INTERVIEW: MD, PSEB

PAKISTAN EYEING GULF IT MARKET

IRFAN SHAHZAD
Feb 18 - 24, 2008

Despite looming political uncertainties and law and order worries the growing IT industry in Pakistan is aiming to capture a sizeable share in the Gulf's lucrative IT markets.

Pakistan Software Export Board (PSEB) recently announced that a major drive to step up IT exports to the gulf countries is being launched. The six Gulf Cooperation Council (GCC) countries offer huge potential for Pakistan IT industry, official at PSEB believes. "We are particularly focusing on United Arab Emirates and Saudi Arabia," said Yusuf Hussain, Managing Director PSEB in an interview with this correspondent.

Pakistan's IT and IT-enabled Services exports have witnessed vigorous growth during the fiscal year 2006-07 and have surpassed the target of $108 million. It was an increase of around 50 percent as compared to exports worth $72.21 million for the fiscal year 2005-06.

This was against the trend of slow down in overall exports, particularly the key sector of textile. "We were the only sector that surpassed target last financial year," added Yusuf Hussain. If the same growth can continue, as PSEB hopes, exports can go beyond $ 160 million mark in financial year 2007-08 ending June 30, 2008.

Pakistan's IT exports to the Gulf have also increased over the years, but there is still considerable potential to expand IT exports to GCC countries. Several IT companies of Pakistan have succeeded in making inroads in the fast growing IT market of the Middle East currently the third fastest growing IT market in the world, after India and China. This factor increases the business precepts for growing companies in the IT arena.

Various estimates show that the Middle East and North Africa (MENA) IT market are set to grow from US$ 6.9 billion in 2003 to US$ 13.4 billion in 2008. Between the GCC countries, UAE and Saudi Arabia alone account for 77 % of the Gulf region's current annual IT spending of US$ 4.94 billion, which is projected to increase to US$ five billion this year.

While Pakistani industry is considered very small as compared to the IT powerhouse next door India the total size has reached to $ 2.8 billion, growing some 60 percent during financial year 2006-07. On a per capita basis, Pakistani IT industry is around one fourth of its Indian counter part that is mainly situated in Bangalore.

The growth rate, however, is double than India's. At this rate the country's IT industry surpass its South Asian neighbor on per capita basis in four years, it is believed.

It may be mentioned here that a number of Pakistani IT companies have developed world class software in areas such as car leasing, enterprise application integration, mortgage lien processing, stock market order management, mobile convergence, data and web content management for some of the top most corporations of the world.

The country has several companies that are world leaders, either number one or very close to the top position. For example, software developed by Pakistani company Visionet Systems has 12 per cent of the US market. Another company Netsol's customers include Daimler Chrysler, Mercedes Benz, Honda, Toyota and Feat. A Rawalpindi based company is world leader in Business Process Management with its software running in Microsoft and White House. A Karachi based company's software, the world number one, is running in bourses such as New York Stock Exchange.

Amongst the Pakistani IT companies entering in to big businesses in Gulf, ZRG International is the prime example due to its selection by Smart Link Inc. of Saudi Arabia to deliver flexible open standards based Intel CTI technology. Smart Link is a rapidly growing contact center outsourcing service provider, established as a joint venture by Saudi Arabia's two prestigious business groups, namely Al-Khaleej and Al-Alamia.

Another company named TPS serving in 25 countries around the world is also helping banks in Bahrain, Qatar and Oman to develop EMV-compliant ATMs. UAE is likely to be the next country to mandate EMV that will pave way for Pakistani IT companies increase business there.

Software export activities by Pakistanis companies are not only enhancing Pakistan's image abroad, but are also having a positive impact on the IT export related earnings of the country. The growth in Pakistani IT industry has also attracted sizable investments in the country. Besides, a number of highly talented professionals have also returned back seeing growing opportunities.

Pakistan has also made a name in off-shoring business in recent past. A recent research titled "Analysis of Pakistan as an Offshore Service Location" finds that as a result of the policy initiatives taken by the government to position the country as an offshore destination of choice, Pakistan has become a major player at global level in the said filed.

PSEB is the Government agency mandated to promote Pakistan's IT Industry including software, services, hardware and call centres locally and globally. PSEB regularly sponsors its member IT companies to participate in International Trade Shows and Exhibitions to help companies showcase their capabilities and develop lucrative business contacts.

Over one thousand IT companies are registered with PSEB and benefiting from its initiatives. In order to further drive IT development, PSEB is now planning to construct new IT parks in major cities while 750,000 square feet of space in PSEB-designated parks has already been leased to IT companies.

According to PSEB, they are focusing on marketing Pakistan's IT services mainly in the English speaking countries and where English is widely used. However, while English is widely used in Gulf Gartner, world's leading information technology research organization, has identified another edge that Pakistan has in Gulf market and that is Arabic language.

The Gulf as a region is already an important trade partner for Pakistan, besides being the leading origin of FDI in to Pakistan. The increased presence of Pakistani companies in the GCC countries capturing a major share in the flourishing IT market will also serve the purpose of enhancing intra Islamic commerce and will help Pakistan reduce its mammoth trade deficit putting unbearable burden on the economy.