IT INDUSTRY - POTENTIAL AND CHALLENGES
Aug 22 - 28, 2011
According to Pakistan Software Export Board-PSEB, Pakistan IT industry's global share is estimated at US$2.8 billion which includes global sales revenue of US$ 1.6 billion.
The industry is reported to have skilled workforce of 110,000 English-speaking IT professionals of which 24,000 are engaged in exports. Since the entire "Industry Review" page lacks the linking of events with the corresponding timelines, it is difficult to have a meaningful interpretation of the aforesaid data.
Incidentally, a 2009 report also places the size of Pakistan's IT industry at US$ 2.8 billion. Irrespective of the actual size, our IT industry is much smaller than that of India. Although the Indian IT industry which attained in recent years growth levels as high as 30 to 35 percent, has slowed down to 10 percent at present, nevertheless the industry is projected to have in its fold 10 million employees by 2020 with a total revenue forecast of $ 225 billion. According to an Indian correspondent, the revenues generated by their top companies during the last fiscal were as follows: TCS S7.1 billion, Infosys $5.3 billion, Wipro $4.8 billion, Cognizant $4.18 billion, HCL Technologies $2.88 billion, Genpact $1.2 billion, Tech Mahindra $1.1 billion, Mphasis $1.09 billion, and Mahindra Satyam $1.0 billion.
Pakistan's IT industry grew at a compound annual growth rate (CAGR) of 40 percent during 2001-07. Despite the phenomenal growth in telecom and IT sectors, we have hardly been able to exploit our real potential in these all important sectors of economy. These are the sectors that bring to limelight many social and economic aspects of an economy. According to the SBP annual report, lower cost of labor, land, and tariff exemption on IT exports give Pakistan a competitive edge over its competitors. Despite a narrow base, our IT professionals are equally - even more - brilliant than those of many leading countries. They have designed internationally-accepted software products in the fields of finance, healthcare, mobile, gaming, and animation. The below-the-potential growth of IT industry can be attributed to the following factors: Lack of horizontal industry-growth; weak global brand image; poor linkages with the capital markets; lack of private and public investment; poor literacy rate and shortage of proper human capital.
In the field of finance, financial software industry has made great strides by developing a dynamic synergy with the strong banking sector of Pakistan. NetSol Inc is Pakistan's first technology industry to get listed on NASDAQ. The winner of National Software Export trophy for a number of years, NetSol Inc is known as leader in the field of financial-solution-providers. Other Pakistani IT companies that have made their presence felt both in domestic and international markets are: Systems, Mixt, TPS, Softech, Aerocar, Avanza, Autosoft Dynamics, PIBAS, THKS, Sidat Hyder Morshed Associates, etc.
Despite the problems of poor brand image, lack of investment in the industry, small corporate size, and lack of resources to compete with the giant international service-providers, Pakistan's IT professionals have managed to survive and even give tough time to their international rivals. A study on Pakistan's financial software industry mentions: "According to one estimate, upwards of $ 100 million a year has been spent over a period of several years by the domestic banking sector, with the four largest banks spending between $ 10-15 million per annum each. The majority of these deployments have gone to large international vendors such as Teminos, Misys, Symbols, and others, and the local vendors have been unable to compete in the large banks' segment. However, deployment is where the local companies have a clear advantage...Many deployments by international vendors have been botched, and taken much longer than planned wasting millions of dollars of shareholders' wealth." At yet another place, the study mentions: "In the domestic market, the market characteristics, regulatory demands, and consumer choices have often created an opportunity for local players to compete against more established global behemoths in a range of different product-market segments, and they have even managed to out-innovate some of these larger players."
In addition to new investment of both domestic and foreign origins, we require a sustained generation of skilled and educated manpower. Our human resource is both our weakness and strength. We have abundant young and intelligent manpower, which unfortunately lacks in formal education. 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 made use of by someone with too little knowledge of English or even by an illiterate. But to operate a computer or to make use of internet, one has to be sufficiently educated. We have a large informal business sector, predominantly managed by uneducated or insufficiently educated people who abhor documentation of their business. Bringing them into tax net can also give boost to the IT industry. Without raising educational standards and taming the informal business sector, we can expect only nominal growth in our IT sector.
IMPORTANT ECONOMIC INDICATORS WORLDWIDE
|COUNTRY||POPULATION IN MILLION||LITERACY RATE %||EXPENDITURE ON EDUCATION AS % OF GDP||RANK BY EXPENDITURE ON EDUCATION||% OF PEOPLE USING INTERNET||NUMBER OF INTERNET HOSTS IN MILLION|
|China||1,337||95.9||Not stated||Not stated||29.1||15.30|
|Sri Lanka||22||94.2||Not stated||Not stated||8.2||0.09|