IT woes: Pakistan’s software houses need to share

Published: October 26, 2010

Companies need to collaborate to create bigger and better industries.

Despite their strength in numbers, many local industries have lost their competitive edge in core product offerings.

Let us examine one such industry: Pakistan’s IT sector.

The two biggest industry associations, PASHA (Pakistan Software Houses Association) and PSEB (Pakistan Software Export Board) represent a total of 1,800 members (400 and 1400 respectively). But these numbers do not translate into dollars when compared to other regional players. Despite the large number of PSEB members, the total size of software and IT services export from Pakistan is only slightly over a billion dollars – that is 50 times less than India’s.

Although Pakistan’s IT Industry has witnessed exponential growth in the last decade, a lag exists, which can be best addressed by carrying out a scenario analysis of the local market. According to PSEB, the annual growth rate of the local IT sector has increased 33 per cent from 2005-06 to 2009-10, employing a human resource base of approximately 110,000 with more than 15,000 IT professionals engaged in export-oriented activities. Given the essence of the industry, which runs on low costs and higher productivity, is the figure of USD1 billion justified?

Tackling weaknesses effectively

Below are a few limitations which inhibit the resource-efficient and cost-effective growth of the industry, translating into an exponential growth in industry size in dollars.

These include:

  • Knowledge-base of start-ups;
  • Access to a trained HR base
  • Access to Venture Capital funds.

One way to tackle this is by promoting a collaborative working environment. The aim behind going collaborative would be to reduce costs and increase levels of efficiency, taking up the size of software exports from the local IT industry to its truest potential.

In other words, businesses should consider collaborating on larger projects, capitalising on each other’s strengths.

A need for examples

What is required here is a sincere move forward towards expanding horizons and thinking big. This is best done when the right combination of resources is used in a collaborative business environment to jointly handle larger projects combining one’s resource strength in a particular domain with the other’s strength in another domain.

InfoTech: One company that got it right

An exemplary local institution that is trying to bring such a culture to Pakistan is InfoTech. It is a leading systems integration and outsourcing services provider, based out of Pakistan, with a client portfolio ranging from the largest banks in Pakistan to capital markets in Africa.

InfoTech offers technology solutions to an all-sector economy, including the banking/financial sector, telecommunications, government, manufacturing, and retail/distribution businesses. Other than infrastructure solutions, InfoTech also provides outsourcing solutions and technology consultancy. In order to deliver larger projects internationally, InfoTech has collaborated with many local and regional companies that complement its strengths.

Naseer Akhtar, CEO of InfoTech, says:

If we do not get into the habit of collaborating and delivering quality internationally, Pakistan will never be considered a serious contender in the global market. We need to change our much destroyed image and have to make the global markets respect us for the potential that we possess.

All set for the bigger picture

So what exactly am I suggesting? Any weakness can be tackled effectively with a broader vision and a drive to turn weaknesses into windows of opportunity. This is possible through synergising and collaborating.

This is not to insinuate or discourage projects being handled single-handedly, but to stimulate a thought process towards creating more opportunities in the global market, where competition is fierce and experience is key. This atmosphere makes it very difficult for single, smaller companies to service large projects.

With various example setters in the international arena, InfoTech is a local winner, which has been working collaboratively with its colleagues in the local industry to deliver valuable projects, locally as well as globally.

Greasing the wheels

Simply put, there are a few cultural traits that need to be collectively addressed, in order to move to the next step of working together in a shared environment that requires sharing of resources.

Generally speaking, these include:

  • A trust deficit;
  • A hesitancy to make the first move;
  • The lack of a legal framework to enforce compliance with rights and obligations stated under a contractual agreement;
  • A corrupt and lethargic attitude.

With the bigger picture in mind, it is safe to assume that compartmentalized approaches can no longer guarantee success in the long run.

anoosha.pervaz

Anoosha Pervaz

A research and editorial manager at CIO Pakistan.

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.

