In case we spend remittances on services and manufacturing instead of real estate, we could generate employment opportunities for millions, reduce poverty, increase our exports and ultimately reduce our trade deficit, which is perhaps one of our major concerns.

KHALIL AHMED, Senior Correspondent
Dec 18 - 24, 2006

Pakistan received over four billion dollars in remittances from overseas Pakistanis during the last fiscal year. And there are expectations that this would increase to around five billion dollars in a couple of years. Some sources believe that the skyrocketing real estate prices in our country are the result of the huge amount of remittances coming from the foreign countries and going into the real estate. The question is: where should the huge amount of remittances, a good sign for our economy, go? Some people believe that there are not diversified avenues available in our country for investment so this amount could go either into the real estate or into the capital markets.

There is a perception that the boom in consumerism is also the result of large amount of remittances received after the 9/11 tragedy. Undoubtedly, the consumption culture has fueled inflation which is one of the basic hardships for common citizens in the meantime. Looking at our immediate neighbouring countries, one comes to know that they focused on services and manufacturing and concentrated on increasing exports and decreasing imports. China is considered the world's factory. A source quotes that China produces over 50% of the world's refrigerators and television sets and about 30% of its washing machines whereas India has a good share in service industries at present. Incase we spend remittances on services and manufacturing instead of real estate, we could generate employment opportunities for millions, reduce poverty, increase our exports and ultimately reduce our trade deficit which is perhaps one of our major concerns.

Outsourcing is common these days and automation is sine qua non for all types of organizations these days. The organizations which do not go for automation suffer a great deal of financial and quality problems. Automation is instrumental in reducing cost of production, maintaining records efficiently, providing ease in decision making and helping eliminate wastage and theft of raw material as well as finished goods. Since automation is considered a solution to all problems, demand for software products is high in the global village. The world is looking at two countries for their solutions: India is helping the world with software products and China is contributing by hardware products.

Looking at our local scenario, it could be said that the progress made in the field of information technology is quite slow when compared with the fast moving world. It is being claimed that Pakistani universities are producing over 5,000 IT graduates every year and a substantial number of graduates are engaged in the field of information technology. Official sources claim that the size of the IT market now stands at well over $700 million. Sources quote that Pakistan earned $ 48.5 million through software export in 2004. Though Pakistan is putting every effort to increase its software exports, yet the issues of capable workforce like that of India's is yet to be achieved and endeavours to market the products to right customers persists. However when we look at our neighbouring countries, we come to the conclusion that we have a tiny share in the global IT market.

India began the journey in the field of information technology in 1970s and by 2001 Indian software exports were strong enough to contribute two percent to the GDP of the country. India's software export was worth ten billion dollars in 2003. At present, India generates around annual export revenue of $17.2bn in software and back-office outsourcing and intends to increase it to the region of $60 billion in future. The Silicon Valley of India comprising Banglore, Allahbad, Mysore, Manipal, Hubli etc. is undoubtedly helping the Indian economy grow. It is said that Banglore alone accounts for one-third of India's annual export revenue of software. Both India and China have explored the African market now. China and India share 27% of Africa's exports in service and manufactured goods.

Though Pakistan is lagging behind, yet one believes that Pakistan has potential to grab a handsome share in the global market by making right decisions and marketing its products to the world with differentiation. Price is one of the factors which may help Pakistan in this regard. The cost is an issue in India at present. Rising wages are shrinking the profits of Indian software companies and this is the right time for Pakistan to come up with prudent strategies to capture the market.

One must remember that in 2002, there were news that Indian software faced Chinese competition and the Indian IT firms were somewhat concerned but this did not happen as the Chinese could compete with the Indians because of high wages in China, wage costs in China were 15-20% higher than in India, and lack of expertise and project management skills required for the domain. However, the Chinese did focus on serving the local market in this realm to save some percentage of the revenue spent on imports. At present India is strong enough in providing services to China and maintaining trade balance to great extent. The annual bilateral trade between India and China was worth $250 million in the 1990s, reached $ 8 billion in 2003 and is worth $20 billion at present.

