The IT Industry Landscape in Pakistan

When it comes to the economy, Pakistan’s IT sector is almost treated like a stepchild; it’s reward and recognition is linked to how well it behaves. It is ahead of the curve in certain areas such as the adoption of Fintech and E-commerce yet it lags in the areas of IT Education and skilled human capital. Pakistan Software Houses Association for IT and ITES (P@SHA) is a trade body that was founded in 1992 to develop the software and services industry in Pakistan.

P@SHA Secretary General, Shehryar Hydri is optimistic about the future of IT in Pakistan. He had an in-depth discussion about this during an intense game of Strategy at The New Spaces. He believes its greatest strength is adaptation and survival to anything that is thrown at it. And he says the numbers prove his point. “The size of the IT industry is approximately $3 billion, which has doubled in the last four years and will double again in the next 3-4 years. Pakistan’s IT exports account for $1.5-2 billion, while the domestic industry is worth $500-700 million. The rest of the industry consists of $500 million worth of freelance clients. Pakistan is the third largest destination for freelance human capital.”

Pakistan is home to many companies that take on international clients such as Netsol Technologies and Systems Limited. Others include We.R.Play which is a game development company that outsources talent for international mobile game makers like Gameloft. They were the ones who came up with the local mobile game called, “Run Sheeda Run” which raked in half a million downloads on the Google Play Store.

“Tech is finding its way into all kinds of businesses in Pakistan. There is a company in Lahore that specializes in smart water filtration and there is a startup in Karachi that is developing a blockchain for banking and document management and there are even companies experimenting with AR and VR in Pakistan.” Even though there has been a boom in Pakistan’s IT sector in the past 5 years due to the issuance of 3G/4G licenses, it still lags behind most of the world’s leading economies in the adoption of global trends, the reasons for which go beyond the obvious turmoil in the country.

“There is a lot of insecurity in Pakistan in terms interaction between companies and people. A general suspicion and aversion to working on together on projects hampers progress. Trying to do it all yourself doesn’t work anymore, you have to communicate with people. And of course the war on terror has done a lot of damage to Pakistan’s international image. Fortune 500 companies are reluctant to invest and commit and they always have a plan B in case their investments fail in Pakistan. The only cure for that is time. We are slowly, but surely going to come out of it. We just have to keep throwing a steady stream of products and applications out into the world.”

The largest technology companies in Pakistan have a few thousand people employed across the globe. Compare that to the 56,000 people that Amazon employs as well as the 88,000 employees that Google has on its global team and you see the potential for growth. The size of the Pakistani IT industry is 150,000 people, with 10,000 more entering the market each year. This increase in skilled labour will lead to the spread of local companies worldwide.

But what of the brain drain? Aren’t the cream of the crop in Pakistan swept up by foreign companies leaving the country without its best minds? “The brain drain factor can actually work to our advantage. You look at countries like China and Vietnam and their youth migrate to the US and work wonders. Look at Sundar Pichai, the CEO of Google and Satya Nadella, the CEO of Microsoft. They’re both Indians; seeing them on the world stage has had a great impact on India and Bangalore is now called the Silicon Valley of India. Pakistan is sorely absent in that category. If there was a big company with a Pakistani as CEO, more people would pursue IT.”

However, Hydri remains optimistic because his experience at P@SHA has been ‘amazing’. Communication with startups has ramped up in the last four months and the government has been very helpful in shaping policy to suit the IT industry’s needs. For instance, there have been assurances of commitments from the Ministry of IT and Communication as well as the Prime Minister himself. The Government has more technocrats today than ever before so they are more enthusiastic in their engagement.

“The attitude previously was that we don’t need the government, but no longer,” explains Hydri. “The government has resources at its disposal and it is our duty not to let them go to waste. And the government is working to make policy that is conducive to innovation. Visas-on-arrival were recently announced for over a dozen countries, there is now a reward of 5% on every $100 worth of exports and special economic zones are being set up for tech startups.” Regulatory authorities like the Pakistan Software Export Board, the Board of Investment and the Provincial IT Boards such as the KPITB are helping accelerate growth in Pakistan. To hear Hydri tell it, the government is doing exemplary work compared even to the private sector. He sees the IT economy maturing in the next 2-3 years with the adoption of fintech companies and services like AliPay in lieu of PayPal and modernizing sectors like agriculture as well as ushering in the Internet of Things such as smart homes and businesses.

Pakistan has been a player in the IT economy for the last two decades yet the level of interest prevalent all over the country bodes well for the future. Development of local businesses and alternatives to global services have clearly had an impact. It is important to keep the momentum going and continue to grow this industry.

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