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Cover Story

By Zurain Imam
May 29 - June 04, 2000

The potential is enormous and growth is exponential

Many industry leaders believe that the Information Technology (IT) industry in Pakistan needs to be evaluated critically. The local industry, if given an opportunity, can grow exponentially. The potential can be gauged by examining the need for applied software in Pakistan's core industries, assembly of personal computers and other accessories.

Among such industry leaders is Mohsin Iqbal, country manager Intel Pakistan. who thinks that the local industry, if given an opportunity, can grow exponentially. Iqbal believes that if right impetus are provided, it would give a new dimension to Pakistan IT Industry. "I think Pakistan can become a viable IT center with a big wave structure based on strategy," Iqbal said. "There is so much more potential that mostly revolves around applied software for the Pakistan's core industries. There are no assembly lines for personal computers in this country, for example. That is a huge potential given the English speaking skilled labour available," Iqbal added.

The Information Technology Industry

(In Pakistan the Industry focuses on Applied Software Exports)

Hardware Software
I Systems (PC) Applied Software
Desktops Related Imports and Exports
Notebooks Browsers, E-mail Software
Servers Other content eg: Telebiz Music
II Networking Products Services
Printing Sharing Internet Related Services:
Eg: Dialpad
III Information Appliances Amazon.com
Set Top Boxes Call Centers
Canned Box: Point E-Mails
IV Auxiliary devices Web Hosting Firms
Monitors InfoEntertainment
Keyboards Telecom


Intel got an opportunity to test Iqbal's premise when Intel's Director of South East Asia, Avtar Saini visited Pakistan for the first time to estimate opportunities for growth in this region. Saini felt that for the restructuring or building of Pakistan's IT sector, Intel and other companies had to forge together and attempt to change the mindset of the Pakistani government and make it more aware of the myriad opportunities other than the import and export of applied software.

"In some ways a lot of the expertise in what to do lies within the sector and the university systems," Saini said. "What the government needs to do is increase the industry and let it flourish. It needs to encourage the increase of the engineering population by way of education. It has to play more of a catalyst role. The government cannot be seen as the creator of the industry but as its nurturer. The media also needs to play a catalyst role by disseminating information in technological advances."

Pakistan is a nation where stocks are governed by the state of the Hubco power plant, among other variables. It is also a country where no IT company is listed on the stock exchanges. Is it feasible to change the mindset of such a communication unenlightened populace? "What really changes the mindset is when you introduce a restructuring of the IT Industry. Through this, the public at large will begin to see what is being valued around the world. This part of the world for example wanted to play a major role in the industrial revolution but it could not place the capital involved to make it a player. To put a steel plant one needed iron ore and a huge investment in the power infrastructure.

The investment level when it comes to the IT is relatively lower than the other capital intensive industries such as automotive plants. As far as the information super highway and Internet is concerned, countries like Pakistan needed to provide access on and off the highway. "One needs to get more people on the highway and that can be done," Saini said. "There is definitely encouraging talk emanating from the government and there is definitely a lot of motivation to increase access as there is a substantial monetary value and remuneration involved."

Intel opened its offices in Pakistan two and a half years ago in July 1997 and has seen a 60 per cent growth rate in Internet usage during this period, including a forty per cent rise in the last three months. Microsoft opened its offices in this country March 6, 2000 after seven months of heated deliberation. Nortel merely sent a press release on March 1, 2000 informing the industry of its plans to lend Pakistan Telecommunication Company Limited (PTCL) five million dollars worth of telecommunication services. Why so much hesitancy on the part of North American based IT companies to establish and expand presence in this country?

"It is still a small market in Pakistan but the growth rate is very encouraging. Over 60 per cent," Saini confirmed. The base is still small but growth is phenomenal. As it catches critical mass you will see a lot more interest. Market size is critical. All those businesses would come to Pakistan when it makes financial sense. Today in this market where there is so much globalization, companies are moving rather quickly. Across the globe there is no distinction. Internet connectivity is there and there is more time for size to grow so that more companies will want to invest their resources," he added.

If one was to speculate why many US companies make lengthy deliberations before coming to Pakistan, one could conclude that often it is because companies analyze the size of growth to assess their return on investment.

