Developing the local software market

Domestic software market: A prerequisite for exports

By Syed M. Aslam
Mar 05 - 11, 2001

Expanding the base of the domestic market is imperative for providing a springboard to the nascent software industry of Pakistan. While the volume of software exports has risen from $ 5 million four years ago to around $ 28 million or Rs 1.8 billion at existing open market exchange rates, the domestic market for software remains one-third at around Rs 600-700 million.

In fact, the volume of money spend on IT education in Pakistan far surpasses than the earnings from software exports and domestic market combined. The IT institutions — public and private alike, be they one of hundreds of institutes mushrooming across every nook and corner across the country or universities — are producing some 85,000-90,000 professionals of all levels including degree, diploma and certificate holders every year. The money spent on IT education adds up to almost Rs 6 billion which far surpasses the export and domestic market of the software combined.

The above statistics were quoted by Khurram Rafiq, ex-chairman of Pakistan Software Houses Association (PASHA) and member Sindh IT Board, while speaking at a lecture 'Pakistan's domestic software markets: Benefits, shortfalls and Pitfalls' held at the Adamson University, Karachi.

What is even more unfortunate is that of the 90,000 IT professionals of all types produced in the country every year only 6,000 manage to find a job due primarily to a very narrow base of local applications of the software development market. In addition, he also cited the non-availability of the soft-loan financing by the government as demanded by the software houses. This in turn is restricting the growth of the software exports as it denies many an enterprising software houses to enter the exports arena.

On the other hand, the small domestic market is not enough to develop economies of scale for the software houses due to insufficient work-automation projects which in turn prohibits them to create new jobs, induct interns, initiate training programmes for the fresh and inexperienced IT workers. This puts the sustainability and survival of local software industry at the stake because its going under would have a domino effect on the very export performance of local software industry.

Khurram said that making a dent in the export market to project Pakistan as a serious software exporting country is directly dependent on expanding the base of the domestic software market. So what is required. Khurram suggested that the base of domestic software market is to be expanded and an annual spending of Rs 10-12 billion is required to develop the local software industry on sound footing. Without a sizeable domestic market, Pakistan would not be able to become a major software exporting country.

Expanding the local base

Dr Asim-ur-Rahman, the keynote speaker, said that professional IT manpower, quality development team and the customer support are must for expanding the base of domestic software market. It is imperative that the corporate sector, both public and private, should be made aware of the benefits of automation not only to improve operations efficiency but also to meet rising customer satisfaction and for good governance. The private sector should be made to realise that automation will give it a competitive advantage, particularly for the export market.

Calling quality IT education as the single most important prerequisite for developing quality software, he said that applications developers should not only recruit top-of-the-line professionals but should also be aware of standard international practices such as IS 9001, Tick-IT, CMM, etc.

In addition, he added, it should be realised that the local software industry is still in its infancy stage and we should avoid euphoria as our software export base still remains much too small compared to the huge potential which Pakistan offers. Moreover software industry remains neglected, and is looking at the real patronage from the government as well as the public and private sector.

Telecommunications

The process for obtaining a telephone connection should be simplified and it should be provided to IT related organisations on top priority basis to reduce the time. As it, while the connection can be made available in a couple of days strictly in technical terms, in reality it takes over a month for the completion of mere formalities, Khurram lamented. There is a need to decentralise the approval process and the local PTCL office be allowed to approve an application instead of forwarding to Islamabad.

Khurram said that claim made by PTCL as being the cheapest in the region is not true as a number of multinationals working here and are also operating in various other countries in the region have informed the private sector that India's telecom rate is the cheapest in the region. Not only telecom tariff in Pakistan is double than that of India but even Nepal and Bangladesh follow incremental rates while telecom tariff in Pakistan are just below the rate in Sri Lanka, he added.

He said that export-oriented software houses should be allowed reduced International, Nationwide Dialing and local call tariff. They should also be exempted from PABX installation fee.