By M.K. AREOLA
Feb 17 - 22, 1998
The reliance on the software industry, which has taken over from other traditional export items just in over two years period, as may not continue to enjoy the same status for long unless the government pay attention to its local development.
Though is has become to be regarded as one of the avenues for foreign exchage there have been a noticeable infrease in the gap between the technology available in the local market and the current trends in the international market.
Though the software industry has been there as long as the computer itself in the country, its presence was not recognised until few years ago when few of them got together under the umbrella of the government-sponsored association.
Prior to that, most of the foreign trained developers operating in the country preferred to keep a low profile until about three years ago when the government, realising the export potentials in the field brought them together under one umbrella.
Computer technology, it is said, has to be localised completely, that is if its utilisation is taken seriously and being in step with the advanced nations, there are two aspects of the technology which is the hardware, which involves the mechanical, electrical and electronic components and the second aspect is the software which is the programme that is being run on the hardware.
Likewise there are two aspects to the software which include the customised software, where a particular programme is designed for individual use only and package or 'commercial' software which indicates the programmes that are budled together in a PC for all users.
Customising software, which is where most of the local software houses generate their income from is , according to the president of Computer Society of Pakistan while talking to PAGE last year, does not require more than a brain and the ability to use it to develop.
For the local market, where the software houses begin from , major products that is in demand is mostly financial programmes for banks and other financial institutions followed by range of other applications for the production and manufacturing industry, the power and energy, communication, humand resources, quality control, general accounting, point of sales, education and skills development leasing as well as other finance related matters, there are other specialised software for pharmaceutical, textile, cement, insurance and transport idustries for both local and international market.
Most of the software houses, though established in the 80s, came to limelight after the formation of Pakistan Software Export Board about two years ago and prospective exporters were asked to register.
During the first year of the board less than a hundred companies registered with the board while the number increased to 116 in 1996 and about 200 last year.
Likewise, the Pakistan Software Houses Association which started with less than five members in the first year of its formation has more than 150 members by the end of last year , 18 out of which are presently working on various international contracts.
Among the players, Systems Private Limited is regarded as the first software house to be established in the country. Established in Lahore in 1977, by a group of professionals led by Aezaz Hussain, the current president of PASHA.
The company is regarded as the market leader in the country at present, its major specialty has been the ability to deliver complete turnkey and customized computer solutions ranging from project conception, system study and design.
Sidat Hyder Morshed Associate Private Limited represents the worldwwide organisation, Arthur Anderson in Pakistan and the relationship has enable the local company to tap its principal's resources in over 72 countries.
The company has been in computer related and financial as well as management consultancy since 1986, and has designed and developed various customised software and products both for local and foreign clients.
Some of its services and clients include the World Bank, the development of accounting systems, general ledger and procedures for Sandoz, Merck Sharp & Dohme, Orix Leasing, Oxford University Press, design and development of a foreign exchange application system for a LAB-based PC for the International Finance Investment and Commerce Bank, designing and development of Windows-based client server MIS application for the training region of the International Telecommunication Union for PTC.
Established in 1983, Noble Computer Services offers full-scale system and development of solutions and specialises in customised software development on AS/400, NT, Windows platform, NCS software products, implementation services as well as training and education services for BPCS, NCS and Microsoft products.
ACE-Advanced Information Management Services or ACE-AIMS belongs to a multidisciplinary firm of professional consulting engineers and is specialised among other services in designing and developing software for database management.
Recently the company designed a system for maximum flexibility in human resource management.
'HR-2000' which is a locally developed, international level software for automizing the HR department is a comprehensive Human Resource Management system geared towards helping proactive HR managers achieve organizational goals with speed, accuracy and objectivity.
The system is based on the translation of corporate culture, policies and methodologies for succession planning, carreer development, performance appraisal, competencies, and the overall tracking of each movement of employees.
ACE-AIMS is among the few companies in the sector to have so far responded to the government's call to establish a computer education institute by establishing an education services department.
The company is currently operating in Saudi Arabia, USA, U.K., Iran, Malaysia, Indonesia and Nigeria.
Crescent Software Products Private Limited is a member of Crescent Group, is one of the largest software export companies in the country, developing software and related services in the domestic as well as in the international market
KPMG Peat Marwick Informationa Technology is a member firm of the worldwide KPMG organisation with over 800 offices in 120 countries with annual turn over of over six billion.
Paksoft, another major player in the local software market, is a joint-venture company set up by five well known software houses in the country which include Infosys, Noble Computer, Sidat Hyder Morshed Associates, Globalsoft and KPMG.