  • http://meer-meherz.blogspot.com/ Meher Zaidi

    As a health consultant I developed Electronic Medical Records especially for Pakistani physicians, students and nurses. The simple software for the hospital management system that our company developed was latest at the time 2002/2003. The Pakistani medical community refused to buy the products even at the cost price. The difficulty I find in our IT industry is mainly human resource, no venture capital investment and sheer difficulty in sustaining independent outfits. There is a need for shared resources, understanding market, cutting edge pathways and cooperating by pooling, sharing and targeting markets. Most work nowadays is being done by doing small development that also limited to some programming. The government needs to support in a more visionary and economically supportive way.Main thrust should be development of human resource with advanced knowledge. Th IT industry can take Pakistan way forward in improving its economic growth. We have spread our education /economic resources at HEC level too far and thin. We should have concentrated on IT as we had started in 2000.Recommend

  • http://internationalstaff.net Anthony Mitchell

    This nice bit of fluff for InfoTech ignores the major problems facing the IT industry—most of which are self-inflicted.

    As with most export-oriented IT companies in Pakistan, InfoTech is invisible on the global stage, invisible on the first page (the only page) of search engine results, and non-existent in the minds of potential clients.

    Mindshare: zero.

    This is the standard state of affairs for IT companies in Pakistan, most of which are run as ‘lifestyle businesses’ rather than operations with any intention or prospects of maintaining a leading share of global markets.

    We can all predict the disappointing outcome that would inevitably ensue if a random foreigner were to open a fashion store in some random neighborhood in Karachi, for example, without paying attention to what customers seek to buy, how they wish to be treated, or what the sales cycle is for that particular industry. Yet Pakistani IT entrepreneurs customarily ignore basic business principles when they head out onto world markets.

    Business is about trust — about gaining it initially and maintaining it throughout the sales and delivery cycles. If I cannot find InfoTech on Google, how can I trust them?

    Try the same for the other leading software houses in Pakistan. Most are ether invisible or treading on the brands of more credible vendors.

    Client-relations skills are unacceptable.

    Staff are not prepared to deal with clients. Managers expect clients to adapt to Pakistani business practices, rather than Pakistani companies operating according to global business standards. Intellectual property protections are commonly disregarded and widely misunderstood.

    Don’t know who to buy from? Try contacting PSEB or some other government authority for help in finding an IT vendor or for help setting up an export-oriented IT operation in Pakistan. Unless you have pre-established connections, you won’t receive any response. If you extend your quest for information beyond PSEB, don’t be surprised if you encounter a crude shakedown attempt.

    I am supportive of the IT industry and I believe Pakistan represents the best IT/ITeS destination in the world. But unless and until that appreciation begins to filter out into the industry itself, and until industry members commit themselves to achieving world-class standing, Pakistan’s tremendous potential will remain a chimera. Just like InfoTech’s position in the search engines. Recommend

  • http://www.meer-meherz.blogspot.com/ Meherzaidi

    I tend to partially agree with Mr. Anthony Mitchell but he seems to be too harsh in his categorical judgement of not finding Infotech on google search. I did find it on google search but the company does seem to list its clients , all of them in local market. This is true of all the Pakistani IT companies. Mr Mitchell ought to realize that the human resource and educated human resource where IT education is so expensive is the problem in Pakistani outsourcing and international competitive market. trust develops with collaborating over a period of time , not finding it on google search. He maybe right in asking the Pakistani to understand business trends and improve their marketing and targeting behavior but then at such low economic and education level how can one expect such a fast paced competition.
    the PSEB again has given e mails in a very simple category listing for some functions. There is no information , not even name of the concerned persons.It seems that the vacancies are filled by candidates not on merit but otherwise. The whole attitude of the PSEB will be reflected by the kind of persons manning the board. The website is also reflecting its general mediocrity. I see some hope in his I believe Pakistan represents the best IT/ITeS destination in the world. sentence but for this again developing the right human resource with exposure is the answer.Recommend

  • http://www.apnijobs.com Kashif Aziz

    I would second Anthony here. While we don’t have Wipro, Infosys, Satyam or HCL, we had and have our share of success stories who rode the IT bandwagon to boom for brief periods. I am referring to the likes of CresSoft, Kalsoft etc. Then there are the likes of Systemsltd and Sidat Hyder, mostly involved in local consultancy projects.

