Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

Pakistan's computer services exports soared 26% in March, 2020 over the same month last year. This growth occurred in spite of the coronavirus lockdown that began on March 23, 2020. The nation's total services exports fell 17% in the same month.

Pakistan ICT Exports. Source: PBS

The ICT services exports bucked the overall down trend in Pakistan's exports. The country exported computer service worth $102.26 million in March, 2020, up 25.77% from $81.31 million in March, 2019.  Overall telecommunications, computer and information services increased 19.44% to $134.95 million in March 2020, up from $112.99 million in March 2019.  Prior to the current coronavirus lockdown, PBS reported that Pakistan's technology exports increased 26.24% in the first 8 months  (July-February) of the current financial year.

Double Digit CAGR in Pakistan IT-ITeS Exports in 2010-2018

The data released by the PBS showed that Pakistan earned a total amount of $887.47 million during the first eight months (July-February) of the fiscal year 2020, up from $702.99 million during the corresponding period of the fiscal year 2018-19. Computer services exports grew 31.57% to $677.23 million from July 2019 to February 2020 as compared to $514.74 million.

 It is generally believed that Pakistan's PBS and central bank underestimate the country's technology exports. Some have argued that the actual IT exports were closer to $5 billion in fiscal 2018. Some of the differences can be attributed to the fact that the State Bank IT exports data does not include various non-IT sectors such as financial services, automobiles, and health care.

Pakistan has a thriving  community of freelancers. Its digital gig economy growth is the fastest in Asia and fourth fastest in the world, according to digital payments platform Payoneer.

Gig Economy Growth in Q2/2019. Source: Payoneer

United States leads gig economy growth of 78% followed by the United Kingdom 59%, Brazil 48%, Pakistan 47% and Ukraine 36%. Asia growth was led by Pakistan followed by Philippines (35%) , India  (29%) and Bangladesh (27%).

The rapid gig economy expansion of 47% in Pakistan  was fueled by several factors including the country's very young population 70% of which is under 30 years of age coupled with improvements in science and technical education and expansion of high-speed broadband access.  Pakistani freelancers under the age of 35 generated 77% of the revenue in second quarter of 2019.

Growth in Freelance Work. Source: Payoneer

Mohsin Muzaffar, head of business development at Payoneer in Pakistan, has said as follows: "Government investment in enhancing digital skills has helped create a skilled freelancer workforce while blanket 4G coverage across Pakistan has given freelancers unprecedented access to
international jobs".

Global Freelance Revenue By Age. Source: Payoneer. 

In Q2/2019, Asia cemented its status as a freelancer hub.  Pakistan, Bangladesh and India, Philippines made it to the  top 10 list, collectively recording 238% increase from Q2/2018.

Online Labor Index. Source: Oxford Internet Institute

As of 2017, Pakistan freelancers ranked fourth in the world and accounted for 8.5% of the global online workforce, according to Online Labor Index compiled by Oxford Internet Institute. India led with 24% share followed by Bangladesh 16%, US 12%, Pakistan 8.5% and Philippines 6.5%.

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State Bank: Pakistan IT Exports Surge to Pass Billion Dollars in 2018

Pakistan's information technology exports have bucked the nation's declining exports trend with double digit growth to reach $1,065 million in fiscal year 2018, according to the State Bank of Pakistan.  It is generally believed that Pakistan's central bank underestimates technology exports. Some have argued that the actual IT exports were closer to $5 billion in fiscal 2018. Some of the differences can be attributed to the fact that the State Bank IT exports data does not include various non-IT sectors such as financial services, automobiles, and health care.

Source: State Bank of Pakistan

Pakistan IT exports surged 13.4% to $1.06 billion in fiscal year 2018 from $939 million in fiscal year 2017. The growth was even more robust in the prior year with IT exports rising 19.1% from $789 million in fiscal 2016 to reach $939 million in fiscal year 2017.

Source: State Bank of Pakistan

About $320 million of IT exports revenue in fiscal 2018 came from software exports while the rest was made up of services such as consulting, telecom and call centers.

Double Digit CAGR in Pakistan IT-ITeS Exports in 2010-2018

Online Labour Index top 20 worker home countries, 1-6 July 2017

Freelancers in Pakistan are benefiting from the growing access to broadband connections which are now being used by over 50 million Pakistanis across the country. Pakistan is ranked 4th in the world by the freelancing industry report.  The country has rapidly increasing human capital of technologists.

