PRESENTED BY PAKISTAN SOFTWARE EXPORT BOARD PSEB

1
PRESENTED BYPAKISTAN SOFTWARE EXPORT BOARD
(PSEB)
PAKISTANS IT INDUSTRY PROFILE STRATEGY
2
PRESENTATION ROADMAP

• Global IT Industry Overview
• Pakistan Economic Success Story
• Pakistan IT Industry Profile
• Strategic Framework
• Proposals for the Prime Ministers Directions

3
Since the technology bubble burst in 2000 growth
in IT Services, which picked back up in 2003, has
remained robust with higher growth
in the Offshore Outsourcing component
GLOBAL IT INDUSTRY OVERVIEW
4
GLOBAL IT SERVICES INDUSTRY OVERVIEW
IT INDUSTRY GROWTH
1.6
1.4
1.2
1
Trillions
0.8
0.6
0.4
0.2
0
2004
2005
2006
2007
2008
2009
2010
Source IDC Press Release 10th Jan. 2007
5
GLOBAL IT INDUSTRY OVERVIEW
SERVICES GROWTH
IT SW Services
ITES
Source Worldwide and US BPO 2004-08-IDC 2004
Bearing Point Report 2005
6
GLOBAL IT INDUSTRY OVERVIEW
GLOBAL IT OUTSOURCING
140
120
100
80
Billions
60
40
20
0
2004
2005
2006
2007
2008
2009
2010
Source IDC-Global IT Economic Outlook 2004
7
ITPS GLOBAL MARKET SIZE
Total Global Spending
Total Outsource able
Actually being 0ffshored
US 1.045 Trillion
US 280 Billion
US 40 Billion
Source Strategy for Increasing Exports of BPO
Bearing Point Report 2005
8
GLOBAL IT INDUSTRY OVERVIEW
US IT OUTSOURCING SPENDING
18
16
14
12
age
10
8
6
4
2
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
U.S. IS Outsourcing Spending Share by Vertical
Industry
Source Worldwide and US IT Outsourcing
Services IDC Report 2004
9
GLOBAL IT INDUSTRY OVERVIEW
BPO SERVICES SHARE
Source IDC-Market Opportunities by Horizontal
Business Functions 2004
10
GLOBAL IT INDUSTRY OVERVIEW
BPO MARKET SHARE
Source Gartner- Press Release 2006
11
GLOBAL IT INDUSTRY OVERVIEW
IT OUTSOURCING SUPPLIERS (USD 40 BILLION)
4.7
17.2
India
0.5
Canada
0.9
China
Eastern Europe
Philippines
1.8
Mexico
Others
1.9
12.6
Source Strategy for Increasing Exports of BPO
Bearing Point Report 2005
12
Pakistans economic resurgence is based on
strong fundamentals and is receiving
international acclaim
PAKISTAN ECONOMIC SUCCESS STORY
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ECONOMIC SUCCESS STORY

• One of the fastest growing economies in the
  world
  
• Doubling of GDP between 1999 and 2006
• Graduation to Middle Income Country
• 8.4 growth in 2005 was 2nd highest in the
  world
  
• 7 growth in 2006

• Over 1000 growth in Foreign Direct Investment
  from USD 300 mil in 1999 to USD 3 billion in
  2006
  
• Multi-billion dollar real estate investments by
  leading international developers like Emaar, Al
  Ghurair, and Tamimi in hotel and residential
  projects
• Tremendous investments and growth in Telecom,
  IT, Real Estate, Electronic Media, Oil Gas,
  Automobiles, Manufacturing and Finance

Over 400 growth in remittances from expatriates
abroad from USD 1 billion in 1999 to USD 4
billion in 2005
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ECONOMIC SUCCESS STORY

• Over 40 time increase in foreign exchange
  reserves between 1999 and 2006 to USD 12.5
  billion
  
• Doubling of exports in same period to USD 17
  billion in 2006

• Increase in Government revenue collection of
  130 in same period to USD 11.7 billion with
  broadening of tax base
  
• Debt to GDP ratio of healthy 59 with a legal
  limit set at 60

• A two and a half time reduction in external debt
  and liabilities ratio to total foreign exchange
  earnings to a healthy 137
  

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ECONOMIC SUCCESS STORY

• Free market rupee exchange rate hovering at PKR
  60 for USD 1 for last four years

• Over 1000 increase in stock index over same
  period making it one of the best performing
  exchanges in the world
  
• Over-subscribed international offerings of
  dollar, euro and Islamic Bonds at only 2 above
  US Government rates

• Moodys B rating and Standard and Poor BB
  rating.

