This might be perhaps the most informative thread on the site. Unfortunately it is languishing in S&T.
Before I comment, I need to know do you guys want to keep the discussion Pakistan specific or are you looking to engage in other experiences and driving factors on a more macro level?
Matsui, shoot.
I think there are a lot of things being talked about here. Export driven services models to domestic consumption driven IT services growth. I think Outlaw is correct. In the short term, gov't will have to do more than private enterprises to make inroads into both IT services scenarios.
I think export driven IT sector growth is out of scope for now. As many of you have mentioned, a robust IT education infrastructure is absolutely required to make this work. Plus, I think there is no competitive advantage for offshoring from the west to Pakistan, as it exists today. Most companies follow a simple paradigm for Offshore partner selection using the following steps.
1) Whether to outsource or not
2) Outsource: one shore/near shore/ offshore
3) Offshore: Country selection (Political economic risk plus cost cost vis-a-vis value. The old Mckinsey chart but in 3D
4) Capabiities of individual companies.
5) Commercials
By the time you get to step 4, 99% of the companies from step three are out of the running. So the candidate must be an extremely strong leader to get awarded menial work. Not to say that sexier stuff is not happening. But the big boys would rather set up something captive than pay for your margins. Which brings up another point.
If your margins are continuously going to be squeezed as the IT business becomes more and more commodotized, which by the way, it has. Then you need to figure out niche plays or move up the value chain. Leap frogging can be done now because of new technologies that some of you have mentioned. Collabrotive development platforms combined with lower IPLC costs do not necessitate movement of data thus risk of IP loss to the offshore vendor.
If deregulation in the telecom sector happen faster, then local links between cities and the IPLC landings can make Pakistan leapfrog into niche indutries as an IT player. I do not see banking or other financial services as the strength but things like ERP II for Retail and Manufacturing of soft goods and ONG industries can definitely be in the forefront.
What is required:
As I mentioned, aside from telecom deregulation, there needs to be tax breaks for export driven industries which signals formulation of lead sectors. I am not sure what Pakistan has done to date but creation of a business friendsly environment is an absolute must. and PR...PR...PR.
I was on a recent roadshow with the new minister of trade and Industry. Hon. Arun Jaitley in NYC. He went around and gave talks across the country on what India is doing. Ministers come and go all the time but in the past few years there has been a carnival atmosphere for these roadshows. Not because of the minister but because fo the India Inc. that it brings with it. CEO's of all top tier IT services firms, CEO's of all top tier Manufacturing companies and CEO's of all top tier Banking and Insurance comapies went around on this whirlwind tour. THe PR was tremendous. In everycity, the chairman of every large corporation was there to meet and listen to the value proposition.
In a roadshow led by a politician the business guys were a hit.
Matsui, what’s “IP” and “IPLC”?
On the export and domestic IT iniative front, following that has been done so far (I’m sure there is more to it, overall):
Matsui yaar, good points. I will come to the deregulation part. On the political sides, we still have those inepts "angootha chaaps" running the IT ministry. I mean how the hell Awais Leghari ( a landlord's son from DG Khan) qualifies to become a minister for IT. The ministry position should have been awarded to someone with broader understanding and in-depth knowledge of Information technology.
Sectors such as economy, science and technology and education, where qualified ministers have been appointed, have shown tremendous turnaround. It's unfortunate that the ones who are not capable and educated enough to hold such positions have been appointed- where interaction with current trends and technologies is mandated for robust growth.
As far as the deregulation is concerned, it’s going to happen under the WTO regulations by 2005. But, whether the IT and telecom sector is attractive enough for the investors, I doubt it. The government has been trying to privatize Pak Telecom for the past four-five years, and hired consultants such as Goldman Sachs and Merrill Lynch, but the bureaucracy and the global economic slump has proven to be achilles’ heal. Plus, Pakistanis have not done such a great job in improving the image after Sep 11 and the war in Afghanistan. Although, when you look at the oil and gas sector, it has attracted tremendous amount of interest and investment opportunities from abroad, especially after the huge discoveries of natural gas in the late 90s. In order to tackle the lack of security (which I think is a myth), many companies have built airstrips near the fields, so the employees from abroad are exposed to lesser degree of risk by not having to travel in the countryside.