Growth in IT exports is a good sign for Pakistan's export diversification beyond commodities such as textiles and food. In addition, air forces of about a dozen developing nations are buying and deploying Pakistani made aircrafts. The reasons for their choice of Pakistan manufactured airplanes range from lower cost to ease of acquisition, maintenance and training.

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Ramzan; Pakistan Economic Survey; Indian IT Job Losses; Trump's Foreign Tour

What is Ramadan all about? Is it only about abstaining from food and drink in the daylight hours? What is the key message for this Ramzan? Isn't respecting Huqooq-ul-Ibad (human rights of others) as important as observing Huqooq-ul-Allah (Duties to Allah such as prayer and fasting) for each Muslim? What must Muslims do this Ramzan to fulfill all of their obligations to Allah and His creation?

What does the Economic Survey of Pakistan say about Pakistan's GDP, per capita income, infrastructure development, education and other important indicators? What must Pakistani leaders do to ensure greater focus on and investment in education and not just in infrastructure? What is the size of and the key priorities in Pakistan's budget for 2017-18? Should some of the $20 billion (out of the $50 billion budget) for infrastructure be allocated to education to boost Pakistan's stagnant literacy and school enrollment rates?

Why is India losing IT jobs at a rate of 200,000 jobs a year, according to McKinsey? Is it all because of Trump's H1B visa tightening? Or does it have more to do with the need for new skills to deal with new technologies such as cloud computing and digital services?

What was the objective of Trump's tour of the Middle East and Europe? Has he achieved any of the objectives? Was Nawaz Sharif's low-key presence at the Riyadh summit appropriate? Are Nawaz Sharif's critics right? Should he have had a more prominent role at the US-Arab-Islamic summit? How would that impact Iran-Pakistan ties?


Viewpoint From Overseas host Misbah Azam discusses these questions with Riaz Haq (www.riazhaq.com)

https://youtu.be/ojEvEICkimA




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5 Years Old British Pakistani is World's Youngest Techie

5-year-old British Pakistani Ayan Qureshi is now the youngest Microsoft Certified Professional in he world, according to the BBC. Ayan takes the title of world's youngest techie from Shafay Thobani of Karachi who was the youngest known Pakistani  to have become Microsoft Certified Professional at age 8 in 2012.

Ayan Qureshi in Home Computer Lab

Ayan was born in Lahore, but the family, including his mother, a doctor moved to London in 2009. His younger brother was born the UK in 2011. Ayan has set up his own computer lab at his home in Coventry, containing a computer network which he built.

Ayan's father who is an IT consultant introduced his son to computers when he was only three years old. He let him play with his old computers, so he could understand hard drives and motherboards. "I found whatever I was telling him, the next day he'd remember everything I said, so I started to feed him more information," he told the BBC.

Pakistani children have been making their mark in the information technology arena since 2005 when Arfa Karim made international headlines as the world's youngest Microsoft Certified Professional at age 9. Unfortunately she passed away at the tender age of just 16. Born in 1995, she achieved celebrity status after becoming the world's youngest computer expert at the age of 9, passing a tough series of Microsoft tests designed for software professionals. Her success brought her an invitation to Microsoft headquarters in Seattle, where she met its chairman, Bill Gates, and discussed her idea for a self-navigating car in 2005.

Arfa Karim died very young but she has inspired a whole new generation of Pakistani children to choose information technology and excel in the growing field. As a result, Pakistan has achieved the distinction of being the third most popular online IT outsourcing destination in the world. It augurs well for Pakistan's young but rapidly growing multi-billion dollar information technology industry.

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Pakistan Deploys Information Technology to Improve Services and Cut Corruption

IT projects ranging from automated meter reading and computerized land records management to online education and mobile banking are now at various stages of implementation across Pakistan.  In a report released today, the World Bank calls these projects "unprecedented in the public sector in developing countries". The objective of these efforts is to reduce corruption, increase productivity and improve service delivery in both private and public sectors. Here's a brief description of five key areas where information technology penetration is visible:

1. Automated Meter Reading:

Automatic Meter Reading (AMR) project has been rolled out across the country with the help of United States Agency for International Development (USAID).  It is aimed at reducing power theft which accounts for 20-30% of all power generated in Pakistan. It will provide accurate electronic meter readings with little human intervention, using technology to transmit meter readings data via GSM/GPRS and Radio Frequency. It is expected to help power distribution companies (DISCOs) to monitor electricity consumption trends for different consumer categories, understand demand patterns, reduce electricity losses significantly and increase their revenues. Initial AMR pilots indicate significant reduction of power theft in Lahore.