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ECONOMIC SUCCESS STORY

• One of the largest educated, English-speaking
  workforces in the World with overall population
  of 160 million
  
• A supportive, forward-looking Government

• Proximity to Middle Eastern, Central and South
  Asian markets
  
• UBS Warburg, 2006 Pakistan has arrived

• Lehman Brothers, 2006 Best IT outsourcing
  fundamentals
  
• IDC, 2006 Surprising new home of offshore
  outsourcing

17
Starting from a relatively low base in 2003,
the Pakistan IT Industry has experienced rapid g
rowth over the last three years
PAKISTAN IT INDUSTRY PROFILE
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PAKISTAN IT INDUSTRY PROFILE
OVERVIEW

• Fifty percent annual growth reported by SBP
• Over 950 active IT companies
• Over 125 ISO CMM certified companies a
  world leader
  
• Seven MNC Development Centers and many more
  projects
  
• Three Public Companies Several World Class
  Product Companies
  
• Two billion dollar industry, including one
  billion dollars of exports
  
• IDC Surprising new home of offshore
  outsourcing in South Asia.Lehman Brothers Best
  IT fundamentals of any offshore outsourcing
  country.
• PSEB re-engineered website (www.pseb.org.pk)
  receiving 1 million hits a month, 70 from
  overseas
  

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INTERNET CONNECTIVITY MAP
Transworld Associates, 2006
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PAKISTAN IT INDUSTRY PROFILE

IT COMPANIES BY LOCATION
33
Source PSEB National Census of IT Companies,
2006
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PAKISTAN IT INDUSTRY PROFILE
CALL CENTERS STATISTICS
PSEB Registered Call Centers by city
Call Centers Share in Total Revenue


Call
Center
26
Other ITeS
IT and
14
Software
60
Source PSEB National Census 2006
Bearing Point Strategy for Increasing Exports of
BPO September 20, 2005
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PAKISTAN IT INDUSTRY PROFILE
IT EXPORTS BY REGIONS
Others 16
USA
UK
Singapore 1
THAILAND
Australia 1

UAE
Germany 1
CANADA
Hong Kong 1
CHINA
Japan 2
China 2
JAPAN
Canada 2
HONGKONG
UAE 3
GERMANY
Thailand 4
AUSTRALIA
SINGAPORE
OTHER
UK 9
USA 58
Source SBP Jul-Dec 2006
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PAKISTAN IT INDUSTRY PROFILE
GROWTH OF KEY COMPANIES
Between 2003-06 these seven sample IT companies
grew by over 400
Source PSEB Survey 2005
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PAKISTAN IT INDUSTRY PROFILE
TOP 10 EXPORTERS FY 05-06
Pakistan (State Bank Figures)
Rank Companies

Netsol Technologies
1
Ovex Technologies
2
TRG Pvt Ltd
3
System Pvt Ltd
4
Elixir Technologies
5
Descon IT24 Pvt Ltd
6
Trivor Software
7
Geopaq Tech. (Pvt.)
8
Enterprise DB
9
Xavor Pakistan Pvt Ltd
10
Source SBP, PSEB, Bearing Point Study
September 20, 2005
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PAKISTAN IT INDUSTRY PROFILE
MULTINATIONAL DEVELOPMENT CENTERS PROJECTS
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PAKISTAN IT INDUSTRY PROFILE
MULTINATIONAL DEVELOPMENT CENTERS PROJECTS
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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
TELECOM Wavetech Large display systems in pu
blic places Inov8 Leading mobile transaction m
anagement platform Mobile complete mobile t
esting suite Pixsense Mobile Photos JOB POR
TALS Rozee.com.pk Online recruitment solutions
DOCUMENT MANAGEMENT eDox Superior docu
ment management and office automation solution
with over 150 international customers
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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
PERSONAL PRODUCTIVITY S
crybe Leading Web based email and calendaring
solution RETAIL
ITIM Fast growing retail
solution with over 50 UK customers
SOCIAL NETWORKING Naseeb.com Muslim
social networking portal


