Industry laments government penetration into IT business

Industry laments government penetration into IT business

KARACHI: The IT industry has lamented government’s penetration into information technology (IT) business and specifically criticized the role of NADRA in securing international projects in Bangladesh, Kenya, Sudan, Nigeria and Fiji.

“They disapproved public sector intervention into business which consequently undermines private sector’s capacity to compete and flourish in the global market,” Trade Development Authority of Pakistan (TDAP) quoted industry stakeholders, including the software association (P@SHA), in a report.

Criticizing market concentration to developed countries, TDAP has recommended the authorities to focus developing economies i.e. Africa, South America, Sweden, Peru and Denmark, which offer huge information technology (IT) and services export potential.

“Presently, the focus of Pakistan’s IT sector exports and marketing activities are developed countries. Professionals in IT industry claim that there is huge potential in developing economies and emerging markets outsourcing their IT projects. Unfortunately, Pakistan has not invested enough to explore and engage these markets for business,” a TDAP report noted.

According to the Pakistan’s national technology fund (IGNITE), Pakistan’s IT industry is set to double by 2020. The current worth of IT industry in Pakistan stands around $3.5 billion expected to reach $7 billion by 2020.

According to the State Bank of Pakistan data, software exports of IT & IT enabled services that are traded through formal-channels stand at $1 billion. “However, undocumented remittances from services provided by SMEs and freelancers add cumulatively $1.5 billion to the industry’s output. Another group fueling up the IT sector exports includes the companies and individuals who do not bring their revenues to Pakistan– account for $600 million revenue to IT sector”.

According to the Pakistan Software Export Board (PSEB), the total size of the software sector is approximately $6.5 billion including formal and informal economy, which is expected to grow at the rate of around 4 percent in the next five years. The growth of IT sector to an exorbitant level speaks volumes as IT sector exports contributed with over 1.12 percent share to total GDP of Pakistan in 2018 registering 6.43 percent growth.

TDAP notes the IT sector in Pakistan has been growing for the last two decades but the sector lacks sustainability in its business model. Enterprises/ ventures in IT sector are initiated on project basis and wind up upon the completion of those projects.

“The business model lacks consistency, passion and sustainability to acquire new projects. Resultantly in majority cases, the sole intention to start-up venture remains to yield profits rather than deliver quality and fame to the IT industry,” the report said.

Pakistan is rated as the 4th biggest freelancer market yet Pakistan lacks infrastructure, ready to hire talent, spoken English qualified & skilled labour and upgraded technology to become the sourcing destination to the world.

The IT industry also highlighted the need to spread awareness and training to commercial counsels. Commercial counsels have a fair understanding of merchandise trade and have been active to promote Pakistan but lack understanding and knowledge to promote the services sector abroad which in turn, costs IT industry to negotiate and establish business.

It may be mentioned here, Pakistan has around nine bilateral and multilateral trade agreements including South Asian Free Trade Area (SAFTA) and GSP+ Concession but unfortunately only two bilateral agreements facilitate trade in services i.e. China – Pak Free Trade Agreement (CPFTA) and Pak – Malaysia Closer Partnership Agreement.

Pakistan can tap into the potential employment opportunities and earn remittance in UK market. In April 2019, Pakistan and United Kingdom have also launched a tech corridor at British Parliament to promote greater links between two countries. This is the high time that Pakistani IT industry should realize the market potential in UK and capitalize upon the IT sector capacity of Pakistan.

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