From Intel's perspective, the local IT industry has the knowledge of what steps to take and given a couple of years the market size would be such that one would notice much more interest from companies. Pakistan, despite its late entry into the field has already become an attractive proposition for Intel. "Intel is already attracted. We are here," Saini said. "We were one of the first ones to invite ourselves and come here. We have made investments in this country. We will play our role. Our role will be to provide the information, provide the means to use and sell our products here. And when it comes to providing our latest products we don't distinguish. When the product is launched in the US we also make it available in Pakistan as well.

Saini discussed the late advent of Pakistan's growth in the IT Industry and explained that India, Bangladesh and Sri Lanka were Pakistan's main competitors in the South East Asian region with India's Satyam and TCS already on Nasdaq and on Fortune 100 respectively. However he offered strategies to combat the lag and allow Pakistan to register as a vital IT center. "Pakistan has lagged behind, thus allowing India to dominate the influx of leading IT companies in the region because of its late entry into the information industry." Saini said. Pakistan's NetSol only very recently appeared on NASDAQ. "Hindustan Computer has been around close to twenty years," Saini explained adding to the list of Indian companies who have been active in the IT industry during the last two decades. "Wipro has been around a long time and have been actively working with companies outside the region. "

The IT industry growth is all about networking and forging relationships. "It should be about when two partners feel comfortable giving work to each other," Saini explained. "The companies in Pakistan as well as the workforce that has gone from here." This might include Pakistanis hired by Intel and Microsoft in the US who ought to network together. In addition the Pakistani Government should create a National Information Technology Council comprising of senior executives of internationally minded institutions. The Council should be given the mandate to develop a precise, well-founded and creative view of tomorrow's opportunities.

Pakistani expatriates may also be invited to advise and bring with them contacts and new relationships. The Council might also invite other companies and nations to look at the infrastructure and view Pakistan's possibilities. Essentially it is about breaking the ice and getting going on with business.

Saini reiterated Iqbal's feelings and said that one of the positives that Pakistan had to offer was an English speaking skilled workforce. "What the government needs to do is increase engineering aptitudes and degrees. It needs to increase its base of engineering resource availability.

It has to provide a good environment for companies to flourish by way of incentives. It also has to work on infrastructure. Having done that there is no reason to believe why Pakistan cannot have a vital and viable Information Technology industry."

Intel would help to forge a huge restructuring based on certain strategies. From Intel's perspective their strategies are to provide the information and to provide the products, while concurrently merging with partners or building alliances. For example they will work with businesses that provide Internet services. One such company that Intel is closely working in Pakistan is Cybernet.

As of March 2000 there was a 55-60 per cent growth in Internet usage within last three months. ISPs such as Cybernet have been inundated with a surfeit of users with a subsequent dire need for the development of new ISPs. Other strategies for Intel include training and working with the industry here as a complete solution provider rather than merely as a computer department. If a banking house, for example wanted a solution to banking it wouldn't merely want to buy a computer and make a transaction it would want a complete solution that would bring it to the next level of computing.

Saini said that Intel had made investments for networking in the last couple of months. "We have products in networking that will help networking in a big way and we are planning to grow. We are seeing a phenomenal growth rate," Saini said.

Saini elaborated on the intricacies and reach of networking. "In E-commerce when a company goes on the Internet they take their brochures, scan them, and put it on the net. The next thing they do is when they take orders on the net. Step three is when they make their sites and their transactions more customer-centered, catering services to customers. In Pakistan most companies are in phase one and two but in time they will reach phase three.

Saini feels that rural Pakistan can also reap the far-reaching benefits of IT technology? "To give a perspective from this region. We fail to see that the secondary or tertiary cities do not want or cannot afford technology. It is not true that they do not want these dual benefits," Saini said. "There is a fair amount of agricultural wealth there. There is definitely a desire for young people to go into computing. And it is more about awareness and reach. Computing can be used very effectively in education.

Schools could provide content and Internet access. Even households with a telephone line could have Internet access. More importantly as data goes over the wireless, Internet access can definitely be made available in these rural areas. It is premature to talk about it, but it will happen."

Intel Pakistan has already made plans to cast its web into 25 Pakistani cities with work beginning in the NFWP region in April 2000. If a developing nation like Pakistan, that stands at many crossroads, does not adopt a structured approach for the development of the Information Technology Industry, then it will find itself at the mercy of more farsighted nations from not merely the West but also the East. It is imperative that it develop an IT Industry and take a broader perspective. Says Iqbal, "If we are serious about making any "real" progress then we have no choice but to have a well articulated view about tomorrow's opportunities and challenges."