Wednesday, November 22, 2017

Information Technology Jobs Moving From India to Pakistan?

Outlook India recently ran a story headlined "Noida to Islamabad". It suggests at least anecdotal evidence of information technology jobs beginning to move from India to Pakistan. The number of jobs is only 125 but could it be the tip of a larger iceberg? Are western companies finding Pakistan becoming more competitive with India in terms of cost and skills on offer? Let's try and answer these questions.

Noida to Islamabad:

Outlook India report said 125 employees at a US-based information technology service provider were laid off in Noida in New Delhi, India, and the very next day an equal number of workers started working for the company in Islamabad, Pakistan. Here's an excerpt of Outlook India story:

"On the night of November 1, stretching into early next morning, close to half the workforce at the Noida office of a US-based IT service provider was informed that their services were no longer needed. A former employee says salaries for the staff at the Noida office were declared delayed by a day on October 31. The official explanation was that the servers were not working. “They weren’t clear about how many people were going to be laid off,” he says. The next night, they “axed 125 people in half-an-hour.” They all got a severance package—a cheque for October and another two months of salary—and a termination letter. Rumors of layoffs had started doing the rounds four to five months ago. The talk was that the company was opening offices in a neighboring country. Curiously, the day the workforce in Noida was sacked, almost the same number of employees for the same low-level IT-enabled jobs logged into their systems, 676 kilometers away, in Islamabad, Pakistan. Job cuts have plagued the Indian IT sector for about two years now and have begun to get pretty serious from the start of this year. “Bloodbath in Bangalore” has been the recurring headline. But the trend of these jobs going to techies in Pakistan is more recent. Away from all the noise of ceasefire violations and surgical strikes, where Pakistan could really hurt India is in taking away low-end IT jobs. The neighbor has a budding IT industry, growing in its own space, looking to emulate the Indian IT success story where right now data operators and BPO callers come much cheaper."

The story did not identify the company by name.

Pakistan: The Next Software Hub?

There are tens of thousands of Pakistani IT engineers working in the West, particularly in Silicon Valley, the high-tech capital of the world. The popular entertainment industry recognizes this fact by featuring a Pakistani-American software engineer in lead role played by a real-life Pakistani-American Kumail Nanjiani in HBO's "Silicon Valley" serial.  Articles like the New York Times Op Ed piece in 2015 titled "Pakistan, the Next Software Hub?" have helped raise the profile of Pakistan's information technology industry in the West.

Afiniti and Careem: Tech Unicorns Made in Pakistan:

Afiniti and Careem are two technology unicorns engineered in Pakistan by Pakistanis. AI (artificial intelligence) startup Afiniti software has largely been engineered in Lahore while taxi hailing service Careem's technology has mostly been developed in Karachi.

Careem is a taxi hailing app that is giving its American competitor Uber a run for its money in a region stretching from Pakistan to the Middle East and North Africa. The company cofounded by Mudassir Sheika, a Pakistani national, is headquartered in Dubai in the United Arab Emirates.

Careem's software has been developed by its technology partner VentureDive based in Karachi, Pakistan.  VentureDive was started by serial Pakistani entrepreneur Atif Azim who sold his earlier startup Perfigo to network equipment giant Cisco for $74 million in 2004, according to a report in Tech in Asia.

Washington D.C. based AI technology firm Afiniti, founded by serial Pakistani-American entrepreneur Zia Chishti, has filed for initial public offering (IPO) at $1.6 billion valuation, according to VentureBeat. The company has grown out of the technology used in the Pakistan-based call center business of The Resource Group (TRG) also founded by Zia Chishti.

Bulk of the Afiniti development team is located in Thokar Niaz Baig, Lahore. In addition, the company has development team members in Islamabad and Karachi.

Numbers,  Skills and Cost: 

Pakistani universities are producing over 10,000 IT engineers annually. Many of them have demonstrated their quality and skills by freelancing for American and European companies. Pakistani freelancers consistently rank among the top three year after year.

In terms of cost, Pakistani engineers cost significantly less than engineers in India and elsewhere. The average salary of a software engineer ($110,000) in Silicon Valley is about 20X more than the average salaries in India ($6,875) and Pakistan ($4,770), according to Glassdoor.

Source: Glassdoor

Summary:

Recent move of 125 IT jobs from Noida to Islamabad in an indication that  Pakistan is becoming an attractive destination for software and information technology companies looking for highly skilled talent at significant discounts. It is an emerging center of technology with at least two unicorns, Afiniti and Careem, engineered by Pakistanis in Pakistan.  With growing numbers of young homegrown Pakistani technologists, a highly skilled diaspora and an evolving startup ecosystem with incubators, accelerators and investors, the country is beginning to demonstrate its vast potential as a vibrant technology hub of the future. Provincial governments, particularly those in Punjab and KP, are showing leadership in encouraging this trend. The main ingredients are all coming together to make things happen in Pakistan.