India and China have pledged to double trade to $40 billion a year by 2010. China exports electronic goods and India exports IT solutions to China. As far as Pakistan and China are concerned, the bilateral trade stands at around $3.4 billion at present and they hope to increase it to $15 billion by 2010. Pakistan having signed Free Trade Agreement needs to look at the option of exporting IT solutions to China to bring about trade balance and reduce its trade deficit. Pakistan has the potential to provide the services and China would welcome Pakistani IT solutions if provided with quality and at comparatively less price compared to the Indian prices. It is to be noted that there is rising demand for outsourcing services which have helped Indian software giant Infosys, India's second largest software exporter, reported a 50% increase in quarterly profits recently and Tata Consultancy Services, India's biggest software services exporter, reported a 33% profit rise as well. The only problem being faced by the Indian firms are high wages. Recently, Wipro, India's third-biggest software firm, saw rising wages hit its shares.

The Pakistan Software Export Board was set up to promote outsourcing and there are news that the industry will grow at around 50 percent per annum over the period of next five years. The steps taken in this regard do indicate that right steps are being taken which undoubtedly will lead to increase in the export of service solutions. The launch of IT parks is one of the excellent steps towards the progress and it is necessary for us to look at the progress made by India's National Association of Software and Service Companies (Nasscom). We can compete by finding out the weaknesses of our stronger ones and acting accordingly. One of the most significant things is to promote the learning of English language which could help us grow in Call Centre business. Conducting IT Commerce Network Asia (ITCN Asia) is one of the most praiseworthy decisions made in promoting our software products.

What Pakistan needs at present is to promote the establishment of Software Houses and individuals should be encouraged in this regard. Until 1995, there were only 54 Software Houses in the country and according to a source at present there are more than 500 software companies in Pakistan which is still a very tiny number considering the size of the population, graduates produced every year and the progress made by our neighbouring countries. Because of the global boom in the IT, Bahrain took timely decisions and is believed to be having over 70 per cent IT based industry in the Gulf region. Sources quote that India's strength in software married to China's hardware skills could launch the 'Asian century' of Information Technology. Pakistan has the potential to be one of the contributors in the launch of the 'Asian century' of IT.


TPS Pakistan (Pvt) Ltd. flagship product "Phoenix" won recently the prestigious P@sha ICT award in the category of "The Best Financial Applications", at the Pearl Continental Hotel Karachi.

Through the continued and consistent efforts of PASHA (Pakistan Software Houses Association), the software and services sector of Pakistan is gaining worldwide recognition as an industry and has generated the interest of various international communities. Each year P@sha ICT awards recognize the top achievers in the industry and provide an opportunity and an ideal environment for companies to gain local, regional and international exposure. Its main objective is to promote and develop the software and services industry in Pakistan and to protect the rights of its members.

The primary criteria for judging a meritorious financial application was how well it addressed a real market need, its reliability and the visible effects it had on the industry at which it was targeted. "Phoenix" was judged the best financial application as it provided the basic infrastructure on which the e-Banking services grew within Pakistan on a national basis. Being a transaction processing and switching middleware, Phoenix is used by 24 leading banks of Pakistan for their electronic banking and alternate distribution program. Beyond empowering individual financial institutions of Pakistan, Phoenix also created the required infrastructure for inter-bank ATM sharing services in the shape of Pakistan's largest online shared financial services network called 1LINK. Phoenix enabled Pakistan to join the ranks of countries offering advanced e-Banking services for the promotion of e-Economy. With Phoenix, TPS recently introduced the service of online inter-bank funds transfers over 1LINK shared ATM network, a service which is unique and unparalleled globally. On the reliability side, Phoenix ranked very high as it is processing millions of transactions per month and servicing ATM requests originating at 78% of the banks in Pakistan including 1LINK.

On receiving the award at the award ceremony, Mr. Mohammad Sohail, CEO, TPS said that "TPS has completed 10 years of operations in the field of e-Banking and is proud to have created a history for itself in the corridors of Pakistan e-Banking history. Receiving P@SHA ICT award for Phoenix is an honor and a testament to the role that Phoenix and TPS played in setting the foundation of e-Banking within Pakistan".