HAS THE IT SECTOR REALLY TAKEN OFF?
ARE WE A MAJOR MARKET PLAYER?
SHAMSUL GHANI (firstname.lastname@example.org)
May 12 - 18, 2008
During an interview, a couple of months back, the then Managing Director of Pakistan Software Export Board (PSEB) appeared quite upbeat about the IT sector's growth and future potential. During the last few years, our IT export has registered a growth of more than 50 per cent and now Pakistan is seen as one of the major industry players. Government policies have been instrumental in attracting foreign investors to the booming industry. The incentives of hundred per cent equity ownership and profit repatriation coupled with the generous tax exemptions on foreign investment and software export income have been the mainstay of these policies. Presently, IT is a $2.5 billion industry with huge potential to expand. There are more than 1,000 IT companies in operation with more than 100 carrying ISO certification. The industry has on its role around 110,000 IT professionals including expatriates from developed countries. Land in the PSEB designated IT parks has been leased out to the country's IT companies for business purpose. The expansion plans envisage an industry size of $11 billion by the year 2011 and with more than 250,000 IT professionals by that time.
In comparison to India, our Information Technology market is quite small yet it is growing at a reasonably fast rate. This sector produced export cash inflows of $73 million in 2006-07 as against an export cash inflow of $48.5 million in the previous year. The target for the next fiscal year is $108 million. We are also working on an ambitious plan to increase the software export to $ 5 billion by 2010-11
No doubt the IT industry in Pakistan has a tremendous potential to grow. It can generate high remuneration jobs for IT professionals. The growth rate of world IT industry is 8 per cent with a forecast to have a market size of $900 billion by 2010. To survive in the fast pace growth scenario, we will have to be extra competitive by developing human resources in line with the international standards and by swiftly switching over to the changing technologies. Our present status of a major industry player shall ever remain under threat from the changing market conditions and industry's insatiable appetite for new investment.
In pursuance of the national IT policy, the government has launched programs to create IT awareness especially among the people of smaller cities and towns. It has also provided incentives in the shape of reduced computer costs as well as services user cost. The productivity of the sector nevertheless remains low in the face of insufficient investment in software. PSEB has announced various incentives for the IT industry which include access to the venture capital, strengthening of equity base and promoting of entrepreneurial culture of international quality. Presently, only a few IT companies are listed on the stock exchange. To give a boost to the industry, the listing of IT companies on country's stock exchanges shall have to be substantially increased through meaningful incentives as well as regulatory measures. This will not only pave the way for the much needed additional investment but will also result in the broadening of ownership base so vital for the running of a company on an on-going basis PSEB has offered 75 per cent reduction in the consultancy fee for IT companies planning to go for an Initial Public Offering (IPO) to make themselves eligible for stock exchange listing. Perhaps this is not enough and some more incentives need to be offered.
AWARENESS AND EDUCATION GO HAND IN HAND
To effectively meet the threats of globalization and multi-faceted competition, we need a broad based expansion of IT industry, new investment of both domestic and foreign origins, and a sustained generation of skilled and educated manpower. Our human resource is both our weakness and strength. We have abundant young and intelligent manpower lacking in formal education at the same time. To expand the industry, we not only need sufficient skilled and educated manpower but also a well-educated user base. This is the difference between the IT and Telecom Industries. A cell phone can be conveniently operated by someone with too little a knowledge of English or even by an illiterate. But to operate computer or to make use of internet, one has to be sufficiently educated. Those, who talk of creating awareness with reference to IT, should realize that the neglected education sector shall have to be tackled first. And given the culture we are living in, it's is a big ask. We often boast of having a literacy rate of 50 or 60 per cent. This is hogwash ñ the lie of the century. Those who can just write names can never be designated as literate. From the standard of to-days" world, only those adept at computer and internet use can rightfully claim to be the literate. The only way out is to raise our real literacy rate on a war footing. The spending on social sector, particularly education shall have to be increased many fold to produce a nation of educated people who, besides broadening the user base, could become the future managers of this all important industry.
Recently, a paper produced by the Ministry of Information and Technology has concluded that the broadband penetration in Pakistan is very low. There are around 100,000 subscribers in Pakistan and the Ministry envisages to increase this figure to 1.6 million by 2010. The small subscriber base reflects badly on the pace of expansion of this industry when seen from international standards. The study further establishes that the fixed broadband is ready to give way to the wireless broadband. Three approaches to correct the situation have been suggested, Leave it to the market, bundle basic services and tackle issue with a new format. While the third option is based on a dynamic approach, the critics have pointed out that no attempt has been made in the study to discuss ways and means to create demand.
Tackling of issue with a new format, and thinking of ways and means to create demand shall ultimately morph into one point solution -invest in education to dramatically increase the real rate of literacy if you want to see the IT industry flourish.