TIME TO MOVE IT
A look at Information Technology in Pakistan
SHABBIR H. KAZMI, Special Correspondent
July 02 - July 08, 2007
For years Pakistan has been aiming at boosting its software export. However, the amount received has remained disappointingly low. Lately, there has been an effort to inflate the figures by clubbing remittances received under various heads with software export. Many experts are of the opinion that misplaced priorities, ill-conceived policies and lack of computer savvy policy planners do not allow Pakistan to get its due share in the global markets.
There are a few issues that need to be understood before exploring potential of software export. There is no possibility of a dramatic turnaround in the software industry of Pakistan in the near future. In the traditional 'brick and mortar' industries, anything that is exported has to be physically transported, along with all the required documentation, across the country's borders.
As against this keeping track of software export is almost impossible, because the 'finished goods' are sent electronically over the Internet directly by the exporters. There is literally neither any mechanism that allows this export to be regulated nor the authorities should attempt to do so. The only fallout could be further reduction in officially stated figures.
Since no mechanism is available to quantify software exports, the figures are often overstated or understated. Depending on the sources that one obtains the information from, software export figures range from US$ 20 million, (based on the remittances that software companies receive form abroad, typically to cover salary and other overhead costs) to the US$ 100 million based on anecdotal evidence from within the industry.
It might be useful to place the sum total of the software exports from Pakistan in proper perspective. As compared to many items the proceeds generated from export of software is very low. The foreign exchange earned by industries involving the lowest level of skills and technologies is far higher than the highly qualified software professionals that have been produced by the country's elite universities put together. Therefore, a question is often raised, why this obsession?
The answer is, no other industry in the world has been growing at such a staggering rate over such a sustained long period. The global software market in 1997 was estimated at US$ 90 billion. The figures are expected to cross one trillion dollars by the year 2008. No other industry comes close to such exponential growth figures. It is no wonder that in spite of not having much success in enhancing software exports, the government is still keen to invest in this sector.
The other major reason for the attractiveness of the industry is that there are hardly any barriers to enter into this business. All it takes to set up this business is a few talented individuals, a connection to the Internet and a customer, and the software company is there. Of course, market dynamics dictate whether the company can prosper, but there are sufficient examples of such companies thriving.
On the flip side, success in the industry requires a close relationship between the buyer and the seller. Unlike cotton or carpets, where the relationship is over once the product has changed hands, the software business demands long term relationships between the two parties.
There are some who advocate that the domestic industry needs to be promoted by giving the local software houses regulatory protection against foreign companies. This industry is one where the competition is indeed global, and hence the domestic industry should be encouraged to undertake large scale software development in collaboration with foreign companies, who bring tried and tested development processes and methodologies that the local companies can learn form.
This form of dissemination of managerial expertise is well documented internationally, and is also borne out by the experience of the multinational companies in various industries that have been operating in Pakistan since many years. The management and technical skills imbibed within these companies by the Pakistan workforce has resulted in substantial improvements in the management practices of even the most indigenous of companies.
The dynamics of the industry are such that the paradigm shifts are frequent and drastic. Therefore, the players need to be continually scanning the technology horizon to ride the next big wave. There is currently a global trend away from customized software development, instead, there is tremendous growth in the outsourcing of IT enabled services and Back Office Processing.
Over the years the Government has focused on improving the underlying physical IT and data communication infrastructure. This critical task has been accomplished to a large extent. Now the time has come to make effective use of this infrastructure by deploying software systems for enhancing productivity within government and improving the delivery of public services. This initiative would at the same time provide a boost to the software industry.
Pakistan's software industry faces two main challenges 1) infrastructure and 2) human resource. Availability of office space in the urban centres of Karachi, Lahore, and Islamabad has become a major constraint. There are three IT parks in Islamabad, two in Lahore, and two in Karachi. However, none of them are IT parks in the true sense. They are simply normal office space, where power and connectivity facilities have been enhanced.
The IT sector is heavily dependent on trained human resource. With an exponential growth rate year after year, the human resource has starts becoming a constraint. The issue needs to be addressed immediately otherwise this impediment could become a tumble block.
Promoting software export should have been the prime responsibility of Pakistan Software Export Board. However, this institution has not been able to discharge this responsibility. It has often suffered from conflict of interest and misplaced priorities. The same is also true about Pakistan Association of Software Houses. While the objective should have been collective growth, the outcome has been contrary.
The government has not been able to market Pakistan as a preferred investment destination to the global software developers. While many big players have their development offices in India, Pakistan has yet to attract the first. Though, some effort has been made at individual level, the outcome is not very encouraging.