IT: WHY SINDH LAGS BEHIND?
By Syed M. Aslam
Sep 29 - Oct 05, 2003
For all its financial, industrial and trading activities, Karachi — the biggest port city of the country — has little to show in IT. It trails miles behind its smaller, but much more IT-alive, counterparts like Lahore and Islamabad.
What is even more troubling is the fact that Karachi houses not only the largest number of software houses but also the largest population of the IT professionals. Needless to say, an overwhelming portion of this tremendous trained human resources keeps on gathering dust and is forced to settle for un-related jobs for its survival.
The impact of 9/11 has been felt by the city like everywhere else but it is more than that felt by its counterparts across the country due primary to the fact that IT had never been accorded the priority that it deserved. While the province of Punjab supported its IT industry fully, successive governments in Sindh remained conveniently indifferent to it all along. It is only recently that an IT Ministry was established in Sindh.
The fact that Karachi was neglected by the successive federal and the provincial governments is evident from the fact that it has no functional IT park unlike Lahore and Islamabad, both of whom houses two fully functional facilities. A third is under development in Lahore and even Peshawar has a functional IT park.
In August last year the then managing director of Pakistan Software Export Board (PSEB), Suhail Shahid, inaugurated the first IT park in Karachi promising that electricity and telephone connections to the building, housing the National IT Park would be provided within weeks. The promises remained unfilled 14 months later today — the facility is completely dependent generators and the telephone connections are hard to get.
That explains the reasons that the top 5 floor of the building designated for the IT park remains vacant with just two operational clients, two more coming this week and another in process. The five cliets would be able to fill just one floor, the top 15th floor, while the remaining 4 floors keep gathering dust costing the operators and owners of the building expenses which run in hundreds of tens each month.
PAGE talked to the consultant of the park, Syed Khursheed Shah, who said that fibre optic link, one of the most vital pre-requisite for technology parks anywhere, was provided after 1 year. Similarly, he said, despite the assurances given both by the Pakistan Telecommunication Company Limited (PTCL) and PSEB, the sponsor of the project, that telephone connections would be provided within 72 hours, the demand notes have not been issued for months though 1,200 dedicated lines are available.
The park has no electricity connection and is entirely dependent on generators for the power supply. For the last 10 months the electric cable has not been laid down by the KESC due primary to incessant obstacles about the digging of the road. Firstly, the KESC decided to give the connection from Ellender road instead of Lines Area thus extending the distance by over 2 kilometers. Next, Rs 2.2 million was paid to the City Government for the digging of the roads to lay the cable but the DIG Traffic stopped the laying down of the cable saying that since Shahrah-e-Faisal is a VIP road a permission is also required from his department. Then came the objections from the Cantonment Board which is expected to give permission for the necesary road-cutting soon. Meanwhile the facility entirely depends on a single generator which has cost Rs 1 million and is not even big enough to support 200 PCs in the tip floor expected to be filled fully shortly by 5 clients.
Khursheed Shah blamed the lack of political will both at the federal and provincial levels for the failure of Karachi, and for that matter Sindh, to play the due role in the national IT industry.
High placed sources in the IT industry told PAGE that as of December 31, 2002, 750 companies were registered with the PSEB. These companies were engaged in various activities from software development to IT-enabled services.
According to census conducted by the Federal Bureau of Statistics there were 278 operational software houses in the country last year. According to sources 76 of these total 278 software houses refused to provided any data of exports whereas 191 of them were engaged in exports and the remaining 87 were not exporting any software at all. The financial data provided by the rest of the 115 software houses indicates that total software exports totaled $ 22.114 million in 2002.
Thus the value of software exports from the country keey stagnating at around $ 20 million a year — $ 18.2 million in 1999-00, $ 20.1 million in 2000-01, $ 20.1 million in 2001-02 and $ 14.6 million during the first 8 months of 2002-03 as reported by the State Bank of Pakistan.
According to sources, the majority of the IT companies neither report their earnings nor provide accurate information to help determine the exact value of software and IT-related exports. However, the data regularly collected by the PSEB, which had 750-strong members last year, indicate that the value of software and IT-related exports this fiscal would be $ 60 million and next year it would touch a respectable figure of $ 100 million.
However, according to Khursheed Shah, Karachi would keep trailing behind Lahore and Islamabad both in IT-related activities. "The meeting of Sindh IT Board, of which the Governor is the Chairman, should be held every month. However, not a single meeting of the Board has been held during last one year. Many of the projects identified in the last meeting are shelved while works on others are continuing but not as per the recommendations made. The lack of political will is evident from the fact that the Sindh Government allocated a mere Rs 20 million for IT in the last budget."
