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Is Pakistan Killing It’s IT Industry?

Is Pakistan Killing it's IT Industry?

The short answer is yes. The longer answer needs time to fully appreciate the level of insanity. Attending the CEO Forum at The Hive last week was 65 minutes of a repeat performance that loosely followed a script formulated almost 17 years ago. The IT industry association that represents software companies, P@SHA, got bigwigs into a room and did what they always do: discuss the issues and identify a plan of action.

The only difference this time is that the association has a seat at the big boys table. This allows them to raise the issues and highlight strategies for the government so that the suicidal ship called the IT industry can hopefully be steered in the right direction. For those who have been stalwarts and patrons of the industry, one can’t help but wonder what an industry association has been doing for so many years. Sure the government was a different political party but at the beginning of 2019, can we still be talking about the same issues we were in 2002? The same faces saying the same things, having the same old solutions for the brand new government that seems to be more pro-technocrat than the previous regimes. Wait a second – previous regimes actually had a lot of technocrats in the places of influence. Dr. Atta Ur Rahman, who coincidentally is back on the Prime Minister’s task force for IT, was as technocratic as it comes back in the Musharraf era.

In fact, most IT companies do run after the public sector companies and the government departments with their products and solutions. The problem is simple: nobody with a sizeable appetite for consuming tech-driven solutions takes Pakistani IT companies seriously. Except for a handful, software companies are either never paid their dues, nor is anyone really interested in ‘made in Pakistan’ when they can get off-the-shelf, gora-skin solutions with the brand recognition they bring. The industry is burdened by tax issues, the exchange rate, data protection issues and a dearth of stable internet connectivity. The wasted grants, the ill-conceived projects that covered everything from ‘digitizing agri’ to wasted VAS… Oh and that useless IT expo.

The Cloud may have only recently helped to level the playing field, but very few local solutions are looked at when you line them up in the shadows of the big box corporations. And how would they? Look at the majority of the ‘products’ being offered in the market today and their sales teams will explain to you that they have only recently focused on making their own product. All those years, they used to work for other companies, earn in dollars and payforward in rupees.

There is such a massive disconnect between the consumers of tech, and the suppliers. The suppliers, our IT companies, are all about innovation and products of the future. The massive consumers, majority of the seth-run companies, are only now waking up to dashboard analytics. They don’t care for AI, robots, drones or smart PLCs for the factories; they have unlimited cheap labor!

But to be fair, those who can pay, shop with the big guys. It makes them look cooler. Last year, I interacted with several CIOs of FMCGs and large-scale local businesses to try and better understand what they look for in an ERP solution. It was no surprise that they just looked for which one was cheaper and which gave them better branding. The Microsofts, Oracles, SAPs and Junipers bring the ‘gora babu’ for technical consultation and implementation. Everyone local is just a sales rep with a quota. Zero technology transfer, zilch skill development.

You’ve heard how payments are and will continue to be so big? You’ll struggle to name 5 local companies that have brought mass adoption onto some local platform. And for the companies who have rolled out great products, it’s because they found scandinavian capital.

Call centers? HRM? Web? Connectivity? Anything Pakistani that has gained success either had unlimited government funding pumped into it or else it was registered outside the land of the pure. Be it FireEye, PayActiv or Infonox, Techlogix, Netsol or names like Naeem Zafar, Rafat Pirzada or Idris Kothari – they all went out to set themselves up in the US before supporting any set up in Pakistan.

Building IT parks, capacity building, demand generation, consumption of local solutions… the list goes on. Does the government really need to be explained to that they should be the largest buyers of technology solutions and not compete with local companies? Wasn’t it the mandate of the PSEB to zone technology parks so local companies could have access to affordable space. Do corporations, the non-traditional technology outfits, still need to be convinced to buy local because they owe it to support the economy? If we’re spending so much time convincing and conversing, when exactly are we doing the actual working?

I have written about the IT industry for almost 20 years. I have interacted with the biggest so-called companies and the most esteemed CEOs. I have magnified issues, the good and the best of the industry on every conceivable media platform locally and internationally. I convinced the world’s largest technology media platform to come to Pakistan because there was so much noise that needed to be heard. All absolutely wasted. The magazine brand fell into the hands of a bunch of thieves and thugs (stress on the word, ‘fell’).

But a great deal of soul searching and reflection after the event at The Hive, has confirmed a most sickening realization: the industry is stagnant, busy with the talking and presenting, almost zero in execution. Yes, we must focus on solving the long term issues and keep Chinese products away from where we can. But freelancers across Pakistan generate more than $0.5billion while the entire aggregate IT export of the IT industry finally crossed the $1billion mark. Seems like these freelancer communities are really onto something.

In the middle of the presentation, the presenter casually reminded the audience how important it was to be a member of the association that lobbies the concerns and issues of the industry on platforms that matter. Really? Is that lobbying how we’ve come so far after so many decades?

The Future, however, is not so bleak

Despite the dread, not all is dark and dreary. It’s no secret that the PTI government really wants to promote the youth. After all, it was of the core mandates that the party was elected to office. 64% of the total population is below is below the age of 30 while 29% of it belongs to the age bracket of 15 to 29 years. But considering that only 34% of the population actually lives in the urban areas, the extrapolated numbers speak loudly to the fact that the unserved still need to be brought into the mix. So do the elderly. This alludes to the investment still needed in smart infrastructure, rural planning and connectivity.

There is some kind of push to equip this youth with a startup toolkit so they can establish businesses and generate demand to retain talent within the country and slow down the brain drain, but it’s an uphill battle. Incubation centers, accelerators and a basic investor ecosystem is in place, but there is so much more that is still needed. You can’t really except the startups to solve all the problems the seasoned corporations and associations haven’t been able to do so since 30 years.

There are nearly 200 HEC recognized universities in Pakistan, and hundreds of technical institutes affiliated with them. Each year more than 2 million students graduate from these institutions and enter the already swarming job market. In the IT sector, an approximate 10,000 graduates enter the brave new world to make or break the promise they envisioned. At present, the unemployment rate is high, the star-studded promise of how cool a startup can be, the job-worker mismatch all compromise the productivity potential of the economy generating friction and frustration all around.

A recent report published in Dawn last year revealed that accounting/finance, sales/marketing and ICT sectors were considered top job creators. Students apply to these sectors in bulk; however, hardly 5 percent of the total applicants actually succeed in landing a decent job. The success rate of the startup industry is about 2% – that’s 2 in 200 startups.

Sorry. Did I say it wasn’t that bleak?

I wish I could say that you should stand up and shout, but then the active population of Facebook is bored and LinkedIn doesn’t appreciate the self aggrandising.

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