IT sector bright spots beckon if govt removes growth barriers

Sajjad Syed is the CEO of Excellence Delivered (ExD), a leading IT company of the country, with system integration, ecommerce and software development as its key businesses. Syed has had a very diverse career spanning Energy, IT and Public Sector. After his engineering from RPI, NY USA, Sajjad joined Schlumberger Inc as a Junior Field Engineer.

At Schlumberger, he had the opportunity to lead multicultural teams that provided services to large multinational companies in Europe, Middle East, Africa, South Asia and North America. After Schlumberger, Syed had a stint with Punjab Information Technology Board (PITB). At PITB, he was instrumental in getting Oracle Corporation to invest $20 million in Punjab and then ran the program that was awarded the Global Best Practice by Oracle Corporation.

His first stint in direct IT consulting started at PWC where he led the technology team that delivered some very challenging projects. He then joined Oracle as Regional Business Manager responsible for ERP business in Pakistan, Sri Lanka, Bangladesh, Maldives and Bhutan. After Oracle, Sajjad joined SAP as the Managing Director for Pakistan. He established SAP as a major ERP player in the market.

The News interviewed him on the performance of IT sector in Pakistan, the issues that hamper its growth and the potential that exists. Excerpts follow.

Q: There is news that Pakistan’s annual software exports have crossed $1 billion mark. Are you satisfied with this achievement?

A: No doubt, it is a good development that hints at a considerable growth in the IT sector exports from Pakistan. In my opinion this figure is close to reality though estimates are on the lower side.

Here, I would like to point out that this figure can be much higher if certain things are taken care of. First, the IT industry faces losses between 5 to 10 percent just due to the exchange rate loss because it gets the money sent from abroad in rupees. Second, there are taxes such as 16 percent sales tax and 8 percent withholding tax on the revenue of the IT companies.

Due to these factors, IT companies park their money abroad and sign contracts there, though their Pakistan offices complete the tasks. It is natural that businesses move to low-tax regimes. The government must revisit this policy and may impose taxes on profits rather than revenues, which is the case with other sectors.

Another issue is that Pakistani IT workers do not get visas easily to visit other countries where they are supposed to work as part of the contractual agreements between foreign clients and their companies. Pakistani foreign office must talk to the foreign missions of other countries to resolve this issue.

Q: What is your company’s core business and how well it is doing?

A: ExD is the only SAP Platinum Partner from Pakistan and are Gold Partners with Oracle. ExD provides its clients with Technology, Outsourcing and Optimization Solutions and ensures that our clients progress towards growth. Our clients expand to varying industries including manufacturing, retail, energy, FMCG, banking, and so on. Pepsi, Qarshi Industries, MCB, Rungrez, Maria B, Honda, SEFAM etc. are some of the major clients that ExD has served over the years.

ExD's expertise in the Enterprise Resource Planning (ERP) industry enables its clients to digitise their processes including manufacturing, quality control, inventory control, payments and so on. The ERP implementation automates an entire company and streamlines its processes in an efficient manner.

Q: Are big businesses adopting the IT fast or still sticking to traditional methods to manage their affairs?

A: I would say now there is not much choice left and big businesses cannot survive and compete with others without adopting advanced IT systems. I don’t know about others but with the grace of Allah Almighty we are doubling on a quarterly basis. There are valid reasons for this. Big industries in our country were set up in 1960s and 1970s and the entrepreneurs who founded them knew everything about these.

Everything was on their fingertips because they had built these business empires from scratch. However, the following generations lack similar knowledge and secondly these groups have become too big to be managed in traditional ways.

Another reason why Pakistani industry is adopting technology is that it is no more in a position to benefit from cheap labour. As labour in India and Bangladesh is poorer and cheaper than Pakistan, our industry has to focus on quality, efficiency and cost effectiveness. Fortunately, our industry has realized technology is the best tool to ensure these elements.

Q: What support does the IT sector need from the government at the moment?

A: Here I would simply say that we do not need any specific support from the government. Instead, we request it to remove the barriers that hamper its growth and free the IT sector of shackles. We have the required talent and acumen and just need to focus our attention in the right direction.

The government can help us by improving its procurement policies. At the moment, these policies discourage small and young companies and allow government to do business with only those companies that are 10 to 15 years old. Quite amazingly, the age of a company matters here and not its expertise and the quality of work it produces.

What the old companies do is that they get work done from new companies and sell it to the government at much higher prices because the former cannot directly deal with the government due to age criteria restrictions. I am a beneficiary of this policy but I demand level playing field for young companies, which will be my competitors.

Another negative point of this procurement policy is that the old companies do not invest in research as they do not have to compete with new companies. I can proudly say that ExD is the only company here that has a full-fledged Research and Development (R&D) division.

Due to this policy, people are not forming companies because they know they will have to wait for at least 10 years to win business from the government. In a nutshell, I would say we discourage entrepreneurs by default in our country.

Another point that I want to highlight is that our government gives advance payments to foreign companies when awarding contracts but refrains from doing the same when dealing with local companies. This puts the latter at a disadvantage against the former.

Q. Do you think Pakistan is exploiting the potential of ecommerce?

A. No doubt, a lot of potential exists in this field but to exploit it we need to streamline our supporting systems and improve packaging, standardisation etc.

Our company has taken an ecommerce initiative under which our traditional products like Sindhi ajrak, blue pottery, khussas, latha, handicrafts, artifacts etc will be sold to customers within the country and abroad online and delivered at their destinations.

We have engaged around 8,000 people who are contacting artisans all over the country and taking them on board. We will connect these artisans with microfinance institutions so that they can get the finances they need to produce their products on a regular basis. The lion’s share of the profits will go to the artisans.

Q. Are you satisfied with the quality of IT workforce being produced in our country?

A. This is a major problem area. Our colleges and universities are producing IT graduates in a large number but unfortunately the industry-academia linkage is either too weak or missing. Due to this, the IT industry does not get the workforce with required skill set so easily.

The employability factor of the IT education imparted here is generally weak. What I suggest here is that the educational institutes providing the IT education must have two to three people from the industry on board so that they can guide them on what to teach to the students. I want the institutes to give these students basic education so that the industry can teach them the IT tools after employing them.

Of late, the government has introduced the IT based freelancing to people which I think is good but only as a short-term measure. I suggest people shall go for high-end returns and must not waste their time and energies in low-paid work. We need to teach our people Artificial Intelligence (AI), Machine Learning, Automation etc, but what we are actually teaching them are MS Word, MS Office and other basic programmes. We must aim high if we want to make a mark in this field.