to employ anyone from anywhere across the globe. My belief is that this challenge is more cultural because 90% of our workforce are Sri Lankans. But it doesn’t have to be that way. Nothing is stopping us from hiring from India, Bangladesh, Vietnam or even the U.S. We have to end the island mentality and populist mindset we often find ourselves in.
Technology can help create solutions to facilitate working together across borders. A good example of this is a smart office platform developed and deployed across John Keells as well as other customers across the region. It’s said that necessity is the mother of invention and 2022 has pushed us to think in new ways and created new vistas for us through many co-innovation initiatives with our customers.
What surprised you the most about the ongoing crisis, from an operational point of view?
There certainly were a lot of challenges. Predicting who would be available and at what time was unpredictable due to the fuel/energy crisis. Not all problems can be fixed remotely. Running tech for the group and keeping lights on for customers who have invested in us was all about being able to deliver on our commitments, 24×7.
It was all about ensuring that there was always someone ready to service customers and keep operations running. Before we encounter a problem, having a contingency plan ready for everything was the most challenging operational obstacle we had to manage.