These companies have done that since they are sure of ROIs and it’s a lucrative area to invest. Now, if Pakistan could do the same thing in IT sector, I am sure the investment would start to flow in. But, IT is not something that occurs naturally, and a lot needs to be done on domestic front.
Roman, IP being Intellectual Property and IPLC being International Private Leased Circuits. When a client.... say a big bank wants to send data across it would rather do it over a private leased circuit than over FTP or another mechanisms...VPN's come to mind. But the latter aren;t as secure as dedicated links, unlike the IPLC's. I am not an IT fella so you will have to elucidate the difference. Providers can get these lines and issue bandwidth based on client requirements for data or voice packets thus ensuring security. THe cost of such has been going down tremendously over the last 5 years and continues to spiral. Therefore there is no need for data to reside on the vendor preises and it is easier to do business and address IP concerns.
Also, what are the norms with legal reforms particularly capital adequacy requirements and indemnifications issued for third party claims for IT firms in Pak. THe reason I ask is because last year we had to walk away from two deals for a subsidiary because of obscene requirements from American clients. It became commercially unreasonable to do the deals.
Outy, you bring up a good point about "professional" managers. In India "professional" managers were simply not there before 1991. 40 years of license Raj produced cronyism and nepotist cadre of managerial corps. The importance of catering and investing in the Indian Institute of Management has paid tremendous dividends by developing a professional core of managers, we are seeing more na dmore dynamic firms and strategies evolved. This is an absolutel must...if not more important than the IT education infrastructure.
LUMS is producing good quality professionals in Pakistan. But it's relatively new institution and graduates have not populated the industry that much yet.
The accounting/finance institution has pretty heavy presence. The graduates are pretty good professionals too -- but that's mostly true about education received beyond Bachelor's. They really make you work hard.
Coming back to IT, I think at this point Pakistan must focus on inviting more credible and prestigious firms like PwC, IBM, Oracle etc to establish their presence in Pakistan. This will induce benefits in the long run in terms of:
1- Local graduates getting experience working for companies that have a proven track record of successful and modern business practices.
2- Employment opportunities.
3- Positive competition for local business to improve their quality of services and practices -- I have already seen this in case of restaurant business where local restaurants have to compete with Pizza Hut and McDonalds and their services and efforts to provide clean environment has drastically improved.
4- Emergence of Pakistan on the global scene as a credible investment region to offer business related services.
At the same time, concurrently, government and other related organizations must make collaborative efforts to improve the quality of IT education in institutues. They must standardized the level of competency, syllabus, and establish well-defined guidlines to make proper use of present day technology.
As a side note to IT education, part of the reason that Indian engineers are sharp is because they have very good math skills and educational infrastructure in India. Indians are good in math, Pakistanis are not. Math is fundamental tool that's the core of IT engineering and software development, and at the same time intigates good business analysis skills. All in all, there need to be some grounds-up effort made to improve IT education quality in Pakistan. Putting emphasis on just learning few programming languages and softwares does not by any means yeild good quality software development and IT solutions. There is a lot more to (eg, Faisal's point on QA practices etc).
From development of a lead sector perspective. It is volumes that drives the services business. How many decent college graduates come out of Pak in a year? I woul dput pakistan in the same bucket as a phillipines. The pool of resources is limited, therefore to build a lead sector from an angle where you do not have competitive advantage is a futile effort.
I think Pak should look at IT simply as an enabler for other sectors that can drive growth. I think that in the area of sof goods manufacturing and ONG, pakistan might have some competitive advantage. Building a maufacturing base and focusing on capturing a small percentage of another countries marketshare should be the way to go. China, Indonesia, malaysia, mexico etc make the market in these the soft goods manufacturing side. Pak can definitiely make inroads here.
