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Project Title

Industry Analysis of I.T Sector in
Pakistan

Market Size & Growth Rate Pakistan’s IT industry has been rising steadily since the last three years. The rapid growth of the sector is largely due to foreign IT firms setting up operations in Pakistan in a bid to reduce costs and raise profits. such as high quality software development. Experts estimate an average annual growth of 33% in the sector.8 billion. establishment of IT Parks with low rent. Moreover. In 2007. Competitive Advantages Pakistan offers various competitive advantages over other outsourcing destinations. The total estimated market size of IT industry is $2.I.T Industry in Pakistan: An Overview The IT and IT-enabled Services marketplace offers lucrative opportunities for developing countries to join the ranks of the developed world. Thailand and India. Many foreign IT firms have enjoyed great success in Pakistan. The scale and pace of growth in this sector is faster than in any other industry. By 2009.T. Pakistan was for the first time featured in the Global Services Location Index by A. Kearney and was rated as the 30th best location for off shoring. and a number of developing countries are attempting to emulate the success enjoyed by countries such as China. A few of the incentives offered include tax exemption till 2016. The Government of Pakistan has been proactively developing the IT sector in Pakistan since the last few years. lowest cost basis and . Pakistan's efforts to establish a reliable IT infrastructure and the attractive incentives it offers to foreign investors have been instrumental in the development of the local IT industry. foreign ownership of equity invested in IT and 100% repatriation of profit allowed to IT companies. swift and easy establishment of business. A marked increase in software export figures are an indication of this booming industry’s potential. Pakistan had improved its rank by ten places to reach 20th.

emerging and state-of-the-art telecommunication and IT infrastructure. By 2003.4 billion (WTO-prescribed formula) Percent growth in exports over the last one year 61% Export targets for the current fiscal year 2008 US$ 162 million Total number of IT professionals employed in 110. This will result in the total IT export revenue crossing US$ 10 billion in the next five years. Experts estimate an average annual growth of 33% in the sector.000 Technology Parks sq ft Following are some of the renowned IT associations of Pakistan: • Pakistan Software Houses Association Pakistan Software Houses Association was formed in the last quarter of 1992 by nine software houses. PTCL broadband & Nayatel etc Competitors/Statistics of I. TRG Private Ltd. Wateen.000 Pakistan Total IT spending US$ 1. PASHA had grown to over 200 members.1 billion (WTO-prescribed formula) IT and IT-enabled services exports US$ 1. • Broadband Service Providers . Ovex Technologies.T Industry Total number of IT companies registered with 1306 PSEB 445 Karachi Number of substantial IT companies region-wise 351 Islamabad/Rawalpindi breakup 426 Lahore 84 Others Total number of foreign IT companies working 60 in Pakistan Total industry size US$ 2. Wi-tribe. Its main objective is to promote and develop the software and services industry in Pakistan and to protect the rights of its members. The other sector which comes under information technology sector is “broadband service providers”. Systems Private Ltd. the top five companies that have contributed the most to the IT sector are Nestsol Technologies.4 billion Total space utilized in IT & Software Eleven IT Parks covering an area of 750. Companies Position According to a report by the Pakistan Software Export Board (PSEB). and Elixir Technologies.