Related Links:

Haq's Musings

OPEN Silicon Valley Forum 2017: Pakistani Entrepreneurs Conference

Pakistani-American's Tech Unicorn Files For IPO at $1.6 Billion Valuation

Pakistani-American Cofounders Sell Startup to Cisco for $610 million

Pakistani Brothers Spawned $20 Billion Security Software Industry

Pakistani-American Ashar Aziz's Fireeye Goes Public

Pakistani-American Pioneered 3D Technology in Orthodontics

Pakistani-Americans Enabling 2nd Machine Revolution

Pakistani-American Shahid Khan Richest South Asian in America

Two Pakistani-American Silicon Valley Techs Among Top 5 VC Deals

Pakistani-American's Game-Changing Vision 


6 comments:

Yusuf H. said...

Hi Riaz. Just wanted to update you. Since 11 months I am heading a federal government technology fund that has launched several projects including a network of world class incubators across the country, a program to train 1 million people in digital skills, and funding of 30 startups and tech development projects in 4th Industrial Wave tech like AI, IoT, Robotics, Implantables, Big Data, cloud infrastructure, cyber security. We also do studies which help introduce incentives like tax breaks for startups. Check us out at www.ignite.org.pk and at @igniteNTF on FB, Twitter and Linkedin. Let me know if you need further info.

Riaz Haq said...

Yusuf: "Just wanted to update you. Since 11 months I am heading a federal government technology fund that has launched several projects including a network of world class incubators across the country, a program to train 1 million ......"


That's great. Would you like to write a guest post for my blog? I'll publish it under your name. My blog is widely read in US and Europe as well as in South Asia. Let me know.

Yusuf H. said...

Would love to. Published 5 articles in national dailies over last few months on our programs. Will send you some links and also take a look at your blog again.

https://tribune.com.pk/story/1444785/igniting-4th-industrial-wave-tech-start-ups/

https://www.wamda.com/2016/02/pakistans-return-as-the-california-of-asia

Riaz Haq said...

The computer services exports of Pakistan have seen an increase of 32.11 percent during the first two months of the current fiscal year 2017-18, as compared to the last year, according to the report of Pakistan Bureau of Statistics (PBS). Pakistan has earned $111.38 million against the services worth $84.31 million during the period.

During the past 4 years, IT Industry has contributed 98% to Pakistan’s economy by foreign exchange earnings, as stated by Minister for IT Anusha Rehman. IT industry in Pakistan is flourishing as Pakistan has earned $54.37m by exporting software consultancy services, showing growth of 69.22 percent as compared to exports of $32.126m last year.

According to the data revealed by PBS, hardware consultancy services exports have also seen an increase of 144.41 percent to $0.72 million as compared to the last year’s export of $0.3 million of the same services. Similarly, the maintenance and repair services for computers also seen a slight increase of $0.39 million as compared to $0.23 million of last year, showing growth of 68.97 million.

In general, the exports of the country have earlier seen a decline by 12% in the past fiscal year 2015-16, while the current fiscal year seems to get a boost by the export services of IT and Telecom sector. However, the trade of computer software services observed a negative growth of 1.01 percent during first two months, declining to $40.766 million this year from $41.181 million during the last year.

However, the export of telecommunication services has not been a much success for Pakistan. The export of telecom services from the country decreased by 0.93 percent by going down from the trade of $63.43 million last year to $62.84 million during the current fiscal year.

It must be noted that general services exports from Pakistan have seen an immense increase by 4.94 percent during the period under review while comparing to the same period of last year. With this considerable increase of $816.27 million of this year, compared to the exports of 777.84 million in last year, Pakistan is witnessing the great potential of its IT and Telecom sector in this era of digitalization.

https://www.techjuice.pk/pakistan-earned-111-million-computer-services-exports/

Riaz Haq said...