I read first posts and I am already lost.
You guys need to find something better to do in life than IT.
This guy I know makes and installs beautiful cabinets and storing spaces in garages....I bet he is making more money than most big shots in IT and enjoys it so much. No tension. No pressure. What could go wrong? does not fit? just trim it another 1/8" and everything is fine.
bha***** paRh ke wakhat paa liya sir...I want to go back to kheti-baaRi.
Romeo, let us buy few acres of land in California and grow all kind of vegetables ONLY. pick and pack them nicely and send directly to super markets. We will hire Matsui as delivery man on our van. If it feels better he can call himself Director of Logitics.
hahaha! That's a good idea Chann ji.
Today I called a friend of mine back in Pakistan. He was not home. I learned that he went to his "zameen" in village. Apparently, they are trying to grow crops in their zameen and then planning on selling it in the market. Waisay Chann ji, khaitee baaRee da vee apna ee maza ay. Next time I go back to Pakistan, I'm gonna spend some time with him doing the stuff. Of course, I'm like a "shehri bao", can't do that for living.
Off the net...
Finding Opportunities in Post-9/11 Pakistan
Growing Economy Sparks Return of Capital, Expertise
Washington Post Foreign Service
Monday, February 17, 2003; Page A27
LAHORE, Pakistan -- Terrorism, nuclear threats, a history of political turmoil and military rule -- when it comes to scaring off investors, Pakistan seems to have covered all the bases. Unless your name is Zia Chishti.
A U.S.-born Pakistani American entrepreneur who made a fortune in Silicon Valley while barely out of Stanford Business School, Chishti, 31, is now devoting his energies to building a new call-center company here that provides telephone services -- such as taking orders for merchandise -- for businesses in the United States.
So far, the bet is paying off. Operating from a seventh-floor office in this ragged, energetic city of 5 million people in Pakistan's Punjab region, the company uses satellite and fiber-optics technology to handle customer calls for about 50 U.S.-based clients, including a major newspaper and a toy company. (Chishti asked that the clients not be named, citing confidentiality agreements.) Chishti's call-center company, the first of its kind in Pakistan, employs about 150 people and is soon to be listed on the Karachi stock exchange.
"I've always had this glimmer in my eye about looking for opportunities back here," said Chishti, who wears his hair in a ponytail and divides his time between Lahore and Sunnyvale, Calif. "The business opportunity here, in my view, is unparalleled."
_ _ _"He attended the Lahore American School, then went on to Columbia University in New York, where he studied computer science and economics. After several years in investment banking, he attended business school at Stanford, where he developed an idea for a new product: clear-plastic teeth straightening devices.
Operating out of his dorm room, he founded a company, Invisalign, to manufacture the devices -- a process that relies heavily on three-dimensional computer modeling. To save labor costs, Chishti "outsourced" the modeling to Lahore, where he hired workers based partly on their ability to play the computer game Doom. The company went public and soon had annual revenue approaching $100 million.
Then came Sept. 11, 2001. Panicked at the idea of staying on in the country, the company's board insisted -- over Chishti's strenuous objections -- on moving the Lahore operation to Costa Rica. Chishti, who has since left Invisalign, described the pullout as "a horrible business decision" that left him with "a flaming ash-heap situation" in Lahore.
But out of the ashes has emerged a new company, the Resource Group, which Chishti and several Pakistanis -- two of them Harvard Business School graduates -- founded with $10 million in home-grown capital. (Chishti contributed $1.5 million.) To get things started, they acquired a controlling interest in a Los Angeles call-center company, Alert Communications, and began handling some of its clients through the same facilities previously used by Invisalign.
Such call centers are already a huge business in India, and Chishti's company follows the same approach. Its employees are coached to speak slowly and to identify themselves with names like "Bob" and "Elizabeth" to put American customers at ease.