    I am not sure what PASHA and PSEB are really doing to promote software industry of Pakistan (if it can be called an industry). What sort of research and training opportunities they have provided? Do they help companies seek work from abroad? What benefits you can have being a member of these bodies? Recent Gitex is an example of efficiency of PASHA and PSEB where they failed to arrange a representation of Pakistan. PASHA, seems to be an organization run by individuals, who apparently use it for self-promotion and networking.

    If Pakistani IT industry has to survive and sustain, it has to build competent human resource. We clearly have a dearth of capable IT staff and this puts a big question mark on our reliability as IT service providers. I can quote numerous examples where established software houses have backed off from projects due to lack of human resource.

    Secondly, there should be a body to accredit and compile a list of service providers, maybe using a rating system similar to ODesk. This would be extremely helpful for potential customers, local or from abroad, to connect with right service provider rather than wasting their time and money on opportunity seekers.

    Unless serious steps are not taken, Pakistan IT woes would continue.Recommend

  • http://greenwhite.org Qazi Atiq

    I have few issues with this article.
    1. Why does while discussing the Problems in IT industry the issues like absence of electricity, law and order (try talking to a client after a bomb blast and tell me what they say) are not even mentioned.
    2. Infotech is definitely a big name but how are Techlogix, Netsol and other bigger ones are not even mentioned, and when author says infotech has done it right can an example be stated where infotech worked ‘collaboratively’ with another firm ?
    3. There are a total of 1400 members i guess because the 1400 and 400 numbers are not mutually exclusive.

    However I do agree to Antohony in regard to our preparation for the big stage we miss it a lot, and price is not a diffrentiating factor any more, a lot of countries offer more attractive rates with better stability. We need to do a lot to learn.

    And being involved with in the industry i can safely say there is a lot of grassroot collaboration happening between IT companies, and trust level has increased many folds, with companies not only doing joint porjects but also refering their competitor local companies if they can not take a project them selve. So its not as bleak as it seems.Recommend

  • http://www.myoffstreet.com Shahjahan

    We recently attended Asia-Pacific ICT Awards in Kuala Lumpur. Pakistan competed in 16 categories in a regional event with participants from Singapore, Hong Kong, Australia, Malaysia and other countries. Pakistan won a Merit Award in 7 out of 16 categories.

    As a startup, I have personally experienced the effort and contribution of [email protected] in fostering an ecosystem of innovation, growth and collaboration. I invite Anoosha and the other critics to get together with us and build a positive environment for the growth of technology companies.

    So it’s a $1 billion industry. Is that a criticism? You cannot grow enough mangoes or milk enough cows to achieve big numbers like $100 billion per year. You can’t even do it with cotton or textiles.

    It’s only in technology that you can create enough value-added in a short period of time to grow really big. Our national goal should be to create 10 or 50 or a 100 big technology companies.

    Are we doing that? What are we doing to facilitate the emergence of an ecosystem of innovation and growth? The government needs to wake up, and the people who want to see things in better shape – should start doing them.Recommend

  • Chris Hanses

    Who says Pakistan has not succeeded in IT? I believe Pakistan is the world’s most successful country as far as the IT industry goes. IT in Pakistan stands for International Terrorism and is its most successful export. The United States pays it billions every year to stop its export!!! Recommend

  • Anoop

    For IT companies to invest stability is really important. When has Pakistan ever experienced stability?Recommend

  • Ebad

    @Chris Hanses:
    Oh so sweet. how old are you by the way? because this is a topic for adults. sweet dreams.Recommend