With a growth of 42% in IT remittances during 2014-15, our IT industry looks well placed to exceed $5 billion in IT exports by 2020
Exclusive Interview of Asim Shahryar, MD PSEB Pakistan
Pakistan Software Export Board (PSEB) was founded in 1995 to help guide and nourish the development of the IT industry in the country, and to provide one-stop facilitation for interaction of IT companies with different departments of Government of Pakistan. Today, PSEB’s mandate has been broadened to encompass not only facilitation but to position Pakistan as a key player in global IT market, to create an environment that is conducive for IT business in country, and to encourage local and foreign investment in IT sector.
Mr. Asim Shahryar Husain (AS) is the Managing Director of Pakistan Software Export Board. He has done BS in Computer Engineering from Stanford University, California and an MBA in Marketing from Duke University, North Carolina with 21 years of professional experience in software engineering, product management, and technology marketing. PhoneWorld team (PW) had the pleasure of meeting him for a candid interview in which he shared the visions and ambitions of his organization. Let’s read what he has to say about PSEB and the Pakistan IT Industry.
PW: What is the role of PSEB in Pakistan’s IT sector?
AS: Pakistan Software Export Board (PSEB) is an apex body of the Ministry of Information Technology with the mandate to promote Pakistan’s IT Industry in local and international markets. PSEB has been facilitating IT industry through a series of projects and programs in international marketing, human/intellectual capital development, infrastructure development, company capability development, as well as promotion of innovation and new technologies. PSEB’s mandate is to ensure sustainable development of Pakistan’s IT industry, to bolster cooperation of Pakistan’s IT sector with the international outsourcing community and to motivate investors to invest in Pakistan’s IT sector.
Our IT remittances have grown by 42% to $527.7 million during 2014-15. Since, Pakistani software companies also keep three fourth of their earnings abroad to finance the cost of their foreign office and international marketing, the total expected IT business of Pakistani companies at present is estimated at around $2.1 billion/year
As MD of PSEB, my objectives is to accelerate the exports of our IT industry and to attract FDI towards the local IT Industry. To achieve these objectives, PSEB has set in motion several projects and programs that focus on improving perception of Pakistan as an attractive destination for IT outsourcing. These include new software technology parks, low cost and reliable bandwidth to IT companies, participation in international IT exhibitions, international certifications for IT companies and capacity building through internships and trainings. We are working with all stakeholder specially the IT Industry to ensure that we take steps that would be most helpful to the industry. To achieve this end, PSEB has been holding seminars with IT industry as well as conducting online surveys on a regular basis.
PW: What are the exact official and real software exports of Pakistan as we hear different figures from all around?
AS: There are various figures for exports of Pakistan’s IT industry depending on the method being used. Based on figures from State Bank of Pakistan, our IT remittances have grown by 42% to $527.7 million during 2014-15. Since, Pakistani software companies also keep three fourth of their earnings abroad to finance the cost of their foreign office and international marketing, the total expected IT business of Pakistani companies at present is estimated at around $2.1 billion/year.
PW: IT laws and regulations and proposing improvements and modifications in Pakistan’s public policy for the IT industry is one of the main objective of PSEB but we don’t see any substantial work done in that regard, why is that?
AS: The Ministry of IT has already drafted a telecom policy based on consultation with the entire telecom industry. Now, it is in the process of drafting an IT policy based on inputs from the IT industry.
The main goal of the government is to advocate business friendly policies and incentives for foreign investors and local IT companies. The government has done well in this regard as is evident by sustained growth of the IT industry in Pakistan. The forth coming IT Policy as I indicated do plan on recommending to the Finance Ministry to extend tax exemption on IT exports by at least another 5 years. Once implemented this single step will enable growth and nurture our IT industry to a level where majority of the companies will become sustainable and profitable.
PW: What role PSEB is playing in creating business friendly environment and overcoming unemployment issue in Pakistan?
AS: PSEB extends maximum facilitation and assistance to foreign and local investors who are considering to establish IT operations in Pakistan thereby making it extremely simple to setup an IT company in the software technology parks already established in Pakistan. Investors from all over the world particularly from North America, Europe, and Middle East have invested in Pakistan’s ICT sector.