Describing himself as a cultural straddler who is equally at home in Pakistan or California, where he likes to watch "The Simpsons" and ski at Lake Tahoe, Chishti insists that his investment in Pakistan's future is premised on sound business judgments. But he admits that personal factors also have come into play. "It's just kind of a salmon instinct," he said. "You're swimming upstream to where you started."
Channji, can I have an el camino..with low rider rims so I can hang with the rest of my mexican homies…hora le vato…wassappenin.. 
Roman, I spoke to a friend of mine who is the Director o Strategic Planning at a lage Investment Bank iN NY and worked for me a while ago at Big Mac. I asked him the very questions you posed int his thread. His answerts boiled down to a three factors. "Uncertainty...Talent Level...Infrastructure" He said that he would rather go to eastern europe than Pakistan for IT outsourcing. He has already outsourcing most maintenance and a lot of development to INdia and is looking at BPO next.
I think misinformation and not uncertainty is the major contributing factor towards the slow-pace of IT outsourcing in Pakistan. Although, we need to tackle problems on the domestic front while promoting the IT industry abroad. Things will change- there's no question. It's up us, especially, my generation to make things rosier, and not let it down, the way generation ahead of us did..
Why's the government using SAP and paying PwC to do it? Wouldn't it be cheaper and less risky to develop new custom system indegenously? With the kind of wage difference, they can fire up 5 teams and mitigate all kinds of risks. Plus imagine the pride and local knowledge!
I haven't heard of too many big 5 (4...3...2...1...poof) erp implemehtations that succeeded (with all due respect to folks that worked there)
Those that are content on saying ‘Pakistan has no talent, no infrastructure, certainty’ and in truth know nothing about Pakistan or its IT sector (and bring up India immediately) are required to please carry out there usual anti-pakistani rhetoric elsewhere… Somoene here was also mentioning LUMS, the quality of software programmers from that instituition is awesome, and a former class fellow of mine participated in a worldwide software programming contest conducted by the IEEE, and guess what, LUMS and IIT ended up at the same spot. :hehe:
16 teams from India participated, and just 1 from Pakistan. But the funny thing is, only one team from India managed the same mention as the Pakistani team. Rest of the 15 managed nothing. Also, lums beat alot of other teams, such as waterloo, carnegie melon, RIT etc etc
Heres a list of winners
Heres a list of contenders
Also Roman is right, graduates from new institutes, such as nust (which is ranked better than lums by asiaweek) still have to flood the industry. Comeptition to get into these schools is high, and the class sizes are small.
Its true that outsourcing to Pak is not going on to the extent it should be, but that will change pretty soon. There are companies that are doing it, just take a stroll to the software development parks setup in the main cities. Oh yes, another thing, its not always about the quantity of work done, the quality also matters.
^ Spock, no one is saying that Pakistan doesn't have talented people. There are talened people in Russia, Eastern Europe and Phillipines as well. Winning these events doesn't mean tha you will have an export driven sector of he economy.
pakistan cannot produce the volumes of capable engineers like India or China. simple as that..it is a matter of numbers, Combined with lower telecom costs, more business friendly environment, plus a sustainable economy and poitical stability. No large bank in the states is going to select pakistan as it's destination of choice for It services with countries like India, China, Russia, Ireland and Israel around where the risk of doing business is far less.
Pakistan might get some trickle down IT work or maybe able to grow the sector for domestic consumption but it cannot become a powerhouse in the sector. There are far too many limitations on capabilities, too stiff a competition and a race that has already passed by.
And you mentioned quality, how many comapies in Pak are CMM level certified? How many have COPC certifications, BS7799 etc. Believe me..no one is going to send development of a front end trading system to Pakistan or INdia or china..
Quality of products means nothing if you are all doing simple app maint and some develpment. Quantity drives an economy. Quality comes as a result of expereince and competitive pressure.