In addition to automatic reading of consumer meters, smart meters have been installed with the support of USAID on incoming and outgoing feeders at all nine government-owned electric utilities. These will help move toward building of a smart national grid to better manage power generation, transmission and distribution in the country.

2. Mobile Governance:

The Punjab government is deploying smartphone applications to crack down on absentee mobile government workers and their corrupt practices. As part of this project, the government employee must send his or her picture and a report of interaction with citizens along with GPS coordinates. For example, a agricultural pest control official required to visit farmers must file reports of his findings and actions in real time via a smartphone app.

An agricultural field monitor uploads a picture of himself and spotted pests on crops using a smartphone. This data is used to ensure visits happen and create easily-accessible time and spatial data. Source: World Bank

An SMS soliciting feedback from citizens is sent out after each such visit or interaction. Responses from users are logged into a central database, and the data then analyzed and mapped. Call centers have also been trained to contact those who do not respond or are unable to read the text due to illiteracy.More than three million users of public services have so far been contacted since the summer of 2012, with both positive and negative feedback, according to the World Bank report. “Sir, we went to the hospital yesterday. They asked for 1500 rupees [in bribes]. We didn’t have the money so we left,” reads one of the reports about a hospital in Lahore, the provincial capital. The feedback is actively monitored by the office the Chief Secretary – the top civil servant in the province – to manage the performance of officials.

Results of Google-sponsored Survey in Pakistan Source: Express Tribune

3. Computerized Land Records:

Provincial land departments in Pakistan regularly show up as the most corrupt in Transparency International surveys conducted every year. In fact, most Pakistanis refer to the culture of corruption in Pakistan as "patwari culture". For the uninitiated, a patwari is a low level official in the land department responsible for keeping land title records. Corrupt patwaris either deliberately misplace such records or delay issuing land title papers when citizens refuse to pay bribes.  With digitization of such records, citizens will be able to check and confirm titles to lands on a computer screen by entering  their computerized national identity card (CNIC) number. Corrupt patwaris are trying to undermine the computerization project.

4. Education and Training:

Pakistan has been at the forefront of using information technology to increase literacy and offer higher education. A pilot program in the country has demonstrated the effectiveness of pushing mass literacy through the use of cell phone text messaging capability.

A UNESCO has recently also started a post-literacy project in Pakistan based on mobile technology. The Mobile Based Post Literacy program is targeted at young rural women, aged between 15 and 25, by keeping them interested in literacy through the mobile phone.

The concept of virtual instruction is finding its way to K-12 education as well. Increasing number of Pakistanis are drawn to various online sites. Silicon Valley NEDians have launched Learntive, an effort to offer digitized lessons in high-school courses.  Virtual Education for All is a local Pakistani initiative extending the concept to primary level.

Virtual University(VU) and Allama Iqbal Open University (AIOU) offer distance learning programs using information technology. Pakistan's Virtual University (VU) has won the Outstanding New Site Award 2012 for an Open CourseWare website which was created in 2011.

5. Mobile Banking:

Combination of growth of mobile phones and ease of mobile money transfers have enabled many Pakistanis to have access to financial services for the first time in their lives.

In a country where only 22% of the population owns bank accounts and more than 70% owns mobile phones, mobile banking is proving to be the fastest way to promote financial inclusion considered by experts to be essential to lift people out of poverty. Benefits include easy access for rural customers to banking services through agents in villages without bank branches, better documentation of the economy, enlarging of the tax-base and efficiency of economic transactions.

Summary: 

Increasing use of computers and mobile phones is enabling broad adoption of information technology in Pakistan. It has the potential to increase transparency, enhance individual productivity and improve standards of living of ordinary citizens.

