FINALLY, AN IT FRIENDLY GOVERNMENT
"If the cyber corridor was taken to be a hypothetical three meters wide today, at the anticipated rate of expansion it would be 11 kilometers wide in next 6-7 years."President Bill Clinton
By Syed M. Aslam
Jul 10 - 16, 2000
The exponential growth of the Internet the global network of electronically linked computers from just 213 in 1981 to nearly 75 million this year has put the world within a mouse-clip away for millions of users. In fact, the number of internet users is far greater since host computers could plug several computers jointly just like an office telephone can serve multiple extensions. According to an estimate there are over 225 million Internet users in the world today.
Internet use has left no parts of human activities untouched today. It not only serves as a shopping centre, telephone, post office, bank, library but also as a source of entertainment and information. Despite playing a restricted role the importance of Internet, and for that matter the IT industry, in a developing country like Pakistan can hardly be under-emphasised as it has shown great signs of benefiting the economy immensely.
Despite being a late starter, Pakistan's IT exports have increased from $ 5 million in 1996 to $ 16 million last year according to Pakistan Software Houses Association (PASHA). Official figures, however, put the volume of software exports at more than double. In any case the Pakistani IT industry has shown immense potential of software exports the materialisation of which depends on a number of factors which make part of this article.
For the first time Pakistani IT industry is getting the attention which it truly deserves. The government has withdrawn duty for the import of computer hardware and accessories in the Budget 2000-2001. The central bank, the State Bank of Pakistan, has allowed software exporters to retain 25 per cent of their foreign earnings to pay for advertisement, promotion, marketing and consultancy services in the overseas market. The income tax on software exports has been reduced to a comfortable level of 0.5 per cent. The IT institutions are exempted from the income tax till June 30, 2005.
A handful of top software houses has put Pakistan on the global map, pleasantly for a different reason altogether. Netsol International; a fully Pakistani owned company with offices in the US, UK, Australia and Germany, which has become the first Pakistani and third IT company in the sub-continent to be listed on the NASDAQ. CresSoft, with its head office in Denver Colorado, and software houses in Pakistan has also clinched high-end software orders in the developed world, both private and public.
The priority the present government is giving to the IT industry to encourage PC use and IT education as well as expand the volume of software exports is a welcome sign indeed. It means the government is determined to make sure that Pakistan's IT prowess should no more remain its best kept secret. It also means that the government is interested to fully exploit the economic rewards from the nascent IT industry compared to the traditional cotton-based exports.
However, observers say that though welcomed incentives alone would not be able to achieve the desired results. This is primarily due to a number of factors including a low PC penetration, a wide gap in the demand and supply of professional IT workforce, the quality of IT education which remains much below the desired level with few exceptions, the absence of the development of IT culture in the private as well as public sector, the lack of venture capital for enterprising professionals. In addition, there are problems which are related to constant brain drain to the developed countries, a weak telecommunications infrastructure which is already very costly according to international standards and which may become even more expensive if news reports are any indications.
CREATING AN IT CULTURE
The term 'Information Technology' generally means computer hardware, the related software and the telecommunications products like e-mail, e-Commerce, etc. Worldwide the prices of computer hardware and telecommunications products are on a rapid decline while the cost to develop computer software is on the rise. Being a service industry the major cost of software development is the manpower. Despite the fact that less than half of the Pakistani population can not read or write, the software development is taking place in the major urban centres like Karachi, Lahore and Islamabad, the education hub of the country.
It is time for the government to play a more active role to create an IT conducive environment in the country. It is essential to induct IT at all levels in the government and though many public sector corporations have spending increasingly more amounts today to 'computerise' their offices much more remains to be done. It shall launch a massive awareness and promotion drive for the introduction of IT at all levels of the government. The local IT industry can benefit from the speeding up of the automation in the government departments through outsourcing of the work to the private sector. These projects shall be awarded on BOT or BOO basis to overcome the financial constraints in investments.
HUMAN RESOURCE DEVELOPMENT
Pakistan is producing a small number of IT professionals which is resulting in an increased gap between the demand and supply every year in the country. The country is producing less than 1,500 qualified IT professionals each year less than 100 of them the top quality.
While training is a major human resources development issue in Pakistan, it is more severe in the field of IT which experiences rapid technology changes. In addition, the country is constantly losing the top of the line IT professionals due to migration to the developed countries. Not only the country is producing a limited number of IT professionals but it is also finding it harder and harder to retain them.
The Computer Society of Pakistan (CSP) suggests a number of ways to address the training and HRD problem. It advocates to allocate 5 per cent fund allocated to various government departments for IT training and a special training programme for new IT coordinators followed by workshops to update their skills on continuing basis. The IT training in various government departments should be provided on an on-going basis and the job for the same should be outsource to the private sector.
