Information Technology status in Pakistan

["Irfan Khan" <khania2@super.net.pk>]

[from Comp-list mailing list]

Information Technology status in Pakistan

The Nation, By Salim Ghauri
2/10/2003
http://www.nation.com.pk/daily/feb-2003/10/business/bn1.asp
  

The Information Technology (IT) sector of Pakistan, given the work 
done to achieve the expected results, is the victim of over 
expectations. Initially, IT industry went unnoticed for years. In 
seventies we had only handful of companies in Lahore and Karachi 
catering to public and private needs within Pakistan. Few computer 
institutes came up offering courses in computer programming 
languages. Eighties saw more hectic activity in the IT mainly because 
of accessibility of personal computers to small businesses and home 
users. Suddenly we saw more and more institutes offering new 
generation computer language courses. Still computer education came 
through private institutions and not via proper degrees from 
acclaimed universities. It is interesting to note that Pakistani 
universities did not take IT education seriously until early 
nineties. FAST, the first serious computer education institution in 
Pakistan started its first campus in Karachi in 1985 and then in 
Lahore in 1990. LUMS one of the most prestigious universities of 
Pakistan started offering Computer Science degree not before 
1993.This shows how young our industry is. I would not put the age of 
the industry more than about ten meager years. If we compare this to 
India, there first IT institute was established way back in the 
fifties. By 1980 there IT industry was already mature and well 
established; and no wonder they got the maximum benefit from the boom 
of nineties.  

Starting from 1997 global IT went into hyper activity, until then 
Pakistan was a very small player with only few companies exporting 
software and services. Suddenly with soaring demand of software and 
IT related services worldwide, a good example of which is getting 
offshore development work from USA and Europe, hundreds of software 
houses emerged overnight. By 2000 we had over 700 software house 
registered with PSEB. Ninety percent of these concerns had based 
their business models on offshore development and related services. 
Things went well between early 1997 to mid 2000. Some of these 
companies getting work from USA and Europe did good work while the 
rest were not able to complete their assignments. With the .com crash 
in USA, suddenly IT industry was like a ball without any air. USA had 
been the major user of the global IT services, with demand dried out, 
thousands were laid off in USA and its impact was immediately felt in 
Pakistan also. Our current IT status reflects the work done in last 
ten years, first few serious and mature years when quality was the 
most important aspect of development and then years of easy business 
access with quality not being important part of the development 
methodology. Where India was able to strengthen its IT in the last 
few years of the boom, Pakistan industry only had a very short lived 
benefit from the extra business generated during this time period. 
Why, when global IT has gone through serious down turn, major Indian 
players like Infosys, Wipro and others have improved their earnings 
and profitability? Answer is simple, these companies over the last 
twenty years have developed a very mature product line and their 
services are backed by quality assessments. Hundreds of Indian 
companies established in last four years also felt the impact of the 
down turn and most of them packed their bags and went home. In my 
view the last few years of hyper activity did not go well for 
Pakistan IT industry. This period created a false expectation at 
every level. Investors were promised multiple returns practically 
over night. Managements were hired at inflated salaries; and these 
managements made promises that they could not keep. The biggest 
damage was done to employee expectations. In 2000 a fresh graduate of 
three years BCS degree would command whopping Rs. 15000-20000 as 
startup salary. In comparison an MBBS doctor who had spent about 
seven years in school for his degree would get only Rs. 5,000-7,000.  


These kinds of exorbitant salaries were not possible for too long, 
however the employees on the other hand did not comprehend the 
changing business environment and could not handle this reality even 
long time after the mid 2000 tech crash. When there current employers 
started cutting back on salaries, the employee base started changing 
companies, but unfortunately every company had to ultimately go 
through the same difficult scenario, "cut cost or perish". Those of 
us who were able to cut cost quickly and could sense the change in 
the business environment were lucky as they were able to steer their 
companies out of the difficult times very quickly.  

Managements of mid size companies had to go through a very difficult 
patch, on one side they struggled to get new business and on the 
other had to bring down the expectations of the employees. It is 
amazing what a great a challenge it was to bring down the employees 
to the real world.  

Every industry goes through good and then not so good phase. 
Information Technology is different than our mainstream industry. 
There are times when organizations invest aggressively to enhance 
their efficiency and productivity by going for the latest hardware 
and software and that marks the good phase for the IT industry and in 
between until new technology arrives there is a not so good phase 
with organizations curtailing their spending on software and 
hardware. Due to excessive investment in nineties on Y2K bug fixing 
and the extreme over investment on e-commerce related technology with 
not too good a result, most companies took a break from investing 
further on technology and persisted with their existing systems. 
According to one of the report in US journals, for 20 years 
technology sector saw a growth of over 12% but in last two years 
there was a negative growth of over 2%.  

Fortunately for Pakistan there was a reasonable IT structure in 
Pakistan at the time of the record boom in technology sector 
worldwide. Any industry that goes through such a rollercoaster ride 
and survives comes out as a mature industry. Similarly according to 
government sources only 200 odd software companies have survived 
these difficult times. The companies that were found in early or mid 
nineties were lucky to have seen all of this happening around them 
and now will benefit from the experience of surviving extreme times.  


In last three years a lot has been done to enhance the telecom 
infrastructure of Pakistan, prices of bandwidth and easy access to 
Internet are the highlights of the last government. But the most 
critical aspect is the opportunity to strengthen the software 
industry in the Public and private sector. Unfortunately with all the 
efforts by all and sundry no major opportunities were made available 
to the local software industry. With very little experience to show 
on our profiles when we go around the world selling our services it 
becomes a very hard sell. The prime example of how local 
opportunities can help is the instance of NetSol Technologies' 
development of Motor Vehicle Registration System for AJK Government. 
This successful MVR system is now being marketed to countries in 
Europe and Africa with great success. Similar, opportunities to 
develop systems for public sector can enable Pakistani software 
houses to export the products and services to the global market.  

2003 is the year of consolidation. After two difficult years, 
business will be slow to come, but already positive signs are on the 
horizon. There are good trends for new enquiries and few of them have 
also been converted into new business. This year there will not be 
explosive growth in the new business but there will definitely be 
more opportunities to look forward to. We must focus this year on 
improving our quality standards and harboring new resources at lower 
salaries. I am very positive towards more opportunities in the second 
half of the year. USA business is still going to be very slow to 
improve but there are other countries in Europe and Asia looking for 
solutions. NetSol has very successfully tapped into Asian market. We 
have been successful in getting business from countries like Taiwan, 
Korea and Japan. Japan is one market which is difficult to penetrate 
but very lucrative once a break through is made.  

I will not recommend attending any IT shows like Comdex or Gitex but 
rather selling through the network. Due to political ongoing 
environment these shows will not yield due results and the cost of 
attending is high.  

In Mr. Ovais Laghari we have a young dynamic Minister of Information 
Technology, he has been actively meeting industry leaders to help 
understanding the problems and solutions of Pakistan IT. This is a 
very good omen for Pakistan IT sector. One of the important areas 
that Minister of Information and Technology must look into is the 
report by companies like Mckenzies on Pakistan IT. These reports cost 
a lot in dollar terms but they are respected by the blue chip 
customers we all seek. India has benefited a lot from these reports 
over the years. Information Technology is going to get better and 
stronger as an industry in coming years. My estimate is that we need 
three more years of work in domestic market and we need to work hard 
on our quality initiative. In three years that is around 2006 IT will 
be a very important export earner for Pakistan, however, any 
expectations from the Industry to bring in large sums of dollars to 
Pakistan in near future will again be an over expectation.  

The author is the President of NetSol Technologies