It’s only been 5 months since Pakistan’s IT industry crossed $1 billion in revenues through banking channels for the first time in its history. Great news? Yes, but view it in the context of how well other Asian countries are doing and the numbers are dismal.
India’s IT industry is $150 billion while the Philippines, a country with half our population, boasts an IT industry with revenues of over $40 billion a year. Why is there such a huge discrepancy?
Barkan Saeed, the former Chairman of P@SHA, recently took to Twitter to explain the reasons. Let’s dive in.
Lack of Special Economic Zones for IT
Pakistan has no Special Economic Zones (SEZs) for IT. In contrast, India has built 113 over the past twenty years while Bangladesh started working on SEZs a couple of years ago. Other countries in the region, like the Philippines, are also aware of the need for IT SEZs and have multiple for different IT sectors.
Special Economic Zones are important because they provide tax incentives for companies. The intent is to make doing business as easy and simple as possible – whether that’s through one window facilities for company creation or straightforward processes to deal with government affairs and matters.
No Reasonable Tech Infrastructure for Scaling
SEZ also solve the tech infrastructure issue for companies. By providing incentives to builders and real estate developers, companies can rent bigger spaces at lower costs, helping them scale quicker. According to Barkan, “Tech ready spaces in Islamabad, Lahore and Karachi go for as much as Rs. 200 per square foot. It’s impossible to rent large spaces.”
He further added that 5 out of the top 10 IT companies want to add 5000 jobs over the next 6 months but there isn’t any reasonable space to accommodate them at reasonable rates.
One company has been looking for a good space for 6 months in Islamabad.
He capped off by mentioning that acres of government land, which was allocated for SEZs, has been sitting idle for 10 years and now, the IT industry is ready to develop tech parks itself.
Outdated Regulations and Laws are Unsuitable for IT
According to Barkan, SEZ laws have been made by keeping traditional industries in mind and arent’ applicable to tech zones. For them to work for IT, they need to be modified heavily.
“We never work on PPRA laws and have failed to develop the capacity of our local industry through helping them partner with international companies.”
The government outsources to its own companies and as a result, the local industry has mostly been relegated to providing services to foreign clients.
A More Proactive Approach is Needed
The government needs to understand that Pakistan’s IT industry needs a lot of products that simply won’t be funded by VCs like HR systems, CRMs, and ERPs that are designed with local consumers and companies in mind. “By developing local products, we can save on foreign exchange and then later market to the world.”
According to Barkan, right now companies are coming to Pakistan asking for a time to meet the decision makers while it should be the other way around. If Pakistan’s IT industry is to escape its self-imposed purgatory, it needs to adopt a salesman approach instead of a “slow customer support” one.
1 billion against 40 billion and that with half population. Thats shameful. All this money could have been useful to cover trade deficit. But no body cared. IT industry is the future and there is much potential for it in Pakistan to lift millions of families from poverty.
IT was past not future. Future is space. This overall lack of understanding of big picture was reason why PK failed in all sectors. Companies need visionary leaders and ppl working in companies needs maturity to work in team environment. All those free lancers who thought working in company is slavery will suffer a big time. Just like rickshaw drivers and workshops and thailay wala, every Pakistani developer wanted to build his own thing which is an app or another e commerce site. You need big strong companies to whom universities and Gov provide backing. Otherwise there is no chance in tech in global competition. And btw India iz big loser in IT. It failed to produce any big company in tech as well. Somehow Chinese n South Koreans proved they are better race. The key was big companies Samsung HuaweI etc. Pakistani ppl do not have maturity to work in big teams in co operative manner and the Gov. and university is full of ghatiya ppl who do not want to support companies. There is no future of Pakistan in tech. Best thing is to persuade Chinese to open their company branches here.
I am a developer in Europe and believe me Pakistan is considered nothing in the IT World. Whereas India is considered the new powerhouse of IT and technology. India has reached the export target of more than 50 billion US Dollars in the IT Sector.
Moreover almost all Fortune 500 companies are now there. Apple, Google, facebook, IBM, Dell, Airbus, Boeing have now more than 100,000 employees in India alone. You will find hundreds of Top Indian CEOs in Europe and America.
Whereas Pakistanis are mostly found in small corner stores,restaurants, workshops and in other menial jobs throughout Europe. Even our education system is corrupt and is producing no quality material. I have hired some developers from Pakistan and all of them faked their CVs. Now I have decided not to hire anyone from my country. We are champions in lying and deceit only.
We are too far behind now. The only solution is to have best relations with our neighboring India and to set up join venutures. We should end the war mongering the 5th gen warfare stories.
Also we have to strenghten democracy and should reduce the intolerance, so that the world will trust us and will work with us.
Very interesting article by Barkan Saeed about IT industry growth of Pakistan. My 2 cent is, all we need to learn to work in collaboration. Why every industry representation becomes an influential group of people? Why every solution to this country starts from funding? We have already invested a lot of money on the infrastructures, money should spent on human development. Due to mass brain drain, we hardly make opportunities here.
The world is evolving, we don’t need to start now the things which is been started 20 years ago in other countries, we need to think virtual and global. Bring investments & global players in Pakistan. I am sorry for being little blunt and apologies if any of my words hurt anyone. Thanks
Human Development is one of the most important aspects
Thank you for your feedback Kanwal .We have to see examples similar to ours which match our human capital capacity and demographics . The best model is to take success models of others. The three biggest things we need to work on are
1) Human Capital Development
2) Physical Infrastructure.
3) Ease of Business
This is how AT KEARNEY Ranks the outsourcing locations and this is based on our understanding of things at P@SHA with industry
On physical infrastructure, the model is public private partnership model in which the government doesn’t spend money but private enterprises are given incentives to build themselves
Our point is exactly the same, that we need to encourage investment from private sector and bring global players to Pakistan. This is what global players tell us
and positive attitude critical feedback is always welcome. We are all working for the betterment of Pakistan