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Pakistan's $2.8 billion IT Industry

Pakistan's information technology industry is quite young. It is in very early stages of development compared to the much older and bigger Indian IT industry, which had a significant headstart of at least a decade over Pakistan. During the lost decade of the 1990s under Bhutto and Sharif governments, Pakistani economy stagnated and its IT industry did not make any headway. However, the industry has grown at 40% CAGR during the 2001-2007 period, and it is estimated at $2.8 billion as of last year, with about half of it coming from exports. This pales in comparison to over $5 billion revenue a year reported by India's Tata Consulting alone.

Here's some data on Pakistan's IT industry:

"The State Bank of Pakistan for 2007-08 reports the export figures of software and Information Technology-enabled services to be US$169 million which shows a consistent annual growth. State Bank of Pakistan adopted BPM 5 reporting system to report the IT exports revenue, which restricted the export figures to US$169 million only in 2007-08. In India, the Reserve Bank of India follows the BPM 6 (also called MSITS) Reporting System, which raises its exports to billions of US dollars. BPM 6 includes sales to multinationals, earning of overseas offices & salaries of non-immigrant overseas workers to export revenue. Using the MSITS Reporting System, Pakistan IT Industry exports are estimated at US$ 1.4 billion while the industry size is estimated at US$ 2.8 billion. It is significant to note that Pakistan IT exports growth in each of the last few years has been more than 40%."

According to a report by the Pakistan Software Export Board (PSEB), the top five companies that have contributed the most to the IT sector are Netsol Technologies(NASDAQ: NTWK), Ovex Technologies, TRG Private Ltd, Systems Private Ltd, and Elixir Technologies.

The revenue per employee for the top Indian IT firms of Wipro, Infosys and TCS ranges between $40,000 and $50,000 per employee per year...about $20 t0 $25 per hour per employee, according to Gartner. The Indian revenue per employee is quite competitive relative to the US firms IBM Global Services, EDS, ans Accenture whose revenue per employee exceeds $150,000 per year, about $75 per hour. In comparison, the average figure of $28000 per employee per year (or $14 an hour) is extremely competitive for Pakistan's IT industry average. Probably the higher-end firms make more while others make less.

Pakistani colleges and universities produce almost 1.2 million skilled graduates annually. The Musharraf government announced a $1 billion spending plan over the next decade to build 6 additional state-of-the-art science and engineering universities. If the current government follows through on it, then the scheme would be overseen by the Higher Education Commission for completion in a few years time.

In terms of enrollment, the 2005 Pakistan Education Census reported 43,801 students enrolled in 4-yr engineering institutions, another 37,635 students in 3-year colleges offering Information Technology degrees, and 69,719 studying in three-year polytechnic institutes. 53% of the students out of the total 1.16 million enrolled in colleges are girls, according to the 2005 Census.

Over 10,000 of the current 1.2 million graduates are engineers with 4-year degrees. In addition, Pakistan also produces at least 25,000 polytechnic inst graduates with three year diplomas (according to recent news in the Nation newspaper) who have less than 4 years of college.

A number of reports inflate the number of engineering graduates in India, as these numbers includes both 4 years and 2-3 years degrees. While it is claimed that India graduates over 200, 000 engineers a year, a Duke study concluded that half of these are 2 or 3-year degrees.

So, for apples to apples comparison, the number of India's engineering graduates is closer to the US's 70,000 engineering grads. And of course, the quality of US graduates is much much higher because they graduate from some of the best schools in the world. Other than about 5000 grads from IITs , the rest of Indian grads are from second and third tier schools that bear no comparison to engineering schools in the developed world in terms of quality. The cost advantage that India offers will still favor a continuing growth based on outsourcing of business and engineering services from the developed world.



Currently, Pakistan is struggling with a powerful insurgency and a stagnant economy that is taking a heavy toll on the nation. If, however, the political and military leadership succeed in creating a semblance of peace and stability in the nation of 170 million, then there can be an expectation of a bright future ahead for the IT industry in particular, and an innovation-based knowledge economy in general.

