Pakistan has immense IT human resources, but reels from lack of finances

May 19 - 25, 2003 

The bursting of the IT bubble should really be viewed as a blessing in disguise: It has provided the decision makers ample time to re-think; and if need be, to revise, the policies to develop a demand-side IT culture instead of the supply-driven priorities of not so distant a past.

The change of policy at the decision making levels is a must indeed because pre-occupation with supply-side IT thus far has failed to benefit the local IT industry and also the society at large. It is time to decide once and for all whether we would continue remaining a net user of the information technology or ready to reap the real benefits by converting ourselves into a net supplier.

Hardware, accessories, gizmos, internet, bandwidth, software, etc., etc., are just the tools of the information technology, no more no less. Like all other developments, inventions and technologies, the real test of the IT is the benefits it has to offer. A vital point to ponder is whether IT has made life any easier for the industry, trade, business and the people or are we wasting time on pursuits which offer us no real economic benefits.

Let's take hardware. Why have their been no serious attempts to produce the PCs within the country including even the screw-driver assembling of putting the parts and components together? We are spending loads of money on import of computer hardware and the best that has been done was the container load imports of used and outdated low-priced PCs. That certainly offers no benefits to the industry or the economy.

The growing demand for the latest hardware and the craze for the latest Pentiums, otherwise unbefitting for a country reeling from low per capita income of less than $ 500, fail to justify any financial benefits. Software exports stagnates at around $ 30 million for last three years while tens of software houses are reportedly closed resulting in lay-offs of hundreds of core professionals in the aftermath of 9/11. The neglect of the software houses to develop a local market for their products has boomerang with the trickling of export orders from overseas after 9/11. The worst sufferers are the software houses which chose to rely heavily on overseas orders not realizing the importance of a solid domestic base.

The global economic slow-down highlights the importance of developing a strong domestic base for software, like all other export-oriented products. Had the industry taken appropriate measures to build up the domestic market for locally developed software the situation has not been as bad.

That's enough to highlight the importance of having a domestic market to serve as cushion to soften the blow of trickling of software orders from overseas. The question is: what can be done to built a domestic market for locally developed softwares? While the biggest portion of total spending on any IT project is spent on hardware and the remaining is spent on software hardware makeup about 80 per cent while software claims about 20 per cent of the total spending on any IT project the accumulated value of software portion of IT projects in the country can help local software industry establish the much needed domestic base.

Foreign companies, thus far, are the real beneficiaries of IT projects and about 75 per cent of all software spending on IT projects in the country, specially those by large banks, are awarded to foreign companies. Measures can be taken to ensure that local software developers get a fair share of this domestic business, particularly in the public sector.

Despite assurances from top levels of the government, the public sector organizations still prefer to award contracts of IT projects to foreign companies which local counterparts are capable of performing, and that too at competitive prices. The absence of patronage on the part of the government and the preference on the part of the public sector entities to award IT contracts to foreign companies has deprived the local companies of sizeable business which in turn could have helped them to develop a domestic base.

Pakistan has immense IT human resources, not to mention the vast potential that it offers, but reels from lack of finances. This is evident from a statement made by Federal Minister for Information Technology, Awais Leghari, urging the banks to invest in the IT sector. He added that the IT sector has immense potential to develop but lacks investment. In his meeting with the heads of banks at the State Bank premises in Karachi recently he said that banks have surplus liquidity to invest in the IT sector.

Hamza alleged that the banks in Pakistan has not invested a single rupee in the IT sector thus far. "There is immense expectations from the IT sector but there has been no attempts to back it with finances. He said strict visa and travel restrictions have taken a heavy toll on the software industry and it is imperative to ensure that banks invest in the IT sector as every rupee means an eight-fold return."