IT INDUSTRY AND ABSENCE OF CORPORATE MINDSETS

SALIM GHAURI
(feedback@pgeconomist.com)
Apr 12 - 18, 2010

IT industry in Pakistan has shown surprising resilience over the years, in spite of waves of exogenous shocks. From the dotcom crash around the turn of the century to the recent global financial crisis, it faced and survived intense pressures, as businesses suddenly cut down on their IT spending and automation initiatives were put on hold. However, even though there were major shakeups, with many key IT businesses running out of steam, the industry as a whole continued to adapt and innovate.

Today, it employees a large number of professionals, over 110,000 according to official figures, and has reached annual revenues of US$ 2.8 billion, out of which US$ 1.6 billion are through export of IT products and IT enabled services. In 2009, an AT Kearney study ranked Pakistan among the top 20 IT outsourcing destinations.

In spite of this success, most of the growth in the industry has been individual stories of creative and tenacious entrepreneurship. Few IT businesses have been able to grow beyond reaping the fruits of entrepreneurial exploration of immediate opportunities. Most companies remain small in size, serving a limited number of clients in niche areas. Playing within narrow bands of opportunity, these businesses remain exposed to serious risks as a result of global and regional shocks.

A few companies have grown into larger corporations. These leading IT firms have very different processes and culture, which have helped them reap economies of scale to build richer and more diverse business models. However, such companies remain an exception in the local scene, and most IT businesses have found it impossible to grow beyond small outfits catering to specific customers.

An important reason why these companies are not able to scale up is that they remain too dependent on the founder-entrepreneur for all matter requiring decision. With such centralized decision-making, these businesses cannot afford to take on greater business complexity from expanding into new segments or developing new market offerings. They fail to develop a corporate mindset that links decision making not to the founder but to professionals who communicate through organizational structures that keep evolving with changing business needs.

The transition from the entrepreneurial business to a corporate entity is a huge one. It requires a change in the organizational structure, business processes and most importantly, the organizational culture. Organizations that are able to achieve the right balance between decentralized decision making and centralized controls are superbly placed to create and tap new opportunities for growth.

Pakistan is fortunate that it has abundant supply of qualified and experienced management professionals. The IT business owners keen to see their businesses grow should provide the right kind of work environment to these professionals to convert their skills into business competencies.

That it is possible to do this in Pakistan is evident from the experience of firms that have crossed the barriers to win recognition both domestically and globally. An increasing number of Pakistani firms are making their mark on the global scene by adopting the right corporate mindset. They are investing in people and processes. No wonder, the most successful IT companies are hiring experienced managers and graduates from the leading business schools of the country. That they are also investing in processes is evident from the uptake of international quality certifications. We already have one IT company with CMMI level 5 assessment (the highest level), and several on the path to achieving various levels.

In order to put Pakistan strongly on the global IT map and to bring about rapid growth in the IT industry, more and more IT businesses will need to think big and adopt a corporate mindset.

Salim Ghauri is Chairman and CEO NetSol Technologies Ltd, former Chairman Federal Task Force on Information & Communication Technologies (ICT) and Honorary Consul of Australia for the province of Punjab.