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Pakistani Myths About India's Resurgence

Hardly a day goes by without headlines about India's success. The headlines proclaim the newly-minted millionaires and billionaires in India, major international acquisitions by Indian companies, the phenomenal growth of Indian economy, India's entry into satellite launch business, the special invited presence of Prime Minister Manmohan Singh at the G8 summit, etc. etc. Indian democracy also gets an honorable mention, along with its economy, particularly when comparisons are made with the other Asian giant China. However, there are many myths associated with India's recent economic resurgence on the world stage and its democracy. Here are a few that I have looked into:

India's Success in Information Technology:

There is a common misperception in Pakistan and other countries that India’s information technology(IT) success is the result of Indian government’s grand vision and smart policies in recent years. Based on my knowledge of the situation, nothing could be further from the truth. The Indian entrepreneurs in Silicon Valley have succeeded in promoting IT in India, in spite of the Indian government, not because of it. It was their own desire to improve profits by taking advantage of India’s lower costs and availability of skilled engineers and programmers. The essential role the Indian government played started back in the 1950s with the establishment of Indian Institutes of Technology (IITs) which have produced a lot of very good engineers and technologists. In fact, Silicon Valley owes much of its success to the availability of IIT engineers.

Indian Institutes of Technology:

The credit for the IITs goes mainly to Maulana Abulkalam Azad, India's first education minister, who conceived the IIT system and won Prime Minister Jawahar Lal Nehru's backing to implement it. If other governments are inspired to help the IT sector or any other sector, they must focus on improving access to quality education. But the results are not instantaneous. IITs are like a tree that was planted in the 1950s and it had to be nurtured and cared for to begin to bear fruit beginning in 1970s and 1980s. But the real impact of it started to be felt around the world in the 1990s. Economic reform in India also played an important role in 1990s. Successive Indian governments deserve a lot of credit for the dramatic success and international recognition of the IIT system.

For those interested in learning about the role of India’s governments in promoting business and industry, I recommend watching the Bollywood movie “Guru” that shows the travails of Dhirubhai Ambani, the great but illiterate entrepreneur and industrialist who created the Reliance Group behemoth. Two of his billionaire sons, Mukesh and Anil, are now among the top 5 richest people in the world. The movie might not be totally accurate, but it does capture the essence of India’s socialist government’s fundamentally anti-business attitudes in the 1950s, 60s and the 70s.


India's Democracy:

India continues to be the home of the largest number of poor people in the world. It has the highest population of malnourished children. Its farmers are committing suicides at an alarming rate. It has the dubious distinction of being the murder capital of the world, with the largest number of homicides in the world recorded last year. Some Muslim holy places have been destroyed and a large number of Muslims massacred in Gujarat, UP and Maharashtra riots. In short, the Indian democracy has failed to serve the vast majority of its citizens. For those who sing the praises of India’s democracy, I would suggest viewing Bollywood hit “Sarkar Raj” that portrays the Godfather-like corrupt, criminal and murderous behavior of India’s powerful politicians. Again, I am certain India is blessed with many honest leaders and this must be a caricature of the reality of Indian democracy, but it does bring out the fact of criminals' presence in Indian politics. According to political science Professor Pradeep Chibber of UC Berkeley, as many as 30% of India's legislators have criminal records. However, the good professor contends that democracy is a messy process that must be allowed to work its bugs out. It should not be interrupted or abandoned because the alternatives are far worse. India has a functioning democracy with an independent judiciary and other institutions that are respected. I agree with the professor's assessment.



India as a Model:

It is very tempting to try and copy India's success, particularly among other South Asian nations such as Pakistan. I think it is good to be inspired by your neighbor's success but it's also important to do so smartly. Pakistanis need to think about what they need to accept from India's successful experience. For example,the Pakistani diaspora, particularly the entrepreneurs in developed world, must play their role to spur development and economic growth in their country of origin. But they should reject what does not make sense for them. In fact, Pakistanis should choose the best ideas to adopt from the experiences India and China as well as other successful emerging economies. For example, there should be an exploration to see if the Chinese efficiency can be combined with India's democracy. There should be an attempt to learn from the Chinese experience of lifting over 30% of their population from poverty and building world-class infrastructure at the same time. It is not unusual to see the rich-poor disparities grow in periods of rapid economic growth but there must be constant efforts made to minimize such disparities. And an effort to avoid the scourge of very large number of farmers' suicides that afflicts India's rural population. Pakistanis and others should learn how to embrace diversity and pluralism from the Indian experience that encompasses a large number of ethnicities and religions, while shunning the evils of the caste system and discrimination against women and female infanticide that still plague India.