FeaturedNationalVOLUME 16 ISSUE # 12

Pakistan’s IT industry in upbeat mood

According to a report released by the Overseas Investors Chamber of Commerce and Industry (OICCI), Pakistan has the potential to enhance its IT exports to $10 billion from the current $2 billion. The report titled “OICCI Recommendations for Digital Economy” highlights the much-needed shift required to capture the opportunity of digital transformation happening within and outside Pakistan through new initiatives and aggressive marketing.

The report says: “Digitising most, if not all, key segments of the economy could boost IT exports to $10 billion annually, provide a significant growth to the gross domestic product (GDP), attract billions of dollars in foreign direct investment (FDI) and create new jobs within a short period.” To fully utilise the FDI potential of the IT sector, there is, of course, need to create an enabling environment for investment in the platform and hi-tech ecosystem, so that Pakistan can attract global IT platform players and venture capital funds to accelerate the trend towards innovation. The OICCI has also emphasised the need for sustained and structured efforts for improving the global image of Pakistan as an attractive destination for FDI, especially for large international technology players.

The OICCI recommendations are comprehensive in their scope and embrace key areas such as connectivity, digital financial system, export growth and digital skills, platforms and e-commerce ecosystem, innovation and regulatory environment, and digital governance and citizen services. At present, IT exports from Pakistan are worth only $1-2 billion, while other countries are doing much better. For example, the Philippines, with half the population of Pakistan, exports IT services worth about $30 billion and India over $190 billion. Among other things, the OICCI report has underlined the need for stable and inclusive regulatory practices to ensure effective participation of global players in the platform economy and connect Pakistan to global e-commerce and creative economy opportunity.

Recently, the government inaugurated Special Technology Zones but to make them fully functional it is important to establish a digital mechanism to provide ease of doing business coverage to bring into use 5-10 million square feet of space quickly. According to IT experts, the government needs to improve the quality and stability of connectivity through rapid fiberisation of the system, enabling the country to be integrated with global technology chains. An accompanying need is to improve digital governance, which can significantly help in terms of service efficiency.

The factors favouring Pakistan at the moment are a visibly improved security environment and attractive operating costs in terms of hard currencies, following steep depreciation of the rupee. Over the last few years, Pakistan has taken rapid strides to improve its standing in the global Information Technology sector. One proof of this is that Pakistan’s IT exports grew by 39 percent to $763 million in the first five months of the current fiscal year as compared with $549 million in the same period last year. In the last fiscal year, IT-related exports were recorded at $1.4 billion.

A heartening development is that Pakistan is now widely recognized as a global player and Pakistani IT talent is now well established internationally. The number of IT companies in Pakistan has now increased to 2,354 from 1,762 in June 2018. According to Najeeb Ghauri, Chairman of Netsol Technologies, one of the reasons for growth is the maturity of the IT industry: “Pakistan’s IT industry is 30 years in the making. The industry is on the move and is very bullish. Now we see very mature products and services being offered from Pakistan.”

Major IT-related products coming out of Pakistan include customized software development across multiple industries, call centers, business process outsourcings (BPOs), consulting for IT services, system integrators and solution providers, global tech support centers, game development and mobile apps and creative services.

Some of Pakistan’s major IT players with global outreach are Afiniti, Netsol and KeepTruckin. Major services and BPO companies include Arbisoft, Systems Limited, Venture Dive, Techlogix, Infotech and TRG. “Ninety percent of our exports are services-based and very few global products are a part of the mix,” said Shehryar Hydri, an IT consultant and former secretary general of Pakistan Software Houses Association. Most of the earnings are through remote teams, developers hired as consultants and offshore back offices for larger companies in the EU and North America.

Pakistan’s ministry of commerce recently broke the good news that the British American Tobacco (BAT) would set up its Business Shared Services organization hub— the BAT “Global Business Services” for Asia Pacific and Middle East Region— in Pakistan which would act as a talent incubator and give a big boost to Pakistan’s IT exports.

Many big companies in the US and Europe already have highly organized offshore processing offices in Pakistan which are making software for them. Pakistan’s leading IT experts are optimistic about the future of the local IT industry and see the current technology paradigm shifts and transformation as opening the door to the emerging global IT opportunities. If the current trends continue, Pakistan may soon reach the $5 billion export mark.