Software exports and its challenges
We also need to ask ourselves as
to the validity all of the export targets we are setting for the software exports
By Salim Ghauri, Netsol, International
Jan 15 - 21, 2001
Pakistan and all of its population are engulfed by the euphoria of
Information Technology. The Government on its part is considering it as the solution of
all problems whereas the rest of the countries population including the younger generation
is considering as the saviour for the coming times. The question now is that "Is it
so, and if it is then are we going about it the right way".
Facts about Pakistan
The following figures of the Information and Communications Technology
(ICT) state all the spending on computer and telecommunications products and services,
office equipment, salaries, capital depreciation and the internal portion of ICT spending
The total global spending on ICT totalled USD 1.8 trillion in 1997,
according to a report by the International Data Corporation (IDC).
This figure accounted for 6 percent of the global GDP.
This figure has jumped to USD 2.1 trillion in 1999 and is expected to
surpass USD 3 trillion by 2003.
55 of the largest ICT spending countries account for 98 per cent of
all ICT spending.
North America leads the pack with USD 796 billion spent last year.
The above figures distinctly indicate the level of investment being put
into the infrastructure by the companies' worldwide. European expenditure is low in this
regard but is expected to grow considerably in the future. The figures depict that the
potential is high therefore all we need to do now is to jump in with the right weapons to
avail these opportunities.
Consider some of the countries that have used the software exports to
their advantage and boosted their exports tremendously.
Israel IT industry
Indian IT industry
An annual revenue of USD 5.7 billion during 1999-2000, according to
the annual industry survey released on 3 July 2000 by the National Association of Software
and Service Companies (NASSCOM).
It has shown a growth rate of over 34% over the past year.
India experienced a 48% growth in exports while the domestic Industry
at 26%. Their Industry is expected to cross over USD 8 billion by year 2000.
In 1995 Software exports from India accounted for only 2.5 % of total
exports, in 1999-2000 they account for 10% of the total exports.
Out of Top 300 companies more than 170 are ISO 9001 certified.
In the CMM category out of 23 companies in the world having SEI CMM
level 5, fifteen are located in India.
Their target is USD 87 billion by 2008. The number of software
exporter companies has increased to 1250 companies.
Results from PITB Survey of 142 IT Institutions
Only producing more and more Software Engineers in Educational
Institutes will not increase software export revenue in the short term. The only way of
enhancing our ability to increase our export revenue is by increasing the size of our
India portrays a classic example in this regard:
Out of the total revenue of USD 5.7 billion, the Indian domestic
software market fetched a total of USD 1.7 billion.
This is almost 25% of the Total Revenue
It is time to aggressively promote automation in public and private
sector. Motorways and Airports have been constructed but the very foundation of our
progress has been neglected due to lack of a proper IT infrastructure. No matter where you
look, from banks to government departments, computers are being used for only typing
With increased opportunities for local development work, hundreds of
additional software engineers will be employed and acquire experience on the relevant
technology, thus being available to develop export oriented software and be eligible for
In IT, revenue is directly proportional to the number of people
employed. Currently the IT Industry employ's about 4-5 thousand people countrywide. The
number of people employed in IT has to be increased substantially if we want our revenue
to reach anywhere near our expected level of few hundred million dollars.
Most of these graduates will lack the pre-requisite skills due to flaws
in the existing education system. The existing education system needs to be strengthened
and also work to acquire a qualified faculty. Opening new Institutes is not the solution,
it is ensuring that the existing institutes provide quality education is the need of the
Where are these resources going to be employed.
Export of Skilled Manpower only possible if equipped with 2 years plus
We need to take the following steps to boost our domestic software
It is imperative for the Government that at no level it should compete
with the private sector. At a time when the entire IT sector in Pakistan is in the
embryonic stage it would be discouraging for the private sector if it had to compete with
the government of Pakistan itself.
Tough monetary criterion should be eliminated in the bidding process of
the government projects and emphasis should be placed on the manpower and the skill set of
Government projects should be provided to organizations with their
development centres in Pakistan. This would allow International agencies to participate in
contracts and at the same time invest in Pakistan as well as provide training and
experience to a greater number of IT persons.
The taxation has to be revised for the domestic software projects. It
has to be emphasized that the export business and the export of manpower will only happen
if we have a strong domestic market that can train people.
Missions abroad should be used for marketing the local software houses.
PASHA members should be listed there and a small space should be provided for their
The Software Export Board should strengthen and work in liaison with
PASHA so that the pulse of the industry is known to the Government.
We also need to ask ourselves as to the validity all of the export targets we are
setting for the software exports. The potential is huge no doubt, but the steps taken
today will not bear fruit so quickly. We have mobilized our workforce and are training
them with the pre-requisite skill set. It will take more than a year to get exponential
growth. Initially I feel the exports will increase but not exponentially. We all will have
to work very hard and the Government has to work hand in hand with the PASHA members to
get the facilities and priorities to ensure success and only then after a few years we
will reach a level where the growth will be exponential.