‘IT sector has the potential to fix the budget and external deficit’

BR Research recently interviewed Munawar Abdullah, a successful investor, mentor and a technologist from Pakistan based in USA; and with two decades of entrepreneurial experience is transforming dozens of companies and ventures through his visionary transformational approach. Digital Transformation is one of his fortes. He revamps startups and ventures leading them to a status of hugely profitable businesses, by blending Artificial Intelligence and Big Data into the decision making processes. ImpTrax is one of the dozens of entrepreneurial ventures he has triumphed, making him a successful entrepreneur in New York.

 The conversation exclusively revolved around the IT sector of Pakistan. Following are the edited excerpts:

BR Research: In your view, how large is Pakistan’s IT sector in terms of annual sales and what is the nature of the market opportunity from an investment point of view?

Munawar Abdullah: The real potential of Pakistan’s IT industry has not been unlocked yet. It is stated by recent economic surveys that Pakistan’s IT industry’s size is convoluted around 5 billion dollars. The growth rate has not been overwhelming if viewed from a global perspective. The enterprise software industry and tech market are moving forward at the speed of 17percent and 15 percent respectively. The opportunity to excel in the IT market is quite progressive, yet it is under various economic restraints caused due to domestic issues. I firmly believe that Pakistan has the opportunities to provide professional services and goods involving IT products and market.

BRR: Actual quantum of IT exports doesn’t