From IMF to IT

Digital revolution. E-commerce. On line expansion. Artificial intelligence. This is what the world has been talking and working on in recent times.

Pakistan is one place with the potential to take advantage of this demand. With almost 110 million people below 30 years, the IT industry represents an opportunity to absorb and leverage a generation that is comfortable with this smart phone mania.

The estimated potential of IT export is 15 billion dollars. The current target is 5 billion dollars. The current performance will at best take it to 3-4 billion dollars. India’s export of digitally delivered services stood at $257 billion in 2023. Pakistan’s total export of products and services touched its peak of 31 billion dollars in 2022.

Comparing it with India may seem a bit unfair but comparing it with its own potential is absolutely just. IT is a growing industry compared to textiles and carpets, etc, that are facing declining demand. IT is a natural skill for a generation born in the digital era.

IT is a good coverup for low linguistic proficiency of our average graduate. Most importantly, the IMF problem can be solved with the IT solution. After months of negotiations, rebukes, and giving in to its harsh conditionalities, the loan that we will receive is a few billion dollars.

With a few changes in policies and banking regulations we can easily ramp up another 2 to 3 billion dollars of IT exports. This will be Pakistan’s money. It will be interest free. It will provide employment. It will have no conditionalities. It will expand the economy. What needs to be done is to develop a comprehensive obstacle removal plan with top level execution priority. The areas that need to be addressed are:

1- Country branding— Pakistan has to be marketed as the next IT haven. A campaign on social media needs to be orchestrated to highlight its advantages. Pakistan is the second most financially attractive IT &ITeS outsourcing destination in the world, according to Kearney’s Global Services Location Index.

International Labour Organization (ILO) has ranked Pakistan as the 3rd largest supplier of digital labour including clerical & data entry services, creative & multimedia services, software development & technology services, writing and translation services.

Pakistan is also ranked by ILO (International Labour Organization) as the 2nd biggest supplier of digital labour in software development & technology services. These are huge facts that even most Pakistanis do not know, leave aside foreigners.

Time to create a data analytic based social media campaign that reaches the accurate target markets. With micro targeting now possible the potential buyers and investors can be reached with these facts to make them start considering Pakistan as a cheaper and more accessible option.

2- Ease of doing business— The best way to encourage IT locally is to make it easy to set up and run businesses in the country. Higher interest rates and inflation are a dampener on the best of the ideas. Banking hurdles and unnecessary restrictions are discouraging exporters from using formal banking channels and encouraging retention of export earnings abroad.

Ease of travel is a necessity to ensure growth of IT &ITeS exports for both inbound travel of investors/customers/partners/employees from offices abroad and outbound travel of IT executives and professionals.

Special concessionary packages should be introduced for IT businesses that are largely SMEs. Tax concessions, credit availability, retention of foreign currency are some areas where policy tweaks can spur growth impetus.

3- Leadership mentoring and coaching— The IT industry is emerging at a fast pace. The success stories are fairy tales. They come, they set up a company, it flies and then it flops. This is the challenge. There is no concept of sustainability planning.

There is a lack of maturity in the leadership ranks that leads to this boom to bust status. Many Startups have become the Endups. From $648.6 billion of venture capital in 2021, global fundraising fell to $248.4bn in 2023, marking a strong correction in the market.

Airlift, Jugnu and Jomo in e-commerce, Medznmore in health, Finja and TAG from fintech are some mega stars that have burned out of the industry. There are different reasons for this demise list. The political uncertainty has made companies keep their money out and not invest in Pakistan. However, that is precisely when visionary leadership is required.

With young people in their early 30s and 40s leading the company and Generation Z being hired to do the operational work there is more of KJD, i.e., knee-jerk decision making rather than thought through structured thinking. Most of the CEOs of these companies are dazzled by their own early success and thus have a vision myopia.

Many CEOs are based out of Pakistan and are thus not able to connect, comprehend and amend the pathways that are leading to destinations unwanted.The initial success of a Startup blinds the leaders to the changes required in the policies and programmes to ensure continuity.

Many of the present star-performing companies have leaders who are so bent upon talking big that they make plans that are obviously and ridiculously grandiose. This showman leadership reflects a dearth of maturity and wisdom in the leadership cadres of the IT industry.

4- HR skills gap— The tech wizards are in high demand. They are sought after. They get picked up at high salaries. That is why there is both a quantitative and qualitative skill gap in the IT industry. The IT institutes are producing 35,000 graduates each year while the demand is in excess of 100,000.

Secondly, only 5% graduates coming out of these institutions are of the international quality level. Thirdly, most of the training done is to make them technically proficient, while the biggest problems lie in mindset and behaviour.

The IT companies are in a fix. Their office timings are mostly tied to the US time zones. Staff has to come late and work till early morning hours. To attract and retain employees the big IT companies have gone on an environmental pampering spree. They are shifting to tall buildings. They are opening indoor gyms, cafés, salons, etc.

These are good Google inspired actions. Unfortunately, they do not have Google-inspired systems to train, coach and have the performance management systems of discipline and accountability. Neither do they have the leadership wisdom to assess and analyze the priorities of the organization in its evolution from emerging to a growing entity.

The IT industry is a low hanging fruit. All it needs is a few good men at the policy level to declare a fast-track banking facilitation path for IT sector. They also need a State Bank of Pakistan-like regulation by PASHA on HR training and development to make it mandatory for companies to prioritize skilling and upskilling.

Many say it is easier said than done. But just compare this with the almost unmanageable deals with the IMF, the embarrassments, the humiliation, the helplessness and subjugation to commands for a paltry billion dollars. The biggest mindset change needs to come for people at the top to shift their paradigm from IMF to IT.

Copyright Business Recorder, 2024