Similarly office automation training for the secretarial staff and computer and IT literacy programmes for the management shall be taken up on a priority basis to help turn the traditional work force into an IT literate force. However, these government-pushed options should only be successful if a massive IT awareness programme is undertaken by the government and the industry itself to involve the mainstream. Excluding the mainstream population would not bring the desired results as it would serve as a cut-out rather than cut-in procedure. No significant achievement would be possible without a large pool of skilled IT power.
A focused IT education and training policy can work miracles for the Pakistani IT industry. It would not be inappropriate to cite the Indian example here- one million IT professionals and some 70,000 graduates each year. The city of Bangalore alone has 9 universities, 51 engineering colleges, 169 polytechnic institutes, 35 industrial institutes and 40,000-50,000 computer science graduates and electronics professionals. One-fifth or 200,000 of the total workforce is employed with the export-oriented IT industry between 75-90 per cent of which are based in India and another 10-25 per cent are working at site in the US outsourcing jobs to their colleagues back home. The destination of 60 per cent of Indian software exports is the US followed by 23 per cent to Europe, 5 per cent South East Asia, 4 per cent Japan, 3 per cent Australia and New Zealand, 2 per cent West Asia and the rest of the 4 per cent to the rest of the world. India has made inroads in all the major as well as minor software markets around the globe.
India is poised to reap immense benefit for making investment in the Human Resource Development in the IT sector. Today the US, Germany and many countries in the Far East are trying to lure Indian IT professionals to fill the demand supply gap. The eventual migration of the professionally qualified workforce around the globe means increased outsourcing of works to India as well as substantial increase in the flow of foreign remittances in the country. However, it must be remembered that without establishing a firm base locally India's present progress could not have been possible. The same is true for Pakistan.
The lack of quality education with few exceptions is also taking a heavy toll on the IT education it has resulted in the shortage of qualified IT faculty in the country.
The telecommunications infrastructure in Pakistan is heavily dependent on the state-owned Pakistan Telecommunications Company which has a network of 3.2 million telecom connections in a population of 140 million. Though there are some 2.5 million computers equipped with modems they are not connected to the Internet. Only 130,000 of PTCL subscribers are Internet users, some 25 per cent of whom have multiple connections to counter poor performance and slow connectivity. In addition, the Internet connection options are limited as nationwide access is not available and the IT service is available only in a handful of cities. Without going to the mainstream the real potential of IT industry will remain unexplored in the country.
Though computer penetration is increasing at an average of 300,000-400,000 each year it will fail to make any impact due primarily to the existing monopoly of the PTCL. There is a complete consensus in the IT industry that the PTCL monopoly shall be ended as soon as possible and the private investors, both local and foreign, should be encouraged to set up their own data communications infrastructure with minimum regulatory hurdles. In addition, in recognition of the Internet as a vital tool of IT, the government should develop a national hub for the Internet. It also suggests to treat the access to the nearest ISP as a local call for areas which does not have local access to ISPs.
Like other developing countries Pakistan IT industry also suffers from the absence of good-quality telecom infrastructure plus the low ratio of telephone penetration in the country 43 persons per phone compared to 1.6 persons in the US, a small PC population, and high Internet access fee. All these factors discourage the use of computer and Internet in the country without which the creation of a conducive environment would not be possible.
According to PASHA, the volume of software exports has been tripled from $ 5 million in 1996 to $ 16 million last year. There are over 200 software houses in Pakistan, most of them individually owned small companies employing just 2-3 persons. However, the bulk of these export earnings are contributed by a handful of software companies. The need for expanding the local IT base, particularly the export-oriented software which has shown great potential for growth, can hardly be over-emphasised.
However, this would need the combined efforts of the government, public and the private sector. This will require preference to the local software industry in particular, and IT industry in general, to undertake local projects compared to the preference given to the foreign companies in the past. This also calls for the transparency in tendering and awarding of the projects to all software houses, be they large or small, as per the requirement of the job to ensure fair distribution of the work.
The major detriments restricting the growth of the local IT industry can be summed up as follows: The shortage of skilled IT expertise; the low government and public sector spending; low automation in the private sector; the transparency, or the lack of it, for awarding of government projects; and the absence of financing.
The solutions are simple. They include: the development of human resources on a fast track and emergency basis; compulsory allocations for software projects in all the government departments and public sector; the reduction in telecommunication fee; the availability of soft credit and venture capital at reasonable mark-up rates; and an all-out government support for a concerted export marketing effort.
It is imperative to give IT the status of the most favoured industry like the one accorded to the Textiles and Tanneries in the 1950s and 1960s respectively. The exponential growth of the IT industry globally should also benefit Pakistan which houses a smart and dedicated IT workforce and a population which is highly enterprising, intelligent besides being an extremely quick learner.