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January 31, 2019

Pakistan stands third in global online gig industry


January 31, 2019

KARACHI: Pakistan is home to the third largest population of professionals related to global online gig industry after India and Bangladesh, as per the rankings available at end September 2018, the central bank said in its latest report.

Improved internet access to more than 2,000 cities across Pakistan, a large number of graduates entering the workforce, and government’s efforts to promote freelancing are the key factors behind this growth.

Online gig work is managed via online platforms with no contract for long-term employment.

The State Bank of Pakistan (SBP), in its first quarterly report on the state of economy for the fiscal year 2018/9, said Pakistan is figuring prominently in Business Process Outsourcing (BPO) segment.

The BPO is a cost-saving measure to outsource processes that are not the core business of an entity but are nonetheless essential for a company to operate. Fundamentally, this involves delegating specific business tasks such as customer relationship management, data entry, bookkeeping, human resource management, payroll processing, and marketing, etc to a third-party service provider (TPSP), usually situated outside the firm’s country of operation.

Globally, the BPO industry has witnessed a period of robust growth post 2002 and, according to industry experts, has expanded into a $180 billion industry.

It is expected that this market will grow further to $250 billion by 2020, as remote work is getting increasingly popular around the world, especially via freelancing websites (such as Upwork and Fiverr).

“However, since the BPO industry is relatively new to the country, it is still not being pursued as a long-term career; the more qualified employees tend to upgrade their careers and move into software development, quitting the BPO industry after a very short span of time,” the SBP said.

“As for the new entrants, the lack of technical and professional capacities works as a major growth barrier, making it hard for the BPO industry to compete in the international market,” it added. Going forward, focusing on skill building and improvement of payments infrastructure would be the key, it advised.

The government is taking administrative measures to promote the sector’s smooth progress. For instance, the recently announced Digital Pakistan Policy provides multiple tax incentives to the industry and envisions a strong interplay between IT firms, cellular operators, and government institutions.

The SBP is also guiding banks on proper documentation of the proceeds of BPO outlets, while working with the industry to sort out associated payment-related issues.

It is vital that the government continues to work in this trajectory and embrace the idea of technology-centric Special Economic Zones (SEZs), where companies can take advantage of IT-ready plug and play clusters and operate under a one-window structure with the government. As for the human resource, some important initiatives have been taken by Ministry of Information Technology and Telecommunication (MOITT) and associated private enterprises, including the launch of National Incubation Centers and the Digital Skills Training Programs.

As far as cross-border payment solutions are concerned, although exchange services of intermediaries such as Payoneer and Skrill are available for individuals and startups associated with the freelancing and the BPO industry, little progress has been made in introducing the most widely used digital payment service of PayPal.

As things stand, data privacy is one of the major hurdles in the way of PayPal to enter Pakistan.

Furthermore, as PayPal’s funds transfer mechanisms work in a bidirectional fashion, there are concerns for countries with weak external buffers to risk excessive outward remittances of foreign exchange.

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