Pakistani IT industry is finally wakening up

By Syed M. Aslam
Nov 13 - 19, 2000

Individual software developers have successfully put Pakistan on the global IT map winning world-class orders from some of the best-known blue-chip international companies. The collective growth of the IT industry and developing a true IT culture, however, still much remains a challenge for the present government which has accorded the deserved priority to the IT.

On the surface, Pakistan's IT prowess looks paradoxical- world-class software exports from a country reeling from a low education and even lower PC penetration levels. The time has come to create a true IT environment and culture at every level of the business and every segment of the society. It's time for the IT to come into the mainstream of the Pakistani society.

After years of slumber Pakistani IT industry is finally wakening up to the ground realities of the wired-world of today which has truly turned it into a global village where information travels at the speed of light to demolish all physical barriers. The realisation that Pakistan's IT prowess need not remain its best kept secret and that IT is the 'in thing which is there to stay' has changed the collective attitude of the people irrespective of their professions or stations in life.

Today, computer education institutes of all sizes and descriptions have mushroomed across the urban centres of the country including middle- and low-income localities. Students and professionals, irrespective of their chosen curriculum and trade, are becoming increasingly interested in learning or upgrading their IT skills to not be left out.


The government has announced a comprehensive IT policy, the salient features of which include duty-free imports of computer hardware and accessories, reduction or altogether removal of duties on software exports and tax incentives to IT institutions & faculty, drastic reduction in internet tariff for the ISPs and expanding internet connectivity to dozens of cities. It also included providing soft loans for the purchase of computer hardware for selected individuals and companies. However, an effective implementation of the policy seem to raise many concerns.

Talking to PAGE, Javed Naushahi of Computer Society of Pakistan, expressed concerns that the successful implementation of the IT policy depends on the availability of the back-end support- administrative, technical and implementation, in short the entire infrastructure. He said that while front-end support is readily available there a complete absence of back-end support, particularly the lack of project managers imperative for the successful implementation of the policy.

Despite the creation of the new IT division in the Ministry of Science and Technology the existing Telecom division seem to attract all the attention. Instead of providing the much needed support to promote the IT sector the old guards in the Telecom sector surrounding the earnest minister of Science and Technology are more interested to promote the Telecom sector, Naushahi lamented. He jokingly added that failure to address the issue on top priority basis would turn 'dot com' to 'dot bomb' for the country.

He also attributed low PC penetration primarily due to money constraints as the major detriment of the development of IT culture in the country. Putting the number of personal computers in the country between 1.5-1.6 million he blamed the low penetration on the high prices of hardware and said that measures should be taken to provide the PCs on soft term loans to the students of recognised academic institutions. Putting the e-mail accounts in the country at 1.2 million, internet connections at 250,000 and internet users at 800,000 the number of users surpass internet connections as a single connection is used by a multiple of users, Naushahi said that much remains to be done to expand the Internet base in the country.

Official figures, however, put the number of internet customers at just 21,000 and total number of internet users at 120,000 by March this year. It also predicted the increase in the number of internet customers to 50,000 during the last fiscal ended June 30 this year.

PC penetration, he said, needs telephone lines and it is imperative to double the number of telephone lines in the country which at present has less than 3 million active lines. Furthermore, the reluctance of the Pakistan Telecommunication Company Limited, the state-owned entity enjoying complete monopoly, to collaborate with the international carriers is also hampering the growth of the IT environment in the country.

A look at the PTCL financial report is more than enough to prove this. The PTCL revenues have been increasing in terms of rupees during last five years but it has remained stagnant in terms of dollars at $ 1 billion. Of this, the share of the international traffic- incoming calls from overseas is $ 400 million. Of the remaining $ 600 million, between $ 100-150 million comes from the outgoing overseas calls. The rest of the $ 450 million of the revenue comes from the domestic usage, only a negligent 2 per cent of which comes from the value-added services like 800 & 900 toll free services, internet, customer line identification facility etc., etc.

Compared to this, Naushahi added, 20-40 per cent revenue of PTCL's international counterparts comes from the value-added services and in many cases the voice and value-added services make up 50:50 ratio of many of PTCL's counterparts. Trends also show that unlike PTCL value-added share of the revenue of the international carriers is on a constant increase. If PTCL has chosen to collaborate with the international carriers it would had not only benefited from the transfer of the much needed technology which presently deprives it the revenues which in turn restricts it to invest to expand the network by installing additional lines necessary for the growth of the IT culture.

So what's stopping PTCL to expand the base of its value-added service to better its revenue? Naushahi blamed it on the small clique of some four dozen old guards in the Telecom sector hell bent to protect the vested interests. He said that without the change at the top PTCL level the things would not improve.

In addition, he also blamed a bad debt of Rs 7 billion, of which Rs 1 billion is listed as 'unrecoverable, nursed by the PTCL. It is imperative that PTCL should have to increase the share of its value-added revenue, improve its recovery and expand the number of telephone lines which would not be achieved unless the first two conditions are fulfilled.

Well informed sources said that the startling volume of software exports as estimated at $ 150 million, almost ten times than that given by the association of software exporters and accepted by the government, sources said that the exporters prefer to keep their funds outside the country due to a number of reasons including the loss of the credibility when the Nawaz government froze foreign currency accounts in May 1998.

Stressing the need of developing professional human resource and terming it the basic pre-requisite for the IT development he expressed concerns about the ongoing institutionalised white-collar crime by such responsible bodies as Skill Development Council and the Sindh Board of Technical Education. Expressing concerns at low content-level of courses he added that the SDC is offering the same course previously offered by it as Web Development now as e-Commerce to cash on the prevalent demand. The Sindh Board of Technical Education on the other hand is offering a similar business-to-business (B-2-B) course. If this is not institutionalised white-collar crime than what is it? Similarly, the courses offered by Allama Iqbal Open University through its distant leaning programmes through 50 centres across the country also inferior to those offered by other private institutions such as FAST.