#Pakistan #IT services #exports register 14.5% growth in fiscal Q1 to reach $252 million. On track for exporting over one billion US$ in FY2017-18 https://pakobserver.net/icts-services-exports-register-14-5pc-growth-q1/ … via @PakObserver

The exports of Information and Communication Technology (ICT) services and related sectors have registered a double digit growth of 14.5 per cent, surging to US $ 252 million during first quarter of this year.
During same period of July to September 2016-17, the exports recorded in this domain were US $ 220.2 million.
The statistics issued by State Bank of Pakistan have showed that local companies and startups related to Information Technology (IT) and similar sectors have continued to expand their market share in foreign market as value of exports recorded double digit growth.
Pakistani companies usually export ICT services to United States, Middle East and North African countries. Major heads of exports included software and hardware consultancy, telecommunication services, call center services and export of software.
In last financial year 2016-17, IT exports and related services touched nearly US $ 1 billion reaching an all-time high. It is expected that exports will cross the US $ 1 billion mark this year.
According to Pakistan Software Exports Board (PSEB), Pakistan’s has been showing a healthy growth rate of IT & ITES exports in South Asia during the last three years. It grew by 71 per cent from June 2013 to June 2016.
In last financial year as well, Pakistan’s IT and related services exports have grown at a faster pace than India and Sri Lanka. Pakistan’s growth rate during 2016-17 was 16 per cent whereas Sri Lanka was at 5 per cent.
The statistics of IT services exports are usually labelled as remittances under IT sector but the industry strongly believes that overall exports are three times higher than the reported numbers which includes exports of services by freelancers and various IT services in different sectors such as financial and textile sectors.
Accordingly, the exports of IT and related services stand US $ 756 million by end of first quarter of 2017-18, which will likely to touch a mark of US $ 3 billion as per estimates.
In this regard, the central bank is working to bring IT companies and service providers on-board. It has designed a reporting structure of inflows that will help in increasing inflows of IT sector in future if companies follow this pattern.—APP

Riaz Haq said...

Pak economy performs robustly in 1Q, with fiscal deficit at 1.2 percent

https://www.geo.tv/latest/169849-with-fiscal-deficit-at-12pc-first-quarter-shows-strong-financial-performance

With the fiscal deficit recorded at 1.2 percent of the gross domestic product (GDP), the federal government's financial operations and debt statistics for the first quarter of the current fiscal year (1QFY17) show strong performance and prudent expenditure.

On one hand, the revenue collection — especially that from taxes — registered a strong growth of over 20 percent during 1QFY17, while, on the other, the government's domestic and external borrowings were kept under check, a finance ministry spokesperson said in a statement here Tuesday.

The spokesperson stated that there were expenditure controls as well, which reflected on the prudent fiscal management and government's resolve to maintain this momentum in the remaining quarters of the year.

Based on the actual data, the overall fiscal deficit during 1QFY17 was recorded at 1.2 percent of the GDP as opposed to 1.3 percent during the last year's corresponding period, the spokesperson added.

He said the total consolidated federal and provincial revenue amounted to Rs. 1.025 trillion, which reflects an 18.9-percent increase over same period last year.

The tax collection by Federal Board of Revenue (FBR) amounted to Rs. 765 billion — denoting a hefty growth of over 20 percent — while the non-tax receipts for the period amounted to Rs. 114 billion, which are also higher when compared to the same period, last year.

The total expenditure during the period amounted to Rs. 1.466 trillion, of which the current and development expenditures were Rs. 1.241 trillion and Rs 0.221 trillion, respectively.

The statistical discrepancy for the period July-September 2017 amounted to Rs. 4 billion compared to Rs. 38 billion during last year's same period.

The spokesperson said the civil accounts data of the federal government's revenue receipts and expenditure in 1QFY17 was received from the office of Accountant General Pakistan Revenues (AGPR), financing data from Economic Affairs Division (EAD) — external financing — and from the State Bank of Pakistan (SBP).

Likewise, the civil accounts data of the provincial government's revenue receipts and expenditure in 1QFY17 was received from the provincial Accountant General (AGs).

He added that the deficit figure reported earlier was based on the SBP's daily cash balance reports, which did not include the financing on account of project aid and financing from National Savings Schemes.

The financing from project aid was substantially higher on account of roads and infrastructure, he said.

The spokesperson said around 47 percent of the budget estimates were received as project aid financing during July-September 2017 on that account.

This has mainly been received during September 2017, while incremental receipts on account of National Savings Schemes have recently been reported by the SBP, he added.

The federal government deposits with the SBP, he stated, also reduced during September 2017.

Therefore, after including the aforementioned financing data, the overall fiscal deficit for the July-September 2017 period amounted to 1.2 percent of the GDP against 1.5-1.8 percent of GDP projected by some analysts.

The spokesperson said a section of the media had drawn some premature conclusions on debt performance of the government based on the data for the first two months of the current fiscal year. He clarified that choosing to evaluate debt statistics based on two-month numbers was a flawed method that led to misrepresentation.

He said as debt numbers from relevant agencies — such as Economic Affairs Division, Budget Wing, National Saving and State Bank — were received and consolidated for 1QFY17, it had become quite clear that the upwards bump in public debt was well below the analysts' forecasts.