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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

  • Exports of $30 Mil

  • Total Employed in PASHA members approx 4000-5000

Global Facts

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 budgets.

  • 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

  • Israel's high-tech products export grew by 146% between 1990 and 1997.

  • In 1999 the software exports were worth USD 2 billion and software sales reached USD 3 billion.

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.

Present scenario

Results from PITB Survey of 142 IT Institutions

  • Total Enrollment 1999: 24,325

  • Short Courses: 11,378

  • BCS: 9,102

  • MCS: 3,845

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 domestic market.

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 letters.

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 overseas employment.

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 hour.

Where are these resources going to be employed.

Export of Skilled Manpower only possible if equipped with 2 years plus experience.

We need to take the following steps to boost our domestic software exports:

  • Enhance the local / domestic market by concentrating on the e-Government project and other computerization projects of the Public Sector.

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 the organization.

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 information.

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.