Metrosoft, another software exporter is a subsidiary of Expert Systems Private Limited which has been in the local software market since 1989.
ZRG International is one of the foreign based software houses with office here in Pakistan, it opened its first foreign office in Pakistan in 1991 and offers a variety of ready-made products to the financial institutions.
CompSoft International Private Limited is a subsidiary of Forbes Computer Technology, based in California, it provides a full line of hardware, software applications and specialized technical services to Fortune 500 to 2000 companies.
XIBERCOM is the pioneer in introducing Web designing in Pakistan, a brainchhild of Dr. Altamash Kamal, the company is involved in a number of web related services which include providing and authoring web space, customised domain names, personalised electronic mail addresses and communication consultations.
CroXx Linc International, a sister company of CroXx Linc Mines has been in the local software market since 1993 and is incolve is software designing, consultancy, development and networking, network project management, game design and support service.
According to estimates, 100% of the projects carried out in the industry during 1996, the first year of software as industry in the country, were carried out for the local market and during the second year in 1997, about 97% of the projects valued over seven million dollars were exported.
According to the president of PASHA, exports for 1998 could be as high as 99% of the projects carried out within the country which is expected to be about 20 million dollars
The demand in the software market is such a huge that there is little or no competition at all as claimed by Aezaz Hussain, PASHA's president but the point where there is competition between Pakistan and India, another giant in the software exports in the region, is the export of manpower.
It is claimed that India produces 55,000 software engineers a year while while Pakistan produces less than 2,000 software engineers with about 40% growth
Sources in the market however put the software engineers being produced in Pakistan as an exportable skill to under 500 and not 2,000 while that of India, too, would be very much lesser than claimed.
According to market sources, the Indian market grew from 10 million dollars in 1986 to over $1.2 billion in the end of 1996 while its export alone is reported to have grown by 64% during 1995-96 alone and is expected to reach five billion dollars by the year 2,000.
Likewise, towards the end of 1996, there were over 700 companies involved in software industry in India with total employment of over 140,000 out of which 100,000 were software developers.
On the other hand it is surprising to note that there is no any source of data for Pakistan's software industry, both PASHA and PSEB that claim to be pioneers of the cause of software industry could not come up with any figure when contacted by PAGE and the only option where figures on exports could be collected, which is the State Bank of Pakistan does not have a proper record on the software industry.
According to PASHA's president, substantial amount of the revenues being generated in the international market at present is being diverted back on marketing in those countries and as such there is little left to be brought home.
On the contrary, a sales executive from another software house, who does not wish to be named claimed that these houses prefer not to divulge their figures for fear of taxes though they enjoy various tax exemptions.
The level of competition within the local industry, however, is said to base on two factors and that is the standard of quality and the speed with which a company can deliver.
While Aezaz Hussain, who is also a chief executive of one of the largest software exporters in the country, - Systems Limited, maintains that Pakistan "can meet any sort of quality standard" in the world market, Syed Asim Zafar, a business development executive for another software exporter said that the introduction of the 'brief case exporters' to the international market has spoiled Pakistan's image because of the "sub-standard quality they produce".
Babar Saeed, the vice-president of ACE-AIMS, however is of the opinion that it is the level of our ability that is keeping us back in the international market. According to him "we are still lagging behind in software export, in its real concept."
Realising the importance of exports in the industry, the Export Promotion Bureau presented a proposal to the federal government to form a board which will constitute among its members practitioners from the software industry with main objective of encouraging software exports from the country.
Headed by a managing director, who is a software developer, the board has as its members federal secretaries of the ministries of commerce, communications, education, environment and urban affairs, finance, interior, science and technology, board of investment.
The president of the Pakistan Software Houses Association (PASHA), the head of PTCL, the chairman of central board of revenue and the vice chairman of Export Promotion Bureau are all members of the board.
The first task of the board was to approve a policy framework and incentives package for the industry which include both fiscal and corporate incentives.
It is said that among the fiscal incentive recommended for the industry is the exemption of duties, tax, surcharges and leviable octroi on all computers and related hardware, peripherals including communication hardware and software, telemetric infrastructure and software development tools to be used excusively for software exports.
Other incentives include the exemption of corporate tax for a period of seven years during the company's ten years of operations on export earnings from software related services.
Financial assistance has been promised to the Software houses both in the forms of loan through YIP's, SBFC, nationalised banks and other financial institutions as well as equity support from government funds for the purchase of computers, communications and the equipment.