[QUOTE]
*Originally posted by Matsui: *
^ Spock, no one is saying that Pakistan doesn't have talented people. There are talened people in Russia, Eastern Europe and Phillipines as well. Winning these events doesn't mean tha you will have an export driven sector of he economy.
pakistan cannot produce the volumes of capable engineers like India or China. simple as that..it is a matter of numbers, Combined with lower telecom costs, more business friendly environment, plus a sustainable economy and poitical stability. No large bank in the states is going to select pakistan as it's destination of choice for It services with countries like India, China, Russia, Ireland and Israel around where the risk of doing business is far less.
Pakistan might get some trickle down IT work or maybe able to grow the sector for domestic consumption but it cannot become a powerhouse in the sector. There are far too many limitations on capabilities, too stiff a competition and a race that has already passed by.
And you mentioned quality, how many comapies in Pak are CMM level certified? How many have COPC certifications, BS7799 etc. Believe me..no one is going to send development of a front end trading system to Pakistan or INdia or china..
Quality of products means nothing if you are all doing simple app maint and some develpment. Quantity drives an economy. Quality comes as a result of expereince and competitive pressure.
[/QUOTE]
We dont need to be a powerhouse and have 100% of our population working on IT development. All youre trying to say is, Pakistan should not be used for outsourcing, just because we have India for that. Its like saying, just because Indians know how to play cricket, everyone else should stop playing it. Look at the ITCN '03going on right now, some very prominent names are there right now and are finalizing plans to utilize Pakistans talent. The example that I used, 16 teams from India, one team from Pakistan in the worlds most prestigious software comepetition with the worlds best universities, and then only one Indian institute making it out of the 15, whereas in the case of Pakistan the lone team fared the same prize, does infact prove something. We have better equipped IT experts, and yet our needs are lesser than India since we are a smaller country. All we need now is better ministers pertaining to IT affairs, like outlaw said, and we are all set to earn a thriving future in this field. If you want, I could give you some names of companies that are operating in Pakistan right now, and like outlaw said, alot of them have managed alot without any mentionable support and incentives from the Government. Do check out the thread started by ^Morph^ on this forum about Pakistan promoting its software export business and the links that he provided.
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Pakistan holds IT exhibition to lure software exports
Sat Aug 9, 7:41 AM ET Add Technology - AFP to My Yahoo!
KARACHI (AFP) - Pakistan launched a three-day Information Technology exhibition aimed at boosting exports of software products, officials said.
"The exhibition is a means to promote Pakistani software industry exports and we are hopeful of a rise from last year's 700 million dollars," state-run Board of Investment's secretary Wasim Haqqi said Saturday.
Software products from more than 20 countries, a majority of them from Southeast Asia, are on display at the Expo center in this port city.
*Pakistan is an emerging market of skilled software engineers in the region where an estimated 1.5 million jobs are currently being outsourced to the United States and Europe. *
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Fair enough Spock..But I think you have misconstrued. I am not saying that Pak cannot get a piece of the pie. BUt there is a difference in trickle down projects and opportunistic offshorng than a globally competitive sector of the economy The 1.5 million jobs are for the region..bulk of which go to India.
ANd the Expo relates to Products not services. Services employ more people, products business doesn't.
I think software products focusing on Pak's lead sectors i.e agri, textile, soft goods, ONG etc are a good way to differeniate an create that niche.
[QUOTE]
*Originally posted by Matsui: *
Fair enough Spock..But I think you have misconstrued. I am not saying that Pak cannot get a piece of the pie. BUt there is a difference in trickle down projects and opportunistic offshorng than a globally competitive sector of the economy The 1.5 million jobs are for the region..bulk of which go to India.
ANd the Expo relates to Products not services. Services employ more people, products business doesn't.
I think software products focusing on Pak's lead sectors i.e agri, textile, soft goods, ONG etc are a good way to differeniate an create that niche.
[/QUOTE]
Yes, 1.5million, bulk of which goto India, but at the same time, a smaller proportion can also go to Pakistan, provided they have the expertise to do so. Thats all I am saying.
Your point about software products focousing on pak's lead sectors, thats a good idea, but then again, there still hasnt been mechanization to that extent in these sectors so right now it wouldnt be feasible to just concentrate on just one scope of software development.