NETSOL OPERATIONS IN PAKISTAN

Interview with Salim Ghauri

MOMEY GUL
Dec 18 - 24, 2006

NetSol Technologies (NASDAQ: NTWK) has been a leading provider of worldwide software development and consulting services since its founding in 1995. NetSol delivers high-quality, cost-effective IT services ranging from consulting and application development to systems integration and outsourcing.

NetSol specializes in high quality custom software development. The fact that NetSol is among the very few companies in the world with a SEI-CMMI Level 5 rating makes it a global preferred software solutions provider. NetSol's approach to software development involves combining knowledge of trends and emerging technologies and complementing these with a highly skilled team that has the capability to deliver critical solutions according to well established and globally accepted software engineering practices.

NetSol's list of clients includes blue-chip companies, the non-profit sector, technology and telecommunications, and financial institutions. Among those who have used our services are Mercedes-Benz, Motorola, CitiGroup, BMW, DaimlerChrysler, Toyota , Yamaha, Quest Communications, and The Innovation Group (TiG).

NetSol's core competencies include all areas of Internet Technologies, n-tier Applications, Object-Oriented Technologies, Groupware Automation and Large Scale System Integration. NetSol is also actively involved in Business Process Re-engineering, Legacy Systems Management & Data Migration, Quality Engineering and Processes Improvement Consulting as well as R&D assignments.

PAGE: By now Pakistanis are seem to be bitten by the IT bug as there seem to be running high IT fever. what do you say of the impression that government has yet come up with concrete step for supporting entrepreneurs, have been facing enormous snags?

SALIM GHAURI: I believe it is the best time for Pakistan, which should be looked at in a positive way. Whatever role the business community can play they should do it without depending on the Government. We should depend on our own abilities and strengths.

Pakistan no more remains a silent observer to the spiraling growth of the IT globally. A beginning has been made and a mass awareness has already been created. The time has come to understand the levels, categories and degrees of this awareness and how to translate it into action to move into the next phase.

Pakistan's entrance in the global IT markets should not be remain restricted to software which would not be possible without sifting the perceptions from the reality. And this would only be possible by qualifying and categorising the IT awareness.

A strong commitment on the part of the government in developing this industry has witnessed a phenomenal growth in the recent past. The industry is now ready to lead from the front. It is recognized worldwide in terms of quality standards and a sufficiently developed resource pool. Some globally known blue chips like Daimler Chrysler, Toyota, GE, Citibank etc are added up to the long list of international customers.

The industry is now preparing itself to play a major role in revenue and employment generation in the country. I firmly believe that it would be progressing rapidly soon it touches a billion dollar mark. Presently, the IT spending in Pakistan is around $ 700 million besides $ 100 million exports of Software and Services. The Indian IT industry, on the other hand, is generating some $20 billion revenue with a future planning of expanding it to $60-80 billion.

In last five yeas, the government has taken very commendable steps to give impetus the IT industry. Availability of infrastructure, bandwidth connectivity, telecommunications besides setting up the IT ministry, federal IT secretariat and Pakistan Software Export Board and no zero duty software exports have started yielding results.

These initiatives have brought the IT industry out of recession around the globe. The business activity is not restricted now to certain areas and industry is getting good volume of business from different parts of the world including the USA. The industry is yet to work hard to get more business from the USA and maintain higher pace of growth. The USA generates maximum opportunities in outsource business in terms of percentage and it is the best time to grab the opportunity through aggressive marketing.

PAGE: Do you agree that the catalysts of the proposed IT revolution the users seem to draw the least attention from the policy makers, good only for token support from the government.?

S.G. Yes, more cities are connected to universal internet access compared to some two-and-half-dozen just a year ago. Denying users a say in matters which affect them directly be it the quality and price of internet tariff, education or training, hardware and software in a market which is highly unregulated can deliver a fatal blow to the proposed IT revolution before it even lifted off the ground.

Despite being a young but emerging sphere of economic development, the IT industry has revolutionized numerous developing economies across the globe; having gained the status of a flagship industry in most cases. Gone are the days when it was considered as the future's industry; today, it has emerged as one of the most potent forces in economic development along with the portfolios of Energy, Telecommunications and Communications thereby encapsulation the entire realm of economic growth, from internal as well as external perspectives.

The IT industry in Pakistan has immense potential to grow and this is the right time to invest here. The IT experts are expecting massive inflow of foreign investment in next three years. The growing trend of automation in local industry, both in public and private sector, is likely to generate plenty of business opportunities for the new investors. An investment made in Pakistan's IT sector would yield good results, as the queries from the potential customers are multiplying with every passing day.
The government has been very proactive in projecting the real and positive image of the country, which has been hampering growth of the industry. The western customers are still reluctant in traveling to Pakistan. There is a need to deal with misleading western media coverage and wrong travel advisories. A projection of robust growth in economy and a big change in social trends in Pakistan can make it possible. I hope Prime Minister Shaukat Aziz's visit to the USA would be helpful in projecting positive image of the country.

