The conflict taking a heavy told on the softwae industryf Pakistan


By Syed M. Aslam
July 29 - Aug 04, 2002


The hot-worded war between Pakistan Software Houses Association (PASHA) and Ministry of Science and Technology (MoST), over the former's allegations of misappropriations of funds, conflict of interest and shadowy deals by the Pakistan Software Export Board (PSEB) and its demand for the removal of PSEB's hierarchy, is heading towards a legal battle.

According to a strongly-worded letter written by President of Pasha, Hamza Matin to the Federal Minister for Science and Technology, Dr Atta-ur-Rahman, PASHA is "left with no other choice but to seek justice from the higher courts of this country in the interest of all fairness and in our continued search to save the Software Industry of Pakistan from extinction.

"Some of the largest IT companies in Pakistan have either moved out or in the process of shutting down, despite allocation of billions from our scarce national savings to your Ministry in the name of promotion of Software exports. This is happening while our next-door neighbour continues to post a Compound Annual Growth Rate (CAGR) of over 30% for the Software Export Industry. The current situation of our industry is the result of flawed deployment of resources and its total mismanagement."

PAGE contacted Hamza Matin about the kind of legal recourse that PASHA intends to take and was told that it will be filing a case in the High Court next week. Asked if the conflict between PASHA and PSEB the two most important players associated with the software industry, the first engaged in development of the software and the second responsible for finding global markets for them is hurting the overall productivity and morale, Hamza said that the industry is doing good.

As stated in the article published in Issue No. 28 a meeting held in Islamabad between a delegation led by President of PASHA, Hamza Matin, and Minister of Science and Technology, Dr Atta-ur- Rahman, was unable to solve the conflict. In fact, it seems to have strengthened the resolve of the two parties to stick to their respective positions. According to a source who attended the meeting the Minister refused to accede PASHA's demand for the removal of his advisor, secretary, PSEB chief and many others including himself.

The ongoing conflict between PASHA, the representative body of around 150 software houses, and PSEB, the organization formed in 1995 by the government with the singular aim of finding foreign markets for the locally developed software, is taking a heavy toll on the nascent software industry of Pakistan. The seriously severed relations between PASHA and MoST and the resultant atmosphere of mistrust and ill will is bound to reflect badly on the performance of the overall IT industry particularly at a time when it has started to come out of the shadows of 11.9.

As stated in the previous article, PASHA has accused the top PSEB officials, including its managing director, of indulging in practices which serves their own interests instead of the interests of the software industry as a whole. It has accused them of engaging in forming a parallel software development activities outside the pale of its single responsibility finding export markets for the locally produced softwares. It has also alleged that most of the PSEB employees are running their own software houses, including the MD who owns two companies, Xcess Dot Com and Xcess Soft.

PASHA has accused PSEB of engaging in competitive activities with the software industry and has demanded that it should not be allowed to run software houses. It has raised strong objection to the STP (Software Technology Park) Incubator project at Lahore at the cost of Rs 20 million, in addition to the foreign exchange component of $25,000 (Rs 1.5 million approximately). PASHA says that the plan is not only impractical but is also completely out of the scope of PSEB adding that it is only the facilitator of the industry and not an industry itself.

Similarly, PASHA says that PSEB should not indulge in Rs 13 million Mergers and Acquisitions project as it is a government institution as it involves marketing of software, a job which individual companies can do the best. "Mergers and Acquisition is a very specialized and niche area of financial market. One should not expect software companies to do M&A through official persuasion... The project to develop six merger teams would cost Rs 3.6 million and another travelling expenses of Rs 100,000 per person per month amounting to Rs 7.2 million would be a joy ride trips by PSEB teams..."

PASHA has also objected a project for the establishment of library in Islamabad and Peshawar at the cost of Rs 5.42 million plus $ 32,000 (around Rs 2 million) in foreign component. "Most of the magazine (sic) can be accessed through web, and the effort should not be duplicated as much as possible."

While MoST has thus far avoided to publicly respond to the allegations levelled by PASHA, it is nevertheless imperative for the two most important players to find common grounds to resolve a issue which is undermining the software industry in particular and IT industry in general.