Fortunes of Pakistan’s IT industry

Another global economic meltdown, in line with the U.S. dotcom bubble burst in 2000 and the global financial crisis that broke out in 2008, has hit the snag. Stock markets across the globe are falling like ninepins one after another. This time around, the economic meltdown is a direct result of the debt crises in the European Union and the United States, coupled with the unprecedented U.S. credit rating downgrade, followed by the rising fears of double-dip recession in major developed economies.
Pakistan economy, in general, and its Information Technology (IT) industry in particular, is threatened by all these global factors, relying mainly on export trade. It is worth noting that Pakistan IT industry was equally affected by earlier dotcom bubble in 2000 and the global financial crisis of 2008. It is high time for the government to take actions to avoid a recurrence of such dismal developments and work on emergency plans to help ICT entrepreneurs with their difficulties.
No doubt, the world economy is likely to enter a long period of adjustment. This phase can only be overcome through radical restructuring and reorganisation that modify both economic parameters and structures. To cope with this, the government should accelerate work to adjust domestic industrial structure by placing more emphasis on domestic demand and reducing reliance on exports as the country’s sole growth engine.
Also, this challenging situation carries an opportunity to grow for companies that have incorporated proper planning and vision. More cost cutting measures in the west would result in transferring of businesses to low cost countries like Pakistan. It means more job creation in Asia’s emerging markets, but still confronted by the prime challenge of slow market recovery.
I still remember that Pakistan’s IT industry was hit hard by both previous setbacks. Many IT firms were left with no option but to lay-off heavily. Some of them even closed or limited their operations. The IT industry kept stressing the government to expedite the public sector automation plan as a stimulus package and save industry jobs. No doubt the government responded positively and initiated many public sector projects, both at the centre as well as at provincial levels. Also, the federal government constituted a Task Force on Information and Communication Technologies under the aegis of Pakistan Software Export Board (PSEB) with a mandate of formulating a comprehensive IT policy for the next decade. This Task Force, which was co-chaired by the author, completed its task withinin the given time and framework.
Pakistan IT Industry revenues exceed $2 billion a year and future projections suggest that the industry revenues would reach $11 billion by 2016, as top five IT firms including NetSol see their sales growth at an annual rate of over 30 per cent. According to a report by the Pakistan Software Export Board (PSEB), the top five companies that have contributed the most to the IT sector are Netsol Technologies(NASDAQ: NTWK), Ovex Technologies, TRG Private Ltd, Systems Private Ltd, and Elixir Technologies.
Press reports suggest that over a million skilled graduates are produced by Pakistani colleges and universities annually. In terms of enrollment, the 2005 Pakistan Education Census reported 43,801 students enrolled in four-year engineering institutions, another 37,635 students in three-year colleges offering Information Technology degrees, and 69,719 studying in three-year polytechnic institutes. 53 per cent of the students out of the total 1.16 million enrolled in colleges are girls, according to the 2005 Census. But still this number is low in terms of competing worldwide on the IT front.
It is worth noting that Pakistan IT industry is preferred worldwide on two counts: quality of the product and delivery of the product within the prescribed timeframe. Further, the intelligence, hard work and commitment on the part of young IT professionals, besides the low cost of doing business, has also won the confidence of many international customers.
On the whole, the future of IT in Pakistan is very bright. There is an urgent need of passage of the National IT Policy by the parliament to ensure financial, infrastructural and human capital support to the industry. It becomes more urgent under the prevailing international circumstances, as Pakistan IT industry possesses great potential to meet the demands of international customers who want to leverage technology to reduce the cost of their operations.

The writer is Chairman and CEO NetSol Technologies, Honourary Consul of Australia for the province of Punjab, Pakistan and former Co-Chairman of Federal Government’s Task Force on Information and Communication Technologies