providing services and products to a growing list of corporate clients. London. This was the first acquisition made by a US publicly traded company in Pakistan. print stream conversion. the company operates as Visionet Systems Inc. and document archival. NAYA Tel etc. Ovex Global. and the Internet. Systems Ltd (SL) was the first software house in Pakistan. Elixir also has development labs in California and Prague. billing. part of Pakistan's global multibillion-dollar foreign-investment program. It specializes in the personalized printing and customized business solutions for print. • Association of Call Center Operators It is an organization rich in information and experience with a wealth of knowledge and wisdom in its members. The company has more than 600 professionals offering a full range of IT and BPO services to national and international clients. WI-Tribe. By August 2004. En Pointe Technologies.000 packages installed in 70 countries for clients in such sectors as banking. NetSol had invested more than $10 million in the IT sector in Pakistan.68 million. NetSol has played an instrumental role in making Pakistan an inviting opportunity for foreign direct investment. a California-based company established in 1985. Since then it has been providing computing strategies and solutions to business and government and playing a major role in some of the largest IT projects in the country. The deal was worth $1.000 customers worldwide with more than 30. Elixir Technologies. Internationally. offering multiple products and services to a premier client base in the commercial finance industry. . The key to continuing success is the sharing attitude among its members. NetSol Technologies Ltd. The industry in Pakistan is now in a growing phase and many organizations require advice the investment in their contact centre in terms of enhanced customer service. Elixir Technologies Pakistan has been operating since 1995. It was the first occupant of the Software Technology Park in Islamabad in 1997. Elixir Technologies Pakistan is a fully owned subsidiary of Elixir Technologies Corp. established in January 2003. Singapore and Melbourne. health care. The government has recognized its efforts in spearheading the country's IT growth. Systems Ltd. It has offices in Zurich. Ovex Technologies is now a subsidiary of the US-based firm. ACCO is in a unique position to assist today’s contact center market place in their quest for improved delivery. It is a third-party offshore business process outsourcing (BPO) provider. PTCL. Besides Islamabad. telecom. Founded in 1977. education and manufacturing in both the private and public sectors. It is a key player in critical areas in the US. Pakistan commenced operations in Pakistan in 1996 and has progressed into a global provider of enterprise solutions and IT services. archival systems. The company has long been a leading developer of innovative software for document composition.Some main broadband service providers are Wateen. 70% of the equity of Ovex Group (Ovex US and Ovex Pakistan combined) was acquired by its longtime client. Paris. En Pointe Technologies. Last October. resource management. It has more than 5.

Toyota. Pakistani officials last year called for Malaysia to help start construction of long-awaited IT parks. Daimler Chrysler. Multimedia Super Corridor Development Corp (MdeC). Most comprehensive date base in the world • Touchstone BPO. 160 international customers including Microsoft • Five Rivers Technologies: Enterprise Computing Resource Management • Supertech DIDXchange: Phone number exchange for Telcos and ISP • Wavetech: Display systems in public systems • Post Amazers: Animation. • iEngineering: Platform Management.The company is running a number of major BPO engagements for large mortgage companies in the United States. A leading Malaysian firm. TRG: IT enabled services/Call Centers . has more than 3. The Resource Group (TRG) is an investment company that is a leading provider of capital and operating solutions to companies active in the business-services sector. • Ultimus: Business Process Management. with six of the top 10 US mortgage companies among its clients. besides facilitating cooperation in other areas including venture-capital funds and trade in IT services. BP. Running on floor of NYSE. TRG has executed more than 10 international acquisitions and. through its acquired companies. Product Innovation • Mixit: Automated Stock Market Order Management. “Son of Mask” and “Exorcist : The Sequel” • NetSol: Car Leasing and Services. half a billion dollars in daily North American turnover. indicating that IT-enabled office space was a critical requirement for the development of the industry. TEXACO. Infospan. TRG Pakistan raised $37 million from the Karachi Stock Exchange and an estimated $5 million to $10 million from private placements. BMW • LMKR: Seismological and Geological Data Management. Ovex.000 employees worldwide. It takes both primary equity positions by providing liquidity to existing shareholders. Multimedia Super Corridor Development Corp. The project aims to build high-tech parks on a BOT basis. The meeting resulted in a recent visit of IT Ministry officials to Malaysia jointly to explore feasible projects that can be accomplished through employing ICT. Systems. The deal envisages the exchange of information and the sharing of ideas about strategies and best practices in nurturing the local IT industry and multimedia companies. The Resource Group. as well as investing directly in companies that could benefit from additional capital. recently signed a deal with the PSEB to build IT parks in Pakistan. CALTEX.

T industry. .T related products are Government. The buyers of the I. market • Telephone Equipment • Large Corporate • Computer • Prefect Competitive market • Emerging Companies • Infrastructure environment • House Hold • IT companies • Catering and Others (NO) Threats Of Substitute Products Bargaining Power of Buyers Buyers have very high bargaining power as there is pure completion in the I. Industry Competition (Porter’s five forces Model) PORTER’S FIVE FORCE MODEL (HIGH) Threats Of New Entrants •Easyto Enter •Availability of Finance •Ease in Resource Availability (HIGH) (VeryHigh) (LOW) Rivalry Among Existing Firms BargainingPower Of Bargaining Power Of • Cut Throat Competition Buyers • Large and Small Players of the Supplier • Govt.T and I. Large companies house hold etc and they have choices for the products have different rates with different features according to their requirement.

