BUSINESS MODELS HAVE TO BE REDEFINED
Excerpts from an exclusive interview with Syed Hamza Matin, CEO, EDP Services
SHABBIR H. KAZMI, Special Correspondent
July 02 - July 08, 2007
Pakistan has a lot of potential to become a leading software exporter but all the stakeholders will have to come up with policies enabling the local players to compete globally. All the players have to redefine their business model, formulate innovative business and marketing plans. Government should facilitate the players by creating supportive infrastructure.
Pakistan and India have more or less similar working environment but proactive policies of India has made it a global players, while Pakistan is still struggling to overcome teething problems. There may be thousand of IT companies in India but bulk of the export comes from less than a dozen companies. However, India gets a lot of business under outsourcing. The presence of leading global technology players in India helps in development, which further facilitates in attracting new investment.
Another factor contributing a lot is the development of software industry in India is the flight back of Indians (NRIs) who have been working for conglomerates. The global exposure helps in marketing players as well as the products. A lot of credit also goes to the Indian government, which hired international consultants to prepare report about the local software industry. This report is being used to market India as preferred destination for investment in software industry.
As against this, in Pakistan; whatever the local players have achieved is the result of their individual efforts. There are less than half a dozen companies, which contribute the most. It may also be said that the misplaced priorities and half hearted efforts by the government has not helped the software development indigenously. Opening up a software company is the easiest but securing business from the international markets is the most difficult.
Usually Pakistan based software development companies follow two business models. First model initially cater to the needs of local trade and industry and then make effort to enter into the global market. Second model suggests direct entry in the global market for soliciting the business and subsequent establishment of back office in Pakistan. However, I am of the opinion that each model has its own merits and demerits but the second model helps in starting in a big way.
Soliciting finance is the biggest hurdle for the software developers. The product they develop and market is intangible and invisible, local financial institutions are scared to extend any credit to software developers. This problem could be overcome by establishing venture capital companies. The process will help bridge the gap of understanding IP based businesses between banks and software companies. The seed money for such companies could be provided by the leading local public & state-owned financial institutions. These companies could raise money through issue of bonds guaranteed by the government. The guarantee by the government would give the investors confidence.
Another issue facing the software exporters is the regulatory framework. The drawback of the existing framework is that the officially stated software export figures are grossly understated. I understand that Pakistan's software export should be above one billion dollar as against reported figure of less than one hundred million dollars.
Having said that I would stress upon that the software export from Pakistan is very low as compared to India. I also believe that software export from Pakistan cannot be increased in the absence of offshore development centers of leading international technology and multinational companies in Pakistan.
In order to attract the global players first we have to market Pakistan as an attractive investment destination. It is true that government has established IT parks but these still lack world class facilities and are very few in numbers. The local newspapers and television channels are complaining about long outages of electricity, which portrays negative image of Pakistan.
I would like to commend government policies regarding telecommunication sector. The huge local as well as foreign investment in the sector has upgraded the infrastructure. Reduction in tariff and creation of state-of-the-art facilities has improved working environment.
As regards to curriculum of IT institutes, the overwhelming feeling is that Pakistan may be producing thousands of computers programmers every year but there is an acute shortage of system analysts and project managers. The backbone of software industry comprises of good project management, entrepreneurship and business savvy skills to compete in the international markets. Therefore, the curriculum of these institutions has to be redefined.
Pakistan has to produce IT literate as well as IT savvy people. This objective can be achieved by providing extensive training to the trainers. Once high quality human resource is available only then any of the global players would be willing to explore Pakistan as an investment destination.
There is also a need to revamp Pakistan Software Export Board and Higher Education Commission. Though, the talk for creating e-government has been going on years, the objective cannot be achieved without developing IT savvy bureaucracy.
Syed Hamza Matin has achieved several landmarks in his professional career. He was listed in International Who's Who of Professionals Directory for 1998 after starting his career with Graduation & PGD in Computer / Information Sciences followed by MBA Marketing in 1994 from IBA Karachi. He is currently the CEO of EDP Services. The company has over a decade of experience with largest network of financial institutions as clients in Pakistan with over 500 projects of 150 clients in the last 15 years.
While as President of Pakistan Software Houses Association (PASHA) from 2000-2002, he provided most energetic national-level leadership ever experienced by the technology industry in Pakistan. His efforts eventually culminated in bringing United Nations to partner with IT industry of Pakistan. He was called on by special invitation to represent on Economic Advisory Board (EAB), the highest economic & fiscal strategy forum in Pakistan frequently chaired by the President of Pakistan and the Finance Minister. He was also on IT Advisory Board of Ministry of Science & Technology and Provincial IT Boards of Provincial Governments. He represented Pakistan in several international exhibitions, forums and conferences over the years.