Plan on recommending to the Finance Ministry to extend tax exemption on IT exports by at least another 5 years. Once implemented this single step will enable growth and nurture our IT industry to a level where majority of the companies will become sustainable and profitable
Pakistan’s IT oriented exports comprise of software development and IT enabled services (also called ITeS which include call centers, medical transcription and billing, and other business process outsourcing) employs over 100,000 IT professionals directly and generates another 100,000 supporting jobs. Pakistani companies have especially done well in emerging areas like mobile application development (iOS, Windows, Android) mobile gaming and animation. In 2004, there were only a handful of IT companies doing a small business, whereas currently there are more than 70 IT companies with annual revenues exceeding $1 million and in certain cases exceeding US$50 million a year.
PSEB incentivizes Pakistani IT companies with a focus on creating and enabling environment in which innovators can generate new ideas and in which entrepreneurs can turn ideas into new products, new companies and new jobs. These incentives include 100% equity ownership, 100% repatriation of capital and dividends, and 7-year tax holiday for venture capital funds. PSEB works extensively with foreign investors and local IT companies to create linkages between them to boost the IT industry.
PW: What challenges do you think Pakistan is encountering while making use of true IT potential of the country? What can it do to address those challenges? Pakistan has a very large community of IT/software graduates emerging from their institutes- Is there a fear of brain drain as well or you see this as an opportunity for Pakistan?
AS: The competition around the world for IT outsourcing pie is intensifying. The government is doing its best to assist the IT industry in this regard and has taken numerous steps including giving incentives and tax breaks for foreign and local investors in IT sector, providing subsidy to IT companies for participation in international IT exhibitions and to IT companies for CMMI & ISO certifications. PSEB is also providing IT internships and training courses for recent IT graduates and sponsorship of IT business plan competitions.
In 2004, there were only a handful of IT companies doing a small business, whereas currently there are more than 70 IT companies with annual revenues exceeding $1 million and in certain cases exceeding US$50 million a year
Our goal for the future is to enhance exports of Pakistan’s IT industry to at least $5 billion by 2020. To achieve this ambitious goal, we have been holding seminars with the IT industry in all major cities of Pakistan to ensure implementation of steps that would be of maximum benefit to the industry.
PSEB is also creating a documentary on the IT industry of Pakistan to be shown at foreign and local IT events. The documentary will have footage of Pakistan’s IT companies as well as statements of local CEOs and their foreign customers
Brain drain is not much of a problem for our IT industry. In fact, many of our IT companies are owned or run by expatriates and they have been instrumental in ensuring the growth of the IT industry in Pakistan. They also have setup their sales and marketing offices abroad and outsource software development and IT work to their back office in Pakistan.
PW: Pakistan Brand as a software developing country is not very good- how is PSEB helping to improve this?
AS: Pakistan’s perception in general has not been positive because of the security and energy issues over the last decade. However, things have started changing from this year. Different investors from Saudi Arabia, Korea, Kuwait, Canada, Australia, etc. have approached PSEB for exploring investment in the IT sector and things are looking positive. PSEB is always trying to project a positive image of Pakistan’s IT industry be it at international events or at local events. During 2014-15, PSEB participated in international IT exhibitions and delegations with Pakistani IT companies in USA, China, Spain, and Kenya and this year, PSEB is planning on participating in GITEX Dubai, Mobile World Congress Spain, and CEBIT Germany with IT companies. Such participation creates awareness about the IT industry of Pakistan and its potential and creates linkages with foreign customers and investors. PSEB is also creating a documentary on the IT industry of Pakistan to be shown at foreign and local IT events. The documentary will have footage of Pakistan’s IT companies as well as statements of local CEOs and their foreign customers. PSEB is also working on other marketing activities to present a positive image of Pakistan and its IT industry.
PW: Building software and IT parks was a great initiative taken by the government which was given much hype as well. But sadly we didn’t see much development in that either. How would you respond to that?
AS: PSEB established many IT parks by signing agreements with owners of existing buildings in good shape and sufficient space but it does not own these IT parks. PSEB is planning a new state-of-the-art IT Park on a land allotted to PSEB in Islamabad in collaboration with Korea Eximbank. New IT parks in Karachi and Lahore are also being planned in future. However, these IT parks will take 2-3 years for planning and construction. In the short term, PSEB plans on establishing new IT parks by converting existing buildings with sufficient space, backup power, and parking at affordable rent for IT companies.
