TDAP wants shift in focus to developing economies for IT exports

KARACHI: Trade Development Authority of Pakistan (TDAP) has advised authorities to focus developing economies in Africa, South America and Europe to increase exports of information technology and other services.

TDAP said presently the focus of Pakistan’s IT sector exports and marketing activities are developed countries.

“Professionals in IT industry claim that there is huge potential in developing economies i.e. Africa, South America, Sweden, Peru and Denmark are some of the emerging markets outsourcing their IT projects,” the authority said. “Unfortunately, Pakistan has not invested enough to explore and engage these markets for business.”

The country’s IT industry is set to double $7 billion by 2020 from around $3.5 billion.

TDAP, citing the State Bank of Pakistan’s (SBP) data, said software exports of IT and IT enabled services that are traded through formal channels amount to $1 billion.

“However, undocumented remittances (amount not recorded by SBP since such persons/ firms are not registered) from services provided by SMEs (small and medium enterprises) and freelancers add cumulatively $1.5 billion to the industry’s output,” it said. “Fourth group fueling up the IT sector exports are the companies and individuals who do not bring their revenues to Pakistan – account for $600 million revenue to IT sector.” TDAP said IT sector in Pakistan has been growing for the last two decades, “but the sector lacks sustainability in its business model”.

“Enterprises/ventures in IT sector are initiated on project basis and wind up upon the completion of those projects,” it added. “The business model lacks consistency, passion and sustainability to acquire new projects. Resultantly in majority cases, the sole intention to start-up venture remains to yield profits rather than deliver quality and fame to the IT industry.”

Pakistan is rated as the fourth biggest freelancer market yet the country lacks infrastructure, ready to hire talent, spoken English qualified and skilled labour and upgraded technology to become the sourcing destination to the world, TDAP said. The industry complains about the lack of infrastructure. It said it takes months to actually start working – entailing delays on delivering outputs – after acquiring international projects through competitive bidding and expensive marketing when they receive orders.

“The registration and licencing process is not integrated, high-speed fibre optics connectivity is limited to very few cities, suitable office facilities, English speaking workforce for call centres and lack of ready to hire skilled talent are some of the problems that hinder IT sector output,” TDAP said, citing industry’s stakeholders.

TDAP further said IT industry lamented about government’s penetration into IT business. It specifically criticised the role of National Database Registration Authority in securing international projects in Bangladesh, Kenya, Sudan, Nigeria and Fiji. Industry stakeholders disapproved public sector intervention into business, which consequently undermines private sector’s capacity to compete and flourish in the global market.

“The IT industry also highlighted the need to spread awareness and training to commercial counsels (who are believed to be the eyes and ears of Pakistan abroad) regarding trade in services,” it said. “Commercial counsels have a fair understanding of merchandise trade and have been active to promote Pakistan but lack understanding and knowledge to promote the services sector abroad which in turn, costs IT industry to negotiate and establish business.”

TDAP said Pakistan has around nine bilateral and multilateral trade agreements, including South Asian free trade area and generalised scheme of preferences plus concession from Europe, “but unfortunately only two bilateral agreements facilitate trade in services i.e. China-Pak free trade agreement and Pak-Malaysia closer partnership agreement”.