Pakistan's software industry: 8,000 people
Making up for IT’s lost decade
By Athar Osama
Pakistan’s software industry appears to be relatively small in terms of manpower and employment. The PSEB Best Practices study puts the total employment at 60 of the most prominent (and larger) firms that it surveyed at around 5000 people.
Another internal PSEB study whose results were shared with this writer puts the entire software industry size at around 8000 people. Even if one adds a tentative number of another 10,000 or so people who are involved in various kinds of ITES/BPO operations ( e.g. call-centres) in the mix, the total industry size is certainly not more than 20-25,000 people.
First, the degree of concentration in the Pakistani software industry is much less than that in India’s. There are no Tatas or Wipros in Pakistan. The ratio of revenues between the most successful and the median firm in Pakistan is around 1:100 against 1:2000 in India. In Pakistan, as against India, we find very little involvement of the country’s large business houses in the software industry.
Not that Pakistani business houses have not ventured into software but they have failed to create sustainable software businesses. While the reasons for this fact may be debatable, the trend itself is undeniable. Second, Pakistan has never been seriously considered by multinational sofware firms as a software development hub for their activities. This is in contrast to the early recognition of India’s potential by multinationals that gave a certain boost to the Indian software industry.
Third, Pakistan has seriously suffered (and continues to do so) from a weak human resource pipeline, both in terms of quality and quantity of its product. This, to our mind, is the single most important hindrance in the development of Pakistan’s software industry and the key differentiator between where it stands today vs where India’s software industry stood a decade from now.
For India, a “blessing in disguise” was the departure of IBM in 1978 that left India with 1,200 unemployed ex-IBM employees, many of whom quickly opened up small software operations and computer bureaux (operations that leased out computing capacity to firms in need of that resource. In 1980, Indian software companies exported $4 million worth of software. The exports touched $100 million mark in 1989/90 and stood at around $500 million in 1994/95. Throughout the 1981-1994/95 timeframe, the United States represented the single largest market for Indian software averaging around 60-65 percent of the total exports.
One observer estimates, based on very narrow market segmentation, rveals that India took about 20 per cent of the foreign “opportunity” for internationally subcontracted software services in mid-1990s. It, however, only represented 0.15 per cent the total world computer services and software market and 1.7 per cent of the total US market in 1994/95.
While these figures represent a minuscle portion of the overall US software market and even India’s total exports, they , nonetheless, reflect the strong above-average growth of the software sector in India.
While it is hard to imagine how the Indian software industry might have evolved had there been no IITs or had they not practiced and perfected bodyshopping, the fact remains that these events did happen, either consciously or unconsciously, and changed the face of the Indian software industry.
They also probably set it apart from the Pakistani software industry and essentially gave India the headstart—and a decisive first-mover advantage—that it enjoys till this day, not only over Pakistan but also the rest of the world. Did the decade of the 1990s, the one that Joseph Stiglitz describes as the “roaring nineties”, constitute a lost decade for Pakistan’s software industry? In many ways, the above analysis provides an inkling into a possible answer to that question.
Having started at pretty much the same time (mid 1970s) and progressed in similar fashion, Pakistan’s software industry of today stands, like shadow of a much larger and well-recognized Indian behemoth, but it is very similar to what India was in 1995.
By Athar Osama
Pakistan’s software industry appears to be relatively small in terms of manpower and employment. The PSEB Best Practices study puts the total employment at 60 of the most prominent (and larger) firms that it surveyed at around 5000 people.
Another internal PSEB study whose results were shared with this writer puts the entire software industry size at around 8000 people. Even if one adds a tentative number of another 10,000 or so people who are involved in various kinds of ITES/BPO operations ( e.g. call-centres) in the mix, the total industry size is certainly not more than 20-25,000 people.
First, the degree of concentration in the Pakistani software industry is much less than that in India’s. There are no Tatas or Wipros in Pakistan. The ratio of revenues between the most successful and the median firm in Pakistan is around 1:100 against 1:2000 in India. In Pakistan, as against India, we find very little involvement of the country’s large business houses in the software industry.
Not that Pakistani business houses have not ventured into software but they have failed to create sustainable software businesses. While the reasons for this fact may be debatable, the trend itself is undeniable. Second, Pakistan has never been seriously considered by multinational sofware firms as a software development hub for their activities. This is in contrast to the early recognition of India’s potential by multinationals that gave a certain boost to the Indian software industry.
Third, Pakistan has seriously suffered (and continues to do so) from a weak human resource pipeline, both in terms of quality and quantity of its product. This, to our mind, is the single most important hindrance in the development of Pakistan’s software industry and the key differentiator between where it stands today vs where India’s software industry stood a decade from now.
For India, a “blessing in disguise” was the departure of IBM in 1978 that left India with 1,200 unemployed ex-IBM employees, many of whom quickly opened up small software operations and computer bureaux (operations that leased out computing capacity to firms in need of that resource. In 1980, Indian software companies exported $4 million worth of software. The exports touched $100 million mark in 1989/90 and stood at around $500 million in 1994/95. Throughout the 1981-1994/95 timeframe, the United States represented the single largest market for Indian software averaging around 60-65 percent of the total exports.
One observer estimates, based on very narrow market segmentation, rveals that India took about 20 per cent of the foreign “opportunity” for internationally subcontracted software services in mid-1990s. It, however, only represented 0.15 per cent the total world computer services and software market and 1.7 per cent of the total US market in 1994/95.
While these figures represent a minuscle portion of the overall US software market and even India’s total exports, they , nonetheless, reflect the strong above-average growth of the software sector in India.
While it is hard to imagine how the Indian software industry might have evolved had there been no IITs or had they not practiced and perfected bodyshopping, the fact remains that these events did happen, either consciously or unconsciously, and changed the face of the Indian software industry.
They also probably set it apart from the Pakistani software industry and essentially gave India the headstart—and a decisive first-mover advantage—that it enjoys till this day, not only over Pakistan but also the rest of the world. Did the decade of the 1990s, the one that Joseph Stiglitz describes as the “roaring nineties”, constitute a lost decade for Pakistan’s software industry? In many ways, the above analysis provides an inkling into a possible answer to that question.
Having started at pretty much the same time (mid 1970s) and progressed in similar fashion, Pakistan’s software industry of today stands, like shadow of a much larger and well-recognized Indian behemoth, but it is very similar to what India was in 1995.
posted by India News Watch at 10:53 PM
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