At present, there are a couple of private VC funds in Pakistan but we need a lot more of such funds to drive and motivate entrepreneurship. PSEB has recommended ICT R&D fund for planning a small VC fund to support promising IT startups by next year
PW: Does PSEB’s plans to have something similar to Silicon Valley in launching VCs (venture capital) funds and help boost IT startups?
AS: The reason Silicon Valley has taken off is because of a complete ecosystem of universities, research centers, startups, companies, investors and venture capitalists. These venture capitalists invest in promising startups with the expectation that their investment will give at least a 40-50% return upon IPO.
PSEB is planning a new state-of-the-art IT Park on a land allotted to PSEB in Islamabad in collaboration with Korea Eximbank. New IT parks in Karachi and Lahore are also being planned in future
There is a rising wave of entrepreneurship in Pakistan at present, particularly in the IT sector. Talking about investments of Rocket Internet, a German venture capital firm, in different ecommerce ventures in Pakistan such as carmudi.pk, lamudi.pk and daraz.pk. Most of the venture capital funds in Silicon Valley are private funds, which invest in startups to make money. At present, there are a couple of private VC funds in Pakistan but we need a lot more of such funds to drive and motivate entrepreneurship. PSEB has recommended ICT R&D fund for planning a small VC fund to support promising IT startups by next year. ICT R&D fund is also planning a new technology incubator for startups in Islamabad.
PW: How is your strategy coming along for achieving 5 billion dollar mark by 2020 from (current) 2.5 billion dollars in exports and domestic revenue for IT and IT-enabled services?
AS: The government has been offering many initiatives to the IT Industry over the past two decades including tax holiday on exports revenue for 15 years. There are many IT parks in operation and more are being planned over the next couple of years. PSEB is also participating in major international IT exhibitions with IT companies to create their linkages with foreign customers and investors. To achieve goal of $5 billion by 2020, we need an average annual growth of 20% a year. The IT industry is doing well and our remittances and exports grew by 42% last year. So we feel that this target of $5 billion is pretty achievable.
PW:How would you rate the application development/software products scenario in Pakistan and where does it stand in international market?
AS: Pakistan’s IT Industry has done well in the global IT market while competing with companies from other key outsourcing countries. NetSol Inc. for instance became the first Pakistani technology company to enlist on the NASDAQ back in 1999, and is a leading provider of software to the financial services industry not only locally but also globally. Pakistani IT companies are providing a diverse range of products including financial software, healthcare software, telecom software, oil & gas software, mobile applications, gaming, and animation. For example, in financial services sector, our IT companies are providing software for the mortgage industry, payment solutions, trading systems, asset management systems, core banking systems and specialized banking applications. Mixit’s software was handling transactions worth half a billion dollars on NYSE and NASDAQ.
Pakistan has produced some great gaming studios. The title animation sequence of Game of Thrones, the world’s most-watched TV series these days, has been produced by Hameed Shaukat, a US-born Pakistani. Cricket Companion application which received world-wide recognition was also developed by Tricast Media, a Pakistani startup. Pakistani Visual Effects Artist, Mir Zafar Ali has received three Oscar awards for his work in The Golden Compass, Life of Pi and Frozen. Novaira Masod, a Pakistani animator, has provided stunning visual effects in some of the most popular Hollywood movies including Maleficent, A Christmas Carol, Thor, Transformers 3. One of the world’s best payment processing solutions was developed in Pakistan by i2c. Eyedeus Labs, previously featured at CNN, is working on a groundbreaking video based technology to disrupt the way we interact with ads.
Pakistani IT companies are providing a diverse range of products including financial software, healthcare software, telecom software, oil & gas software, mobile applications, gaming, and animation
Clearly our IT industry has the skills, depth and the marketing acumen to perform at the global level. Since 2010, Pakistan has won 25 gold or silver awards at Asia Pacific ICT Awards (APICTA) in different categories including startup, mobile applications, e-learning, e-health, e-government, security, supply chain management, communications, and financial applications. These achievements are a testament to the high-end expertise of the IT companies of Pakistan.