‘Integrated approach needed for rapid IT growth in Pakistan,’ Acting MD PSEB
BR Research: How will you categorise the local IT industry into different segments?
Raashid Bashir Mazari: Pakistan’s IT industry can be categorised into two basic areas. One is the software development and the other is the IT-enabled Services and Business Process Outsourcing. These broad categories can then be further broken down into areas like IT product development, software development and services, mobile applications, gaming and animation. The IT enabled services and BPO include call center operations, telesales, medical transcription, etc. Other areas are system integration, consulting and embedded systems.
BRR: What is the current state of competition among major IT-BPO hubs in the region? Where does Pakistan stand?
RBM: The outsourcing industry continues to grow despite global economic down turn and the global revenues are estimated to touch $479.3 billion by 2016 from the current $370 billion.
The outsourcing business, despite backlash in major outsourcing destinations such as the US, would continue to follow an upward trajectory because of the obvious benefits that emanate from the necessity of obtaining the highest possible quality at the lowest possible cost and due to intensifying global competition as the world becomes even smaller due to advanced telecommunication networks and collaboration solutions that allow companies to search the globe for the most optimum solutions and to outsource work to entities half a world away.
The competition for global outsourcing pie is intense with India, Ireland, Philippines, South Africa, Sri Lanka, Russia, China and several Latin American countries. Pakistan offers generous incentives to its IT industry in the form of significant tax breaks, software technology parks and other forms of costly stimulus packages, all intended to ensure that the local IT Industry develops and, therefore, plays its part in enhancing the efficiency of both the public and private sectors’ entities in Pakistan and also contribute to the economy through employment generation and foreign exchange earnings.
Pakistan is consistently ranked amongst the top destinations for ICT outsourcing. Despite the image problems that Pakistan faces due to negative publicity, the IT companies have done reasonably well in soliciting business from main markets such as North America. Currently, over 1,800 companies are registered with the PSEB. These companies have long standing experience in providing services, from low end BPO services to high end software development. Pakistani IT companies count world’s largest companies among their regular clients.
At the APICTA Awards, Pakistani IT companies have constantly outperformed the competition, year after year. Several Pakistani IT companies are ranked amongst the fastest growing companies in Pakistan. IT industry has continued to show positive growth trends despite world-wide slump and is perhaps the only industry in Pakistan to escape the economic downturn so prevalent across the globe. The presence of international IT companies in Pakistan, such as IBM, Intel and CiSCO is a vote of confidence in Pakistan’s potential as an IT destination.
BRR: How does the PSEB facilitate the local IT industry? What particular projects or programmers have had a meaningful impact in fulfilling the PSEB’s mandate?
RBM: PSEB is an apex body of the Government of Pakistan with the mandate of promoting Pakistan IT Industry in local and international markets. PSEB has been facilitating the IT industry through a series of projects in infrastructure development, human/intellectual capital development, company capability development, international marketing and promotion of innovation and technologies. Over the years, PSEB has helped 110 IT companies achieve ISO-9000 certification and extended significant financial support to 25 selected companies to achieve the all-important CMMi certification. These certifications are virtually mandatory when soliciting business from international customers.
PSEB plays an important role in projecting Pakistan as a viable IT destination and regularly subsidises the participation of IT companies in both local and international exhibitions, thereby providing them with a viable platform to reach out to potential international and local clients. In 2011, PSEB took the initiative to develop the first ever Portal of the IT companies in Pakistan. The Portal is essentially a repository of the IT companies operating in Pakistan and hence a prospective local or international client can visit the website and browse through Pakistan-based companies that may be providing the required service.
PSEB has a number of additional projects under various stages of implementation. Other notable PSEB projects include Internship Phase III, Strategic Studies Project, strengthening of PSEB, Incubation Programme, and Internship Programme for the underserved areas of Pakistan. Information on these projects and other projects currently being implemented, is available on PSEB website at pseb.org.pk
BRR: How does establishing IT Parks across the country facilitate the industry’s growth?
RBM: IT companies require critical backup for all required services such as bandwidth and electricity, because they cannot afford to have downtime or else they risk losing their customers. The IT customers are finicky and it does not take much for them to take the business away to a company in another country. A Software Technology Park addresses all the unique, critical requirements of the IT industry by providing redundant backups for all necessary services, thereby ensuring that there is no interruption to the operations of an IT company.
The state-of-the-art STPs are subsidised and provide high quality accommodation, thus negating the issues that come with operating in a challenging environment fraught with load shedding and security. In a way, these parks provide peace of mind to the companies, thereby allowing them to focus on their businesses.
BRR: What international linkages does PSEB have? How does it facilitate the local IT-BPO companies in reaching out to external clientele?
RBM: PSEB subsidises the participation of IT companies in both local and international exhibitions, thereby providing them with a viable platform to reach out to potential international and local clients. The exhibitions, both local and international, are selected in consultation with the IT industry. PSEB-led international delegations, comprising of senior IT company representatives, have been helpful in enhancing co-operation between IT sectors of Pakistan and other countries. PSEB plans on visiting at least three countries this year with representation from thirty companies.
PSEB has also launched an IT portal, accessed at the URL ‘it.org.pk’. The portal is intended to bring all IT companies on one website. The portal is custom designed to ensure that companies have a viable opportunity to market themselves and their respective products and services through the portal. This portal, once fully populated, would be marketed online and hence is expected to be helpful in attracting business towards Pakistani IT companies in addition to improving Pakistan’s perception as a viable, feasible destination for IT outsourcing.
BRR: At the turn of the millennium Pakistan and India shared somewhat similar factor advantages as a potential destination for Western IT-BPO business. Today, India’s IT exports are around $60 billion, while Pakistan’s IT exports are yet to (officially) cross the billion dollar mark. What worked for India that could not work for Pakistan?
RBM: Although Pakistan’s IT exports are eclipsed by its much larger neighbour, the Pakistani IT industry has done well in attracting overseas clients and earning accolades along the way. Pakistani companies regularly win awards in international competitions and count fortune 500 companies among its regular clients. The government, as explained earlier, is doing its best to support the IT sector and to provide a competitive advantage to the industry over its international competitors. Over the past two years, despite global economic crisis and less than stellar economic and security environment in Pakistan, the IT industry was among the handful of sectors in Pakistan’s economy that actually showed respectable growth.
There are no doubts that more work needs to be done to bolster the local IT industry. An integrated approach and more effective private and public sector partnerships are needed to ensure rapid, sustainable growth for the local IT industry of Pakistan.
BRR: The IT & ITES-related export proceeds recorded by the SBP were less than $200 million in FY10, which seem really low. In your opinion, what is the more precise valuation of the industry’s size and export proceeds?
RBM: The size of the exports varies as per the methodology adopted; therefore, the calculations for any country’s IT exports vary by a wide margin. It is pertinent to note that it is not possible to have all the exports accounted for, and therefore, the PSEB figure of $2.8 billion as the industry’s size, is based on our regular interaction with the IT Industry as well as assessment from independent consultants. The SBP figures are obviously lower because it is dependent on the exports that were actually reported to the SBP and were, in effect, categorised as IT exports.
Assessing the size of the exports of IT products and services would always be tricky as it pertains to the delivery of services which is hard to measure as there are no physical products to account for. We can take comfort in the fact that although more needs to be done, our IT industry has done reasonably well despite severe global down turn in key destinations such as the US and the European markets. Hence, it is safe to suggest that the future of Pakistan’s IT industry is of sustainable long-run growth.