He said that it's imperative to set up IT accreditation, certification and testing services to improve the curriculum to ensure that students are being provided the best education in their chosen area of IT training. He said that out of some 30,000 students enrolled in the country in the Bachelor of Computer Science (BCS) programme only 5,000 or just about 17 per cent are receiving the quality education. It is imperative that measures should be taken to ensure that the remaining 25,000 of these BCS students should be imparted as good than that imparted to their counterparts.

The similar is the case with some 150,000 students enrolled in IT certificate and diploma courses nationwide. Only 20 per cent of them are being imparted the quality training while the rest of the 80 per cent are receiving education which is not up to the mark explaining the reason why so many people are finding it hard to find a gainful employment despite having a certificate or a diploma. This is a great waste of human resource indeed which demands immediate accreditation, certification and testing services that thousands of IT institutions across the government, both public and private, are imparting training which is relevant, of quality and is what it says it is.

The former general secretary of Pakistan Software Houses Association, Khurram Rafiq, expressed concerns that not a paisa of the Rs 5 billion allocation announced in the IT policy for the development of the industry has yet been utilised. The only progress that has been made is the hiring of number of data and key-punch operators in the government departments.

Of the Rs 5 billion allocation Rs 3.5 billion is earmarked for education, Rs 550 million for computerisation of the government departments across the country while the rest of Rs 950 million will be used for infrastructure support and establishing offices in five cities across North America and an office in London as well as ensuring Pakistani participation at international IT exhibitions and fairs.

However, he said that the measures taken by the present government such as a drastic reduction in Internet tariff will encourage the development of the much needed IT culture by providing the relief to the end users.

As is, the government has slashed Internet bandwidth tariff from $ 360,000 to $ 35,000 per mega byte per second which is 10 per cent of that in India and Dubai. The federal minister of Science and Technology, Dr Atta ur Rehman last week said that a further reduction in internet bandwidth tariff is in the offing after a meeting with representative body of Internet Service Providers. He further added that the benefit of the reduction will be passed on to the internet users as internet charges will be further reduced by 10-15 per cent.

The minister also said that he don't intend to make internet bandwidth a major source of PTCL revenue but rather want to use it for the progress and development of the IT industry and culture in Pakistan. These are encouraging words indeed amidst concerns raised by Naushahi and supported by Khurram that PTCL has too much vested interests to use the internet as a major source of its revenue.

He said that true dot com culture has yet to take root in the country. Though there are many websites as well as a handful of dot com companies in Pakistan the true dot com culture where e-commerce is facilitated and selection and purchase of goods are offered remain almost negligible. One should not confuse internet websites with dot com culture as real dot com culture is basically e-commerce to facilitate on line purchase of services and goods a practice yet to take a root in the country.

The development of real dot com has many pre-requisites which are either missing altogether or have a very narrow base. For instance, the use of Automated Teller Machines (ATMs) still remain an alien concept for the majority of the population still preferring to carry out basic banking transactions in person. The low base of credit card use, which has become more a sign of status than a means of comfort, is another detrimental factor. In dot com culture transacting business on the line require credit card and the concept of plastic money has yet not taken a root. With such basics missing it is easy to see that e-business will hardly enjoy any mainstream prospects in the country. However, it could help the manufacturers, traders and exporters of scale in many ways.

A move in this direction has been taken by Export Promotion Bureau of the Government which has invited bids from manufacturers and exporters to display and sell their products on 220 shops of 'Virtual Internet Shopping Mall (VISM)'

So what could be the priorities to amidst problems of all dimensions mentioned above. Khurram said that software development has the ability to absorb large number of IT professionals by concentrating on developing the IT Division of the Ministry of Science and Technology instead of utilising its energy on the Telecom sector. He said that the Pakistan has some 35,000 software professionals of which some 6,000 are leaving the country annually. While the country is producing some 3,000 software professionals each year there is a net loss of 3,000 software professionals each year which poses a serious problem to the availability of quality professionals.

In comparison, India has some 600,000 software professionals of which about 275,000 are working in the export-oriented fields. It produces between 175,000-200,000 software professionals each year while another 75,000-100,000 professionals leave the country for better jobs in the other countries. Thus India is enjoying a net gain in the number of its software professionals annually sufficient enough to work in the local market as well as foreign markets both of which benefit its IT industry.


Despite many problems and issues seemingly detrimental for the growth the Pakistani IT future is bright due to many positive aspects. Number one, the all pervading importance has turned IT into an only option for the educated Pakistani, particularly the students. Ask a student what he would prefer to do and the chances are that it would have an IT link. The students of today seem more inclined to demand a PC along with an internet connection from their parents who are increasingly being convinced themselves that IT holds the key to the successful professional career. The IT institutions are coming up in every area and locality in the urban centres and so are the cyber cafes. These cafes are proving to be hits and it is not unusual to wait for hours for one's turn. The younger generation irrespective of its academic qualifications or curriculum is fascinated and seems not to miss a beat about the latest developments in the developed countries.

The www has become a symbol of knowledge, a benchmark of IT prowess and an 'in thing.' The sitting government looks serious to lend an all out support to develop the IT industry be it by abolishing duty on the import of hardware or accessories, financial incentives to software exporters, expanding the level of IT education, encouraging the internet use by cutting the tariff, linking more and more cities to the internet network, etc.

Despite challenges the future of IT has never looked better. It's time to take that much needed leap.