Major Issues in Pakistani IT Sector,

Proposed Solutions and Key Areas

.. Requiring Attention
Submitted TO:

Engr.Amir Zaman
Submitted By:
Arshad Ali
(12-PWELE-4093)
Section A

DEPARTMENT OF ELECTRICAL ENGINEERING,

NWFP UNIVERSITY OF ENGINEERING AND TECHNOLOGY,
PESHAWAR KPK, PAKISTAN.
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Introduction:
Information Technology (IT), as defined by William and Sawyar (2005) is a
general term that describes any technology that helps to produce, manipulate
process, store, communicate, and/or disseminate information. It includes
hardware, software, databases, networks, and other related components which
are used to build information systems (Shelly et al., 2004). IT as a tool of socioeconomic development has been spreading very rapidly into developing
countries. IT has become, within a very short time, one of the basic building
blocks of modern industrial society. IT now is the major contributor to the
progress of both developing and developed countries.
Pakistans IT sector has been serving the country in a range of areas. Its not
only contributing to national exchequer in the shape of foreign exchange (from
outsourcing business) but also generating employment opportunities. As per
Pakistan Software Export Board (PSEB), Pakistans share of global IT sales is
$2.8 billion, out of which $1.6 billion accounts for the countrys exports of
software and IT enabled services. The credit of this goes to over 1500 registered
IT companies and millions of freelancers that are serving the national economy in
multiple domains.
The IT industry can play a major role in bolstering the economy of Pakistan as
demonstrated by countries like India, Philippines and Singapore,china ,korea.
One of the key competitive advantages of IT sector is that it does not require
heavy machinery, or sophisticated infrastructure. It only needs talented human
resource. Statistics indicate that over 2 hundred thousand professionals are
employed in the IT sector with number of freelancers crossing 2.5 million
benchmark. Despite this much pool of talent and number of companies; Pakistan
has a very negligible share of global IT industry. Reports indicate that weve just
1 percent of the global IT industry, which (according to Gartner) was worth $407
billion in 2013.
However, there is another side of the story too; not every firm/individual is able to
use his full potential to work. There are a range of problems they are facing and if
met, their share/contribution to the national economy can grow fast.

Major problems:
some of the problems faced by IT industry are :

Governments Insufficient Support:

States always patronize private sector or at least help them sustain and grow
with financial support, infrastructure and legal cover. In Pakistan, if we compare
the governments support for other industries and IT; the situation is not
encouraging. State happily supports Textile for its value in the national economy
but isnt willing to provide those incentives to IT sector. Though KP IT board is
doing very good job in some areas but this can be improved. In addition, the
federal government needs to introduce a dedicated national IT policy and
allocate budget for IT centers, institutions, and bodies across the country.
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In this regards, the immediate attention should be paid to the following:

Easy financing facilities for IT entrepreneurs.

Special energy plants for IT cities/hubs.

Registration of companies.

Allocation of budgets for industry bodies and institutions.

Representation of Pakistan in global industry/trade shows.

The Education System and HR Side:

Globally, the education system supports industries by providing qualified human
resources. In India, around 200,000 IT graduates are hired every year and
academia is supporting the need of industry. In Pakistan, some institutes are
performing beyond expectations and providing high quality human resources to
the industry. However, majority of the educational institutes are not providing the
required human resources. The course, subjects and information inculcated is
outdated and does not encourage creative thinking (the most important in IT).
In addition, the communication skills of average IT graduate are also a question
mark. As IT sector heavily relies on the outsourcing, it has to deal with foreign
clients. This makes written and verbal English an essential requirement of any IT
job. Similarly, there is a significant need to increase the number of IT universities,
as the current employment in IT is far below that of other countries in the race.
Promoting IT education and developing infrastructure in the rural areas can have
a significant effect on the GDP as well as poverty alleviation.
The educational institutes need to:

Build strong network with industry and its representative bodies.

Revise its syllabus in light with industry feedback and requirement.

Introduce soft-skills workshops.

Adopt case-study teaching method.

Promote internship programs and make it compulsory for a degree.