PAGE: What is the perception regarding Pakistani IT & Software industry in Europe and USA? And what are your contributions in this regard?

S. G: There is little or negative awareness about Pakistani IT & Software industry abroad, especially in the EU. The NetSole has played some role in this because we have some visibility in the media through investors, since we are a public Ltd. company. The perception is like any other western media who projects unfortunately not very positively about Pakistan. It is our job to make sure that negative perception is changed. You can only do that by doing good work and sending good quality software to the foreign countries. As the word gets out that Pakistan is a stable country, automatically the perception of IT industry will also change.

Awareness does serve a purpose, and an important one at that. However, it should not be seen as an end in itself and has to be replaced by action and practise. Numerous minimum breathers have already been given to the IT industry and the policy decisions have all been IT-friendly. It is time to come up with the concrete plan to give a distinct direction to the IT industry by discussing issues which thus far have failed to attract the due attention.

As is, the software industry seems not to market itself in a proactive manner. The business and image of the local software industry can only be improved with the aid of a properly engineered marketing campaign. Pakistani software developers should be encouraged to participate in such prestigious international IT exhibitions

PAGE: What are the key factors to be successful in IT business line?

SG: Its hard work, belief and dedication and most importantly, taking risks. The biggest risk we took was to invest in Pakistan. For us it was a known territory, but that wasn't so for the others. We had great faith in the Pakistani people and they did not let us down. The biggest challenge of an IT company is to deliver the services with quality and on time because there is so much competition and we managed to do that. The team we have in USA, Lahore, London, Australia and elsewhere is a very dedicated one and we are proud of it.

PAGE: Is it right impression that rapid growth in IT industry is cutting off by the shortage of IT graduates?

SG: Yes. Its true and I foresee tremendous growth of IT industry in Pakistan during 2008-08 with high job demand. I have been pointing this factor out for some two years back that the industry will be facing acute manpower shortage soon it comes out of pressure in 2006.

The shortage of qualified IT faculty for the hundreds of IT institutions across the country is one of the major problem. As for us, we prefer to train our own people we have retrained electronics engineers. Measures should also be taken by the government to retrain MBAs and even diploma holders to develop a professional IT force to meet the increasing demand at present and in the years to come.

The IT industry is booming across the world at present and Pakistan is getting good amount of business at present. I see further growth in the business some two years down the line. The IT industry in Pakistan is busy in software up gradation in 2000 but we are getting business other than up gradation and the companies are involved in product development as well.

Pakistan is getting mission critical software work now. Similarly, the business of call centre was growing very fast in Pakistan.

PAGE: How do you compare Pakistan IT with India?

SG: The IT companies in Pakistan are charging more price than the companies in India due to high focus on quality. There is no doubt that Pakistan entered the IT industry some 20 years after than India but still the quality of work being offered by Pakistan is far price-worthy than India.

The NetSol will be introducing some training programmes in future in order to meet the labour shortage for the IT industry. The company was established in 1996 and it was the first Pakistani IT Company that got ISO certification first time in Pakistan back in 1997. Then, the NetSol is the only company that got registered with NASDAQ in 1999. President Pervez Musharraf had honoured the company with his presence during its fifth anniversary.

NetSol also suffered like other IT companies in the backdrop of 9/11 but it got recovered by 2003 and has picking up growth during last three years.

PAGE: What motivated you in go for the NASDAQ?

SG: Getting listed on the NASDAQ meant getting the kind of international exposure we always wanted. Besides, getting listed on the NASDAQ meant a far better return and more funds for the exponential growth to help us grow globally. It also meant the global presence, and acceptance, in addition to the big status symbol and the reputation that goes with it. The best names of the IT industry are all listed on the NASDAQ. It meant getting recognised globally, not only for our company but also for Pakistan.

It also meant exposure for Pakistan. We have become the first Pakistani company to get listed on the NASDAQ and it certainly has given more IT exposure to the country. Many international IT professionals and enthusiasts who thus far remained oblivious to the Pakistani IT prowess now realise the potential that Pakistan offers. We have come of age as a nation which can offer competitive software systems and consultancy at par with the companies in the developed West. The best thing is that while all our input costs are in Rupees our revenue is totally dollar-based which allows us to buy in rupees and sell in dollars. By he end this year we expect to earn revenues in the range of $ 7-10 million. Our commitment to invest in our people is evident from the fact that each employee of NetSol is a shareholder.

We have undertaken world-class projects but its our listing on the NASDAQ which has given us the real international exposure. The country has also benefitted the name of Pakistan did not typically come to a foreigner's mind with reference to the IT till the recent past. All that has changed for now. Being a fully owned Pakistan company, NetSol has put Pakistan on the world IT map.

Since our listing we are receiving an increasing number of requests for our software programmes and at present we are in the process of negotiating deals with three foreign companies. We plan to grow acquisition, we have already took over a company in Australia, and we will keep looking out for more acquisitions in the years to come.