PAKISTAN INFORMATION TECHNOLOGY INDUSTRY

MOHAMMAD AQEEL KHAN
Research Associates

July 02 - July 08, 2007

OUTLOOK

Pakistan's IT industry is of $2 billion. Revenue of $600 million and $1.4 billion has been generated through global IT exports and domestic industry. Export of computer software and information technology services has gone up by 52 percent to $64 million in July-Feb 2006-07, as compared to $42 million in same period last year. Approximately 1,000 companies engaged in IT & IT-enabled services in Pakistan.

PAKISTAN IT EXPORTS BY REGION

COUNTRY

2005

2006

USA

57%

58%

UK

10%

9%

UAE

3%

3%

Thailand

3%

4%

Germany

3%

1%

Japan

2%

2%

Hong Kong

2%

1%

Canada

2%

2%

Other

15%

16%

Sources: SBP

GROWTH EXPANSION

Presently there are three IT parks in Islamabad, two in Lahore, and two in Karachi.

City wise growth of IT industry over the last three years shows that in Islamabad IT companies increased by 300%, Karachi 180% and in Lahore 150%.

 

IT COMPANIES GROWTH

FIGURE

PERCENTAGE (%)

1

Islamabad/Rawalpindi

307

33

2

Lahore

322

28

3

Karachi

368

38

4

Others

13

1

 

TOTAL

1110  

Source: PSEB National Census of IT Companies 2006

IT PENETRATION

In Pakistan the numbers of DSL/ Broadband users are 1.5 million, while the numbers of dialup users are 10.5 million.

OBJECTIVE 2010

Pakistan to be positioned in key international markets as Tier One IT target; Create awareness of IT industry growth and potential in the country, and awareness of PSEB programs in the IT industry. Expected IT industrial growth stands at ten billion dollars by 2010. Government's trying to increase IT graduates in the country up to 230,000 with opening of ten new IT/Technology Parks across the country. For the time being 250,000 IT and non-IT graduates employed in IT Industry.

IT INDUSTRY PROJECTIONS

CATEGORIES

05-06

06-07

07-08

08-09

09-10

Export Revenue (SBP) in USD Millions

75

120

198

330

550

Export Revenue in USD Millions

150

239

396

660

1,100

Export Revenue Global in USD Millions

1,000

1,250

1,584

2,640

4,400

Domestic Revenue in USD Millions

1,000

1,862

2,476

3,294

4,381

Total IT Revenue in USD Millions

2,000

3,112

4,060

5,934

8,781

IT Graduates working in the Economy

90,000

110,319

138,388

178,046

235,459

Total HR working in IT industry

52,500

74,729

127,756

177,262

250,000

IT Graduates working in the Export IT Firms

10,000

16,569

27,615

46,025

76,709

IT Graduates working in Domestic IT Firms

25,000

33,250

44,223

58,816

78,225

Bandwidth in Mbps

608

1,222

2,456

4,937

9,924

COMPARISON:

COUNTRY

ESTIMATED GLOBAL IT REVENUE

IT PERSONNEL

INTERNET BANDWIDTH USAGE

Pakistan

USD 2 billion

75,0001

600 MBS2

India

USD 36 billion

965,2504

6.21 GBS5

Ratio

1:18

1:12.87

1:10.35

Source: 1. PSEB Study 'Assessment of IT Professionals in Pakistan' 2005
2. 'PSEB Domestic Business Department'
3. 'NASSCOM 2006'
4. 'NASSCOM 2006'
5. 'NASSCOM Strategic Review', 2004, p 207

India's estimated global IT revenue stood at USD2 billion compared to USD36 billion of Pakistan (1:18). IT Personnel stood at 75, 0001 in India and 965, 2504 in Pakistan (1:12.87), whereas Internet Bandwidth Usage in India and Pakistan is 600MBS2 and 6.21 GBS5 respectively (1:10.35).

INDIAN INFORMATION TECHNOLOGY INDUSTRY

OUT LOOK

IT sector of Indian is one of the fastest growing industries in Asia-Pacific.

During 2004-05 IT enabled services exports grew by 32% from US$17.7 billion - US$ 23.4 billion in 2005-06. The industry has achieved a CAGR of 28% in production and 50% in exports during last 5 years.

The domestic IT market is beginning to come out of the shadows of the export segment. The overall size of the domestic market comprising hardware & software and services (IT-BPO), grew by an impressive 29% in FY06 and is expected to reach USD 15.9 billion in the current fiscal.

GDP SHARE

In 1999-2000 share of India IT Software & Services Industry in GDP was 1.2% has been risen to 4.8% in FY05-06, and the government expected to reach 7% share of GDP in 2008. Over FY01-06, India's share in global sourcing has grown from 62-65% for IT and 39-45% for BPO.

EMPLOYMENT

During 1999-2000, 284,000 professionals have been employed in IT and ITES-BPO while in 2005-2006 it was 1,287,000 in addition government has created an additional 3 million job opportunities through indirect and induced employment.

IT PENETRATION

During 2006 there were 40 million internet users i.e. 3.9% in India, while the world share of internet users of India was 13.62%. By 2007 IT penetration is been expected to raised through computers 2% whereas by internet 30%.

IT INDUSTRY SECTOR WISE BREAK UP

USD BILLION

FY 2004

FY 2005

FY 2006

FY 2007E

IT Services

10.4

13.5

17.8

23.7

Exports

7.3

10.0

13.3

18.1

Domestic

3.1

3.5

4.5

5.6

ITES-BPO

3.4

5.2

7.2

9.5

Exports

3.1

4.6

6.3

8.3

Domestic

0.3

0.6

0.9

1.2

Engineering Services and R&D, Software Products

2.9

3.9

5.3

6.5

Exports

2.5

3.1

4.0

4.9

Domestic

0.4

0.8

1.3

1.6

Total Software and Services

16.7

22.6

30.3

39.7

REVENUES

Of which, exports are

12.9

17.7

23.6

31.3

Hardware

5.0

5.9

7.0

8.2

Total IT Industry (including Hardware)

21.6

28.4

37.4

47.8

E= Estimates

Sources: NASSCOM Fact Sheet

PROJECTED REVENUES

Exports and ITES in 2008 have been projected to USD57-65 and USD21-24 billion respectively. On production of software/services and hardware $80 billion and $121.74 billion estimated. Potential of jobs expected up to 4 million (Software & Services 2.2 mn, Hardware1.6mn and ITES/BPO1.1mn) by 2008. MNC investments reach an unprecedented scale; over USD 10 billion announced in FY06-07, to be invested over the next few years.