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Last Updated: Friday, 24 August 2007, 17:03 GMT 18:03 UK
Pakistan raring to go in IT sector
By Santosh Sinha
BBC World Service, Karachi

Venture capitalist Faruq Ahmad
Venture capitalist Faruq Ahmad is hopeful

"Pakistan is at a tipping point," says Faruq Ahmad, a venture capitalist based in Silicon Valley in the US.

And before you jump to any conclusions, no, he isn't talking about the political state of affairs in the country.

Mr Ahmad is among a dozen international information technology experts who recently visited the coastal city of Karachi for Pakistan's biggest IT, telecom and media show, ITCN Asia 2007.

"If you go back eight or nine years, both India and China saw a lot of investor activity but not much investment," he says.

"The biggest reason for that was the investors could not assess the risk of investing in these countries.

"That changed with some early movers investing in India and China and soon enough the capital was flowing in - turning ideas into attractive business propositions."

Faruq Ahmad believes the same story could repeat itself with Pakistan, given the steady growth of the information technology sector in the country.

Steady growth

According to figures available from the Pakistan Software Export Board (PSEB), IT exports have grown by 50% in each of the past three years - reaching $1.4bn in the financial year ending June 2007.

The reality of Pakistan is that it is a good and safe place to do business
Awais Ahmed Khan Leghari,
Information and Technology Minister

To put this into a South Asian context, India earned around $31bn in the same year.

Comparisons will naturally be made, but Ashraf Kapadia, president of the Pakistan Software Houses Association (Pasha), isn't perturbed.

"It shouldn't surprise anyone that India earned 20 times more than us. After all, it has eight times more people than Pakistan," he says.

Mr Kapadia says that Pakistan's key strength lies in its cheaper costs and a strong desire to prove itself.

"I run a subsidiary of my company, Systems Limited, in the Indian city of Bangalore and it costs me almost 30% more to run it.

"Also, because we are desperate for work, we pick up jobs that Indian and Chinese companies find either too complex or not profitable enough and work hard to deliver these well."

Ashraf Kapadia
Mr Kapadia says Pakistan is desperate for work

Over the past few years, companies like Systems Limited, Etilize and LMK Resources have worked hard with the subsidiaries of international majors like IBM, NCR Terradata and Mentor Graphics to establish Pakistan as the new destination for IT and IT-enabled services (ITeS) work.

Now, a newer generation of entrepreneurs is hoping to take it to the next level.

Inov8 is one such start-up, set up by two cousins who returned to Pakistan after spending nearly a decade in the United States.

One of its first products is a Java-based mobile payment system, which is being rolled out soon on Mobilink - Pakistan's biggest mobile operator with nearly 27 million customers.

Bashir Sheikh, co-founder and President of inov8, says: "My cousin Hasnain and I wanted to break out on our own and the feedback from friends and business contacts was that Pakistan offered a good and stable platform for that."

Challenges

However, getting skilled people has been a key challenge for them.

"It is difficult to find talented individuals with both business and technical skills and, unfortunately, we have had to train our employees ourselves," says Mr Bashir.

Pasha's Ashraf Kapadia concurs with the view.

"At the moment, we just have adequate number of people to meet the industry's demands. If we continue with our current rate of growth, we would need another 25,000 people over the coming year.

"We can get about 2,000 from Tier-1 universities like Lahore, Karachi and Islamabad, and another 10,000-15,000 from other universities. But more needs to be done to ensure that skilled people are available to meet the demand of new work."

Then there is the question of how Pakistan is perceived.

ITCN conference, Karachi
ITCN is Pakistan's biggest such event

The country's Information and Technology Minister, Awais Ahmed Khan Leghari, says: "I am aware that every time a business executive says that he is off to Pakistan, his family must be getting worried.

"If the international media are to be believed, there are fundamentalists with Kalashnikovs moving around the streets of Pakistan."

Mr Leghari says he is eager to correct that perception.

"The reality of Pakistan is that it is a good and safe place to do business. There is no tax on earnings from venture capital and reasonably easy exit options. And I hope that those visiting Pakistan haven't seen Kalashnikov-wielding fundamentalists roaming our streets."

On education, he says the government has almost tripled its investment in the public-sector universities over the last five years.

"We are also making money available to software companies to train their employees. We are also looking forward to universities from Italy, Singapore, Japan and South Korea bringing their expertise and curriculum to Pakistan over the coming year."

These efforts may take some years to bear fruit.

In the meantime, Pakistani software companies are focusing on building up skills of their employees and on being recognised as a serious player in the IT and ITeS sector.

They hope that increasing costs in India and China may encourage multinationals to look at other options.

Pasha's Ashraf Kapadia says: "We want Pakistan to be their first choice. We are already competing with these countries for business, and are in a position to provide the same quality at a lesser cost.

"With the right investment and environment, there is nothing stopping us from growing the same way that India and China did earlier on in this decade," he says.




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