Price war is going and they are true rivals with each others.T firm and also the related resources (human capital and raw material) are also available in the market. Although the existing I. Potential New Entrants The I. but as I said earlier that low budget is required for setting up an I.T industry. FORCES AT WORK TO CHANGE THE INDUSTRY CONDITIONS Increasing I.Rivalry among Existing Firms There are many firms working in I.T related equipment are very cheap and also there are so many suppliers in the market. Key Performance Indicators (KPI’s) Find below some of the key performance indicators for I. Infrastructure is available and also the second hand market is also exists in Pakistan.T. • Innovation / Technology • After sales services • Quality of products • Network availability • Link Speed • Availability • Round Trip Time (RTT) .T industry is already dominated by experienced dominant players with long experience. Innovation and technological advancement are the main forces that have the impact on the pace of change and industry conditions. So there is a threat of new entrants as entry/exit barrier are very low. As the I.T industry is a comparatively easy industry to get into. Bargaining Power of Suppliers Suppliers' bargaining power in this information technology industry is low.T products awareness in Pakistani market has greatly increased sales of products including broadband.T industry of Pakistan and the environment is pure competitive. software and hardware. Substitute Products As such there is no substitute for I.

which is expected to be started within two . • Billing Complaints • Service Provisioning Complaints Innovation / Technology I. Each of the ISPs would invest $50 million to kick off their service in Pakistan. Service Availability Broadband Service Availability (BSA) indicates the number of times we are able to successfully access the broadband services. backhaul failure etc. Round Trip Time (RTT) It is also known as round trip delay. So this will identify that how much time a firm takes to improve their products. Link Speed The Link Speed (LS) shall be checked against the advertised speeds. as is claimed or “advertized ” by the Broadband Service Providers.T products need continuous technological advancement.T department for this purpose. For a local area network (LAN) the data connectivity between server and computer is initiating the signal and the destination is a remote computer or system that receives the signal and retransmits it Industry Attractiveness Three Middle Eastern and Far Eastern Internet service providers (ISPs) are set to launch their operations in Pakistan with an aggregate investment of $150 million. After sales services I. it relates with the data transferability. For example Microsoft office 2003 and the improved / advanced version is Microsoft office 2007.T products/firms which provide them assistance and after sales services also. This shall verify operator coverage claims. Network non‐availability can happen due to various reasons like l ine failure. Authentication Authorization and Accounting (AAA) failure. Network Availability The parameter shall check the availability of the Network or Service. The link speeds which are normally shown to the subscribers are not the actual link rates that are available to the subscriber s at any given point in time. Maintenance also needs a cost.T equipments require regular maintenance on continuous basis so large organizations have separate I. Organizations preferred those I.

Supplier Management. which will increase the IT industry's size to $10 billion in 2010. High quality in product and services. The PSEB has proposed a four-year draft strategic plan. They plan to start their operations simultaneously at 90 destinations throughout the country.000 trained IT professionals. . It is very important to stay ahead of competition in this kind of industry which is driven by technology. The ISPs are preparing feasibility reports and assessing the market. By last June. the company cannot be complacent and would have to focus on constant innovation. Data from Pakistan's central bank show that the country managed to export more than $72 million worth of software during financial year 2005-06. Pakistan had 50. according to the PSEB. Innovation. Internal capabilities including the experienced and trained personnel would be a key success factor in this kind of business. quality etc. is very important to the customers. wide geographic presence is a critical factor in case of the kind of DTH service. Relations with suppliers—both of equipment and channels— would play a critical role in success of this kind of service. Pakistan's software exports touched $72 million in fiscal year 2005-06.years. a record 56% increase compared with exports of $46 million in fiscal year 2004-05. 232. Trained Human Resource. Good relations result in low input costs which could be passed to the customers. It enables the service providers to ensure the reliability. The company would have to remain in touch with the changing needs of the customers. Pakistan has invested billions of dollars in producing IT experts. Islamabad's plan to build IT parks in major cities may further accelerate the IT industry's growth. The quality of service which includes reliability. Customer intimacy.000 workers in the IT sector and by 2010 it will need. Knowledge about the culture and habits of the customers is very important. Critical Success Factors in the Industry Effective distribution. So.