The policy makers are seem to be occupied with announcing new schemes, the implemetation of which always remains a problem. Sindh IT Minister, Yaqoob Ilyas announced an allocation of Rs 84 million for IT schemes, both new and ongoing, at a seminar held in Karachi last week. He said that the provincial government has allocated Rs 42.5 million for new schemes and Rs 41.2 for on-going schemes in the IT sector. He also announced to establish an IT park in Larkana, conveniently ignoring the infrastructure starved counterpark in the biggest urban centre of the country, the four floors of which keep gathering dust for absence of occupants. Meanhile, two major call centres have been established at the Software Technology Park Lahore recently — the Resource Group Pvt Ltd employs over 100 persons and caters to the North American market while the ITS Homes has an employee base of some 50 persons. There has been a mushroom growth in the IT-enabled services at the Software Technology Park Islamabad — 3 call centres are already operational and another 100-seat is in the process of setting up.
There has been a clear shift of direction of Pakistani IT industry since that fateful September day which turned every single national economy and all its sectors tipsy turvy. Trends show a shift from software development to other IT-enabled services like call centres, medical and legal transcriptions, Internet services, etc. The shift is limited to Pakistan, it is global in nature. The current global pattern is based on outsourcing low-tech back-end work to developing countries. What this means for Pakistan, a country sitting on large pool of trained IT professionals with English as second language, is that we can target the low-tech jobs to fuel our stagnating IT prowess. India has taken the exact same course and we can do the same with our low labour costs which is less than one-fifth of that in the US.
SOFTWARE FOR THE EQUITY MARKET
The burst of the IT baloon and the shrinking of export markets have not only resulting in shifting trends from software to IT-enabled services but has made the local software houses look at the domestic market. As stressed time and again by PAGE local market is one of the top pre-requisite for exports without which long term IT growth just would not come through.
However, the national psyche to not to invest in latest technologies remains a primary hurdle for the IT companies to find a willing taker. The following example highlights the pains of one Karachi-based software house who is facing hard time to market a revolutionary software to track hedging and arbitrage in the equity market.
Talking to PAGE, the director of EDP Services, Syed Hamza Matin, said that the software developed by his company is designed to handle real-time hedging and arbitrage of stocks. It also allows instant trades execution in micro-seconds between ready and future markets and that too without any human interface. In short, it can do completely automated arbitrage of stocks trade on KATS and LOTS terminals between Karachi and Lahore Stock Exchanges whenever an opportunity strikes in real-time and micro-seconds.
Hamza said that the the Karachi Stock Exchange issued a notice to all its members not to indulge in a deal in the software after he ran advertisement in a national daily to sell the product to a limited number of brokers, banks, mutual funds and corporate investors last month.
Hamza stressed that the software contribute to increase market volumes upto the level of developed capital markets and helps the members many distinct advantages. This include hedging of stocks prices in markets which are highly volatile, help multiply market volumes and capitalisation, phenomenal increase in revenue for members in commissions and other incomes, enhancing the revenue for the stock exchange to further accomplish its goals, and the not last but least to help attract increased amount of foreign exchange in national capital markets.
Hamza said that the KSE has stipped the brokers, who has shown keen interest in the product, to use the software, and has also not signed the Non-Disclosure Agreement thus barring it to certify the product from the KSE's IT department. This has forced the company to suspend the sales of the product until KSE's IT department certifies its usage.
He said that all developed stock markets in the world are using intelligent software with provisions of automated options, futures, hedging, arbitrage, index trading and that there is no reason why Pakistani markets should lag behind.
INDUS TECHNOLOGY PARK
The belated establishment of thus sleepy National IT Park at Karachi jeopardises the establishment of a proposed 50-acre Indus Technology park at Super Highway Karachi. The project is six-year old and yet is anywhere close to implementation due to problems related to the transfer of the land.
Meanwhile, the lack of direction and priority to make Karachi, and for that matter Sindh, an IT-friendly city, and province, taking heavy tolls on the national economy in more ways than one.
Karachi lags far behind Lahore and Islamabad in software exports despite sitting on a tremendous skilled human resources. What is even more threatening that it keeps on chunning out the biggest number of IT professionals of all cadre in the country despite the crash two years ago.
The closure of foreign markets and employment opportunities for the IT companies and professionals and the absence of local market demand that the relevant authorities, the Sindh IT Board in particular and all other organisations in general, should wake up from their slumper to formulate policies with necessary growth of the IT industry. What stops the policy makers to follow the example of Punjab, which has turned Lahore and Islamabad the hub of IT activites in the country?