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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
FINANCE Mixit Stock Market Order Management, NYS
E, USD 0.5 Bil per year NetSol Car Leasing and S
ervices. Daimler Chrysler, Toyota, BMW Systems
Limited Mortgage Lien processing software has
leading share of the US market)
Autosoft Retail banking Solution running in
three countries Metalbid.com world leading meta
l exchange TPS e-payment and e-banking (Customer
s Al Bilad KSA, CBK, BoK, ESB, UBL Kuwait,
1Link, Allied Bank)
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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
HEALTHCARE TSG Leading medium size hospital data
warehouse 200 customers in USA
Cure MD Leading web based HIPAA complaint
healthcare system
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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
ENTERPRISE COMPUTING Ultimus Business Process Ma
nagement. 160 international customers including
Microsoft White House Five Rivers Technologies
Clear Cube Partner and world leader in fast
growing field of centralized computing.
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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
SOFTWARE SERVICES Cube XS Level 4 Data Center fo
r ATT Visualsoft Hardware and software system
integration Kalsoft Advanced infrastructure desi
gn and implementation Averox Enterprise client/s
erver based solution Si3 System Integration solu
tion providers Techlogix Business process improv
ement solutions Techaccess Enterprise management
solutions Systems Ltd IT and BPO services Pi S
igma Group Consulting and software development
Comcept Innovative telecom solution provider
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PAKISTAN IT INDUSTRY PROFILE
WORLD CLASS COMPANIES
IT ENABLED SERVICES Post Amazers Animation. Son
of Mask and Exorcist The Sequel
LMKR Seismological and Geological Data
Management. BP, CALTEX, TEXACO.
iEngineering Platform Management. Most
comprehensive database in the world
Touchstone BPO, Ovex, Infospan, TRG, IT24 IT
enabled services/Call Centers
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PAKISTAN IT INDUSTRY PROFILE
EXPORT OF IT SERVICES
Source Pakistans IT Revenue grossly
understated V1.4, PSEB, 31/08/2006
35
PAKISTAN IT INDUSTRY PROFILE
LOCAL INDUSTRY REVENUE
Source PSEB and Bearing Point 2005-2006
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PAKISTAN IT INDUSTRY PROFILE
TOTAL INDUSTRY SIZE
Source Pakistans IT Revenue grossly
understated V1.4, PSEB, 31/08/2006
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PAKISTAN IT INDUSTRY PROFILE
COMPARISON WITH INDIA, 30th June 2005

Source 1. PSEB Study Assessment of IT
Professionals in Pakistan 2005
2. PSEB Domestic Business Department 3.
NASSCOM 2006 4. NASSCOM 2006 5. NASSCOM Str
ategic Review, 2004, p 207
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OPERATING COSTS IN US, INDIA PAKISTAN
US Cost per FTE
(Full Time Employee)

100-200
0
100-200
Total Price in Market
18,000 to 27,000
23,708 to 35,562
58,598
Pakistani labor is cheaper than India.
Source The Buying Triangle, LLC, 2006
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While the Pakistan IT Industry has made
impressive strides over the last
three years, sustaining the growth will require
sustained measures that are part of an integrated
strategic framework
STRATEGIC FRAMEWORK
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STRATEGIC FRAMEWORK
INTERNATIONAL BEST PRACTICES LESSONS LEARNT
41
IT TELECOM INDUSTRY COMPARISON
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IT INDUSTRY FEEDBACK
90
80
70
Telecom Bandwidth
60
IT enabled Office Space
No. of Companies
50
Human Capital
Marketing/Country Image
40
Availability of Finance
Company Capability Development
30
Public Policy
Facilitation
20
Strategy Research
10
Other
0
Areas of Concern
IT Industry feedback was conducted with the
collaboration of Top IT Companies in
Islamabad, Lahore Karachi. The scale of 0-90
shows the importance of the area of concern.
The colored bars represent the areas of concern.
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STRATEGIC FRAMEWORK
Direct Drivers
HR
Telecommunications Bandwidth
Marketing




Office Space
Sustained dominance of niches Bring development
house or call centre of large technology or other
MNC to Pakistan
Provide adequate quality manpower in sufficient
quantities with acceptable attrition, in quick
time
Provide Quality IT-Oriented Office Space at
affordable rates in sufficient quantities and in
quick time

Provide Reliable bandwidth of sufficient
capacity
in quick time
Indirect Drivers
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STRATEGIC FRAMEWORK
STRATEGY RESEARCH
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STRATEGIC FRAMEWORK
VENTURE CAPITAL FUND ENTREPRENEURSHIP
DEVELOPMENT

• Current Profile
• PSEB has developed methodology for launch of VC
  Fund based on
  
• interaction with several international VC,
  domestic financiers, and
  
• Grant Thornton study

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STRATEGIC FRAMEWORK
IT PARKS

• Current Profile
• PSEB operates 750,000 square feet in 11 STP

• Proposed IT Parks
• Transparency through Inclusivity, Publicity and
  Objectivity
  
• BOT (Nationwide Census of IT Companies, National
  Assessment of Public Land, Three City Survey of
  IT Company Location Preferences)
  
• - Due Diligence (International Parks Domestic
  Projects)
  
• - Market Teasers
• - Retention of top consultants

• Next Steps
• CAA land in Karachi and Lahore

47
STRATEGIC FRAMEWORK
MARKETING PR
PR, Sales Pipeline, Matchmaking

• Current Profile
• Reengineered Website now receiving one million
  hits monthly
  
• Monthly bulletins with subscription of 5000

• Sales Pipeline for GLOBAL 2000/MNC Development
  Centers
  
• Joint Action Plans (JAC)/MOU Malaysia, China,
  and Turkey. Singapore and Mauritius in pipeline.

• Over one hundred and fifty PR Events and
  Artifacts
  
• Tradeshows Last year PSEB sponsored fifty one
  companies in nine
  
• international tradeshows and delegations and
  four domestic events.
  
• Customer Events Leads Passing

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STRATEGIC FRAMEWORK
PUBLIC POLICY
Taxes Tariffs, Convergence, IPR

• Next Steps
• MoIT/PSEB to be consulted on all proposed
  legislation impacting IT including that tabled by
  organizations like CBR .

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STRATEGIC FRAMEWORK
HUMAN RESOURCE DEVELOPMENT

• Current Profile
• Currently 90,000 IT graduates. Need 230,000 by
  2010.
  
• Strategy to increase Tier One institution
  output, improve Tier Two institution quality, and
  expand professional training
  
• Academic Programs Internship
  Apprenticeship Professional Training
  

50
STRATEGIC FRAMEWORK
FACILITATION
Regulatory Facilitation Targeted Interventions

• Current Profile
• Visa processing, Software NOC
• Open Source 11 migrations saving PKR 35
  million700 trainees translation of instruction
  kit into Bhasa
  
• ERP Launching with BSF
• Industry associations (PASHA, OPEN, APSENA, TIE,
  
  
• ACCO, CSP, PCA, and ISPAK)

Establishment of a Visa Handling Desk in MoFA f
or expediency in handling IT company visas
similar expediency for issuance of work permits
by BOI.
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STRATEGIC FRAMEWORK
COMPANY CAPACITY DEVELOPMENT
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STRATEGIC FRAMEWORK
INTERNAL
Target 2010 Best management practices, automa
ted, ISO 9001 and ISO 27001 certified.
Market competitive salaries and 45 Additional
positions
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EXPERT ENDORESMENTS OF FRAMEWORK

• Professor Wong Poh Kam, Director of the
  Entrepreneurship Center National University of
  Singapore
  
• Dr. Robert Firth, Director Institute of
  Systems Sciences National University of
  Singapore
  
• Professor Ken Morse, Managing Director,
  MIT Entrepreneurship Center

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PAKISTAN IT INDUSTRY PROFILE
GROWTH PERCENTAGE 2003-2010
55

• IT REVENUE GROWTH

9,000
8,000
7,000
6,000
USD in Millions
5,000
4,000
3,000
2,000
1,000
2009-10
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Fiscal Year
Source Strategy for Increasing Exports of BPO
Bearing Point Report 2005
56

• IT INDUSTRY PROJECTIONS

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STRATEGIC FRAMEWORK
VISION 2010

• Over ten billion dollars in annual turnover
  from several hundred million dollar services
  companies, leading product companies, and ten
  additional FORTUNE 500 and GLOBAL 2000
  development centers.
• Internationally recognized as a leading IT
  destination
  
• 800 IT companies in the country
• 10 IT/Technology Parks nationwide providing 20
  million square feet
  
• 230,000 IT graduates in the country
• 250,000 IT and non-IT graduates employed by the
  IT Industry
  
• USD 200 mil annual disbursement by VC Funds to
  the IT Industry
  
• 10 GBS International Internet Traffic with
  99.99 uptime
  
• Over 300 ISO, CMM, ISO 27001, Six Sigma, OPM3,
  ITIL and certified companies
  
• Effective regulation for Convergence
  Facilitation, IPR protection, data protection,
  
• and prevention of electronic crimes and smooth
  regulatory approvals.
  
• Accurate, yearly updated industry data.

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STRATEGIC FRAMEWORK
EXTERNAL RISK AREAS

• Global economic downturn
• Country Branding
• Support of Other Government Agencies (CDA, CAA,
  PTA, PTCL, HEC, SBP, SECP, CBR, MOFA, MOF,
  Planning Commission)

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THANK YOU