Tharaka Hettihamu, a product owner at Colombo-based software development startup Ifonix, was in the process of hiring for specialized developer roles at his company in 2022 when a devastating economic crisis hit Sri Lanka. As he browsed through the applications, he noticed a trend: Most candidates demanded that salaries be paid in foreign currencies.

These applicants were from Sri Lanka and were applying for a role at a local company, but they wanted to be paid in U.S. dollars, euros, or pounds sterling. “We hadn’t stated anywhere that we would pay them in foreign currencies because we couldn’t; we are a Sri Lanka-incorporated company,” Hettihamu told Rest of World.

He soon realized that getting paid in foreign currencies or in Sri Lankan rupees adjusted to these currencies was a matter of survival for many professionals at the time. The local rupee had tumbled to record lows — declining almost 45% against the dollar between February and May 2022. “Living costs were so high that they had no choice,” Hettihamu said. “Most people were just using that moment to try to leverage whatever they could and get the highest possible salary.”

A year on, even as the rupee has stabilized, the trend of Sri Lankan tech professionals preferring salaries in or pegged to dollars and euros has continued. In fact, it has become so widespread that entrepreneurs told Rest of World they were struggling to afford quality talent and had to come up with workarounds such as offering travel allowances, stock options, and upskilling staff to fill up roles. Some startups are even hiring in other countries because they feel they can get better talent for the amount they are being asked to pay by Sri Lankan techies.

“Startups have a hard time attracting talent to begin with because [larger] IT companies offer higher salaries,” Bernard Arulanandam, who works with Sri Lankan startups and IT companies in an advisory role, told Rest of World. “[Now] most rupee-funded startups have been struggling since the currency devalued.”

According to Pegged Place to Work, a database for IT professionals looking for jobs in Sri Lanka, 192 tech companies operating in the country now fully or partially pay salaries adjusted to foreign currencies. There are approximately 300 IT companies in the country.

The Colombo-based Calcey Technologies was one of the first companies to start paying salaries adjusted to U.S. dollars last year. “I, as a business owner, made a strategic business decision, which is to save the company,” Mangala Karunaratne, founder and CEO, told Rest of World. “Does that hurt the local startups from retaining people? Probably, yes. [But] we managed to save some of our most valuable assets, which [are] people.”

Software outsourcing companies that earned revenue in U.S. dollars, euros, and Australian dollars were the first to allow their staff to peg their salaries to foreign currencies during Sri Lanka’s economic crisis, Jiffry Zulfer, founder and CEO of digital mobility startup PickMe, told Rest of World. “Because they wanted to retain their staff, they started offering them a pegged salary,” he said. “Within a day, we had the Sri Lankan rupee devalued two times. It went from 200 rupees per dollar to 400 rupees. This created a lot of issues for a lot of people because they were paid in rupees.”

Shay Anthony, co-founder of collaborative email service startup Zapmail, which earns revenue in Sri Lankan rupees, has been struggling to match “dollar-based salaries in the market for both existing and new hires,” she told Rest of World.

“Instead of compensating with [just] cash, we allocate shares,” Anthony said. “We obviously try our best to kind of match the market but also it’s very difficult from the point of view of a startup because [we have] limited funding.”

192The number of tech companies that fully or partially pay salaries adjusted to foreign currencies.

Some startups have been upskilling workers, or hiring staff that is “slightly adjacent” to what they’re looking for. “A marketing person, even if they’re not an absolute digital marketing specialist, [companies] might take them in, spend a little bit of time to train them up on the job, and then you can get them for a lower price,” Arulanandam said.

Other tech startups have begun hiring remote workers — within or outside Sri Lanka — to keep costs in check.

Shenal Vanderwall, who launched his engagement solutions company, Meeedly, in 2022, told Rest of World he was forced to hire remote workers in the country. Early-stage startups like his rely on fresh graduates, he said, “and what happened with this inflation, with the U.S. dollar-pegged salaries, we couldn’t even get that workforce.” Vanderwall now has staff across Sri Lanka, though his company is headquartered in Colombo.

Hettihamu of Ifonix, meanwhile, has started hiring workers in Peru.

“We found that paying $1,000 in Peru for a high-end software developer would get us much further,” he said. “It didn’t make sense to hire local talent for the same cost because it would take us twice as much time [to complete tasks]. Whereas the people we are hiring [from Peru] are already specialized in what we need.”