International high speed data circuits have also been promised to the Software houses at the rates that will be highly competitive to rates offered by other telecom companies in the region, this is important if the rates of these software houses are to competitive in the international market.
And most importantly is the permission to the software houses to re-export their capital goods without any levies.
And the corporate incentives promised to the houses is the permission to foreign investors of up to hundred per cent equity in the sector.
It is said that support from the Board has not only brought these companies together, it has also provide an opportunity for a smaller firms in smaller cities to introduce themselves to the international market by participating in international exhibitions.
By encouraging the members to participate in international shows, PSEB has focused the attention of the sector on the vast potential offered by the international market
In collaboration with the University Grants Commission (UGC), PSEB launched what it called the 'Action Learning Centers of Excellence (ALCoE) two years ago by inviting proposals from the private sector.
The programme is a frame work which allows a private sector party to join hands with existing universities of repute to create high quality institutions.
Following the invitation, more than 200 institutions were reported to have showed an interest in setting up this institute which includes international giants like IBM, Microsoft, Oracle and other industrial groups like TCS, Jaffer Brothers and Shaheen Foudation.
Some of the universities which were selected for the programme at that time include the Institute of Business Administration, IBA Karachi, Sir Syed University and Technology, Karachi, NED University of Engineering and Technology, Karachi, Mehran University of Engineering and Technology, Jamshoro.
Others include National University of Science and Technology, Rawalpindi, University of Engineering and Technology, Taxila and Arid Agriculture University, Rawalpindi.
The programme which include a one-year curriculum, which was developed by the PSEB and was approved the UGC, emphasis more on hand-on-training is yet to pick up at the speed it was conceived.
Another objective of PSEB is to develop and execute marketing plan to help local software houses , as the companies dealing in software are known, reach out to potential clients abroad, at the same time PSEB will attract and facilitate foreign software firms to establish their software development facilities in the country and facilitating international trade fair participation.
The board will also plan, develop and execute the software technology park scheme to provide office space, communications and electric power facilities to companies and firms willing to establish in the park.
SOTWARE TECHNOLOGY PARK (STP)
The first phase of this was the acquisition of the 51-acre piece of land located near the National Institute of Health (NIH) in Islamabad and a renowned Singapore based company, Promet Engineering was selected for partnership with PSEB for building and managing the park on Built Own Operate (BOO) basis..
The government issued a letter of intent (LOI) to the company after the latter had pledged an investment of over $130 million in the project.
Later the agreement between the company and Pakistan Software Export Board went sour because of what some called the indifferent attitude of the PSEB to the demand of the company which included the active participation of the local software houses in the project.
According to a source from one of the software houses who are being runned independently without having registered with PSEB "the Singapore company backed out because of the Board's attitude that was not encouraging".
Though it can be said that the PSEB's interest in the software industry led to the coming together of local developers from all over the country on one platform and under this umbrella they participated in various international exhibitions alongside their counterparts from India, Taiwan, Hong Kong, Malaysia as well as with United States and Germany, the next result of this participation is still to be seen.
One of the problems that discouraged the Singapore Company and subsequently led to its breakaway is also the locals who prefer to stay away from investing whatever little is available in the park.
And presently there is acute shortage of manpower in the sector. While most of the companies involved in the sector recognised this as a problem none of them have taken the innitiative of introducing a proper training programme.
The Software Park was said to be expecting the interest of multinationals like Microsoft which went to India in 1996 with a pledge to transfer its technology to schools.
First and foremost among the problems facing the local industry is the level of awareness among the local populace, and according to experts, unless something is done in this aspect, the gap will continue to widen due to the fact that most of the experts in the field at present are concentrating outside the country while the country is not producing enough substitutions.
According to one of the systems analysts in the city, all PASHA and PSEB who claimed to be struggling for the cause of IT in the country could do is to trade accusations among each other and not paying attention to the problems facing the nation.
It has been observed that the two always avoid sitting together and does not attend each other's functions talk less of meetings.
By the way of subsidizing the government spend more than 200,000 dollars on each COMDEX exhibition that software developers from the country attended, which causes the main tussle between the two as PASHA members accuse the other members of using the platform for their own self interest.
There is a need to encourage the smaller companies too to participate in the international exhibitions, to reach the projected figure we will certainly need more than five large companies that seem to dominate the scenario at present.
And most importantly, we will need more than six-monthly programmers to serve as professionals in the field and as Aezaz Hussain has rightly pointed out, if we are to address the issue effectively today, by establishing proper departments in the universities, it wwill take another four years to produce professionals.