Building IT Parks – A Strong Avenue for Economic Development in Pakistan

By Wajid Hassan

The IT industry of Pakistan has the potential to become a major economic contributor to the country. Pakistan has only 125 CMM and ISO certified companies which guarantee on-time delivery and efficiency.

Pakistan can establish its name as a leader in quality software and IT Services in the world. Karachi being the ‘New York of Pakistan’ is a highly favorable place to establish an IT park. The metropolitan area of Karachi has a population of more than 15 million, dozens of HEC-recognized IT departments and universities and a great concentration of IT firms. The city is also a travel and financial hub. It is famous for its seaport and is the heart of the economy of the country.

Over 100,000 trained professionals and an increased number of educational institutes are adding a great number trained resources to the vibrant job market in this field, ensuring that a talented pool of resources with exceptional skills is always available to this industry. But due to the lack of sufficient facilities and opportunities, most of the talent pool is unable to contribute to the development of the country.

IT Technology parks provide the organizations with a hassle-free setup on friendly policies and low cost. State of the art facilities and office spaces are provided by IT parks with the aim of expanding IT enterprises and providing a one-stop solution for setups.

After 1970, many developing countries have established technology parks at regional and national levels for regional and economic development by providing infrastructure to tech-businesses for creating new opportunities for employment.

The main objectives for the establishment of technology parks include knowledge flow and encouraging cooperation between industries and universities to create innovation firms, high-tech jobs and attracting enterprises and foreign investment in the country.

Pakistan’s current software export is approximately $1 billion compared to Indian Software export of $111 billion. With a limited number of IT Parks where fast Internet, 24-hour availability of electricity and secured premises are available, we have stunted the IT sector’s growth in Pakistan.

There are only 8 IT Parks in Lahore including Arfa Technology Park, 5 located in Islamabad and none located in Karachi. Private enterprises have established makeshift facilities where building owners ensure 24/7 hour electricity, security and uninterrupted fast internet but there is no such facility provided by the government.

Pakistan is at a decisive stage. Decisions that are taken now will have a strong impact on the future of Pakistan. The need of the hour is making Pakistan a service based economy. IT industry is an example of a service industry that can significantly boost the economy of Pakistan as demonstrated by other developing countries like the Philippines, India, and Singapore.

IT industry, unlike other industries, does not require heavy machinery. Over 100,000 people are officially employed in the IT industry of Pakistan and many more are employed informally. Unfortunately, the IT industry in Pakistan is not given the same industry status as, for example, the textile industry and this, in some way, has impacted the development of this industry in the country.

Pakistan has only a share of 0.9 percent of the global IT sector that is approximately $303.8 billion. If significant steps are taken by the government then it can have a great effect on the GDP and foreign investment.

In spite of the challenges faced by the country including political instability, energy crises and lack of promotion, the IT sector of Pakistan has gained global recognition. There have been success stories in the various domains of IT like mobile applications, healthcare, finance, and telecom.

As per reports by PSEB (Pakistan Software Export Board), the share of Pakistan in the global sales is $2.8 billion dollars, out of which $1.6 billion dollars account for country’s IT-enabled services and software exports.

The main focus of Pakistan has been mainly high-end software products, whereas other developing countries like the Philippines and India have focused on more basic IT enabled services like outsourcing and software support.

Electronics Commission of India led the development work of India’s IT sector. The commission’s work was supported by UNDP (United Nations Development Programme) and a master plan was developed for regional centers of computing.

The key focus of the work was on knowledge development and intellectual capital. Today India shares 39.2 % of the global IT industry.

The industry is continuing to develop and nearly 230,000 jobs are generated every year. Almost 2.8 million direct employments and 8.9 indirect employments are being provided by the IT industry of India. Telecom and IT ministry of Pakistan can leverage large international organizations’ support to build similar regional IT Parks.

Another developing country where IT service development and promotion has played a great role in the development of the economy of the country is the Philippines. Since 2006, the BPO (Business Process Outsourcing) industry of the Philippines has developed 46% annually and is overtaking the progress in the IT sector in India.

The IT sector in Pakistan has great potential. However, there is a significant need for the development of IT parks and promotion in order to strengthen the economy of the country and to compete with other developing countries.

Issues like lack of world-class research & development, the absence of state of the art infrastructure and payment gateways etc. have created difficulties in the development of this industry.

With a clear vision, strategy, and direction, the IT industry can grow in the country resulting in more employment opportunities and alleviating poverty from the country. Development in the IT sector of Pakistan will attract foreign investments in the country which will also have an impact on other industries as well.

The establishment of technology parks is crucial for the economic development of the country. Software technology parks can be helpful in the creation of new businesses and attract foreign investments. Results show that half of the firms located in already established technology parks are startups.

The IT parks already established in Pakistan are small in area as compared to other Asian counterparts such as India, China, and Korea etc.

This study shows that to create new businesses, new jobs and to increase the GDP of the country, the government needs to establish more IT parks as well as promote research and development in the country.

About the author: Wajid Hassan is a Ph.D. Fellow in Technology Management and advisor to the Chancellor, East-West University, Chicago.