The Managerial Side:

Though the entire corporate culture in the country is subject to discussion with
regards to values, patterns, practices and vision but Ill keep focus on some key
problems in management of local IT companies. Other than big names, they
dont have any concept of Human Resource Management or Training and
Development. This lack of will on the part of organization leads to stagnation. On
the top, the companys all decisions are made in a dictatorial way without seeking
real-time feedback on strategic issues of the organization. Employees
ideas/feedback are taken mostly when the company is designing a product or
launching a new campaign.
A slight change in these practices can lead to massive success.

Introduce a culture of delegation and open feedback.

Hire professional HR people not just payroll administrators.

Delegate authority with accountability.

Encourage creativity via workshops, and games.

Encourage performance based bonuses.

Industry and Its Representative Bodies:

One of the biggest issues that our IT sector is facing is lobbying and unhealthy
politics on various levels. The industry representatives need to get out of
personal gains exercise and work jointly for the sake of industry and national
economy. Different bodies need to work together and bargain with the
government, investors, and foreign clients. In this regards, I can think of the
following as good steps.

Conduct regular networking events.

There should be a degree awarding institute of the industry itself that could
issue certifications in different fields. Just like banking, promotion of staff
should be linked to certification, experience and qualification.
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Industry should arrange different trade shows, participate in networking

events, and try attracting investment from abroad.

Raise industry issues with the government in the right way. I do believe
theyre doing that but the collective voice is always more powerful than
individual.

Lack of expertise:
There are some problems which are due to lack of expertise or which is due to red
tapism in government departments.the fact that the public banks fail to approve loan for
software projects ,that government tax revenue department fails to appreciate the
nature of R & D works,the State bank of Pakistan fails to comprehend the nature of
software export transaction,all reflect that the government need to hire consultants or
full time employees who have an expertise in this modern technology.this is more
important if pakistan has to make a headway in the information technology and software
development field.
In this regard I can think of the following as a good points.
Government should make use of services of technical experts in overall policy
making decision regarding software industry and device a comprehensive
long term plan that not only adress the issues related to fiscal incentives but
also includes infrastrucure aspects.
Government should help private sectors in setting up educational institutions
for producing an educated and skilled group.

General Issues:
In addition to the points raised above, there are some general problems that everyone
in the industry is facing. One such issue is absence of PayPal from Pakistan. PayPal is
probably the most popular online payment solution thats used by companies round the
globe. Unfortunately, the very service is not available in Pakistan and local
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professionals have to rely on expensive or non-popular alternatives. There are some

companies that pay only via PayPal ruling out prospect of a Pakistani professional to
grab the deal. The banking sectors approach to process and manage international
payment is another issue that keeps realizing its presence. Issues regarding absence of
payment gateways, research and development, delay in roll out of 3G technology,
licensing and education have created difficulties as well as limited the growth of the
Pakistani IT industry.

Recommendations for supporting IT industry:

Some recommended solutions are listed below:
Government should encourage the export of software and also the import of
hardware and software parts.this would require deregulation in tariffs and duties
on imports and better foreign exchnage facilities for exports.
Software firms should properly hire trained MBAs for marketimg amd project
management related issues.Also basic marketing concept be introduced to the
top management of softeare companies.

A forum be created by IT professionals to discuss and debate the issues focusinf

software industry.
The educational standards of IT institutions also need to be monitored in order to
increase the proportion of highly capable software engineers in the market.
Though the top management of every organization is now fully aware of IT
importance and open to its investments but overall still there exist its
incapability for IT strategic planning. Plans are made in isolation of IT
heads.
ThePakistan has state-of-the-art telecommunication network but needs
immediately an overhaul to the old PTCL organizational structure to make
it line with the world standard.
It is an urgent need that PTCL should further enhance its communication
network and other telecommunication infrastructure to all cities of the
country to provides extended communication dial up, DSL, dedicated
bandwidth, VOIP applications, cheaper call rate and domain server to the
companies by replacing/enhancing the current infrastructure of the current
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PTCL network for increase its services and revenues.

The country has abundant pool of young talents but they are lacking with
competency for using new IT products. The Government of Pakistan has
been supportive to all digital initiatives in the recent past but it urgently
needs to further revolutionize its IT infrastructure. It needs to educate and
train and bring its workforce to the international standard. It should bring
intense focus on building an information based economy by upgrading the
technical and managerial skill of people