IT venture capital fund

Prime Minister Shaukat Aziz has urged Pakistani investors to establish a venture capital fund for Pakistan's Information Technology industry to promote an innovative and knowledge-based economy in the country, says a news report carried by this paper. The fund would not only lead to creation of more jobs; it would also stimulate growth of Pakistan's IT sector, as there is a large pool of competent IT professionals in the country.
The Prime Minister, while chairing a high-level meeting at Islamabad, has said that in any such venture the government would play the role of a facilitator for the propagation of innovation by the private sector.
Earlier, the Managing Director of Pakistan Software Export Board, Yousaf Hussain told the meeting that Pakistan's IT industry, with over 900 world class IT companies, had posted a turnover of more than $2.2 billion in 2005-06. Pakistan, with an annual export growth of 50 percent, is fast becoming an important offshore outsourcing centre in South Asia.
It is rightly said that no area is as promising in its potential in the 21st century as Information Technology. During the last one decade or so Pakistan has been developing IT human resources and necessary infrastructure to cope with the rapidly advancing IT world.
With over 90 percent digitized telecom infrastructure, 250 ISPs (2004 figure) operating in remote areas as well as major cities, 10,000 computer science graduates being produced annually, domestic long distance optic fibre network, and deregulations and incentives set forth for the telecom industry, Pakistan is in a position to take on the challenges of the global market.
According to one estimate, there are about 300 software houses based in Pakistan that are busy in developing and exporting software to the developed world in areas as diverse as database management, Internet applications, E-commerce, CAD/CAM management systems, etc.
At present about 100 universities in Pakistan are imparting education in IT at graduate and post-graduate levels, in addition to a number of institutions offering IT short courses at elementary level. Although these are adding skilled manpower to the IT sector, the major potential lies in engineering, accounting and banking/insurance sectors.
Over 900 IT companies in Pakistan are generating approximately $32.88 million in revenue while the Pakistan Software Export Board is responsible for development and promotion of the country's software industry. Incidentally, IT should be seen as an investment and not as an expense, as the sector requires vision to employ IT as a tool.
In 2000, as many as 700 high-tech companies in the Silicon Valley were headed by Indians, while many companies were headed by Pakistanis. However, Pakistan seems to have lagged behind in marketing of its IT skills. This is surely an area that we could cooperate in, since the Indian IT industry is short of qualified people, because of the exodus of its professionals.
The IT sector is highly labour-intensive, and lack of trained professionals could easily tarnish the positive international image that we have built up. According to one estimate, Pakistan exports software worth about $35 million a year to the entire world, as compared to $8 billion by India and $5 billion by Ireland. A closer coordination with top-level IT countries can thus yield positive dividends for us.
As Pakistan's economy is largely based on low-level, low-value industries, the country has failed to attract premier revenue from world markets. Therefore, we need to initiate urgent measures to train and bring our IT workforce to international standards.
Prime Minister Shaukat Aziz's exhortation to Pakistani investors to establish a venture capital fund for Pakistan's IT industry is, therefore, a move in the right direction. Meanwhile, the government should try to create conditions that are conducive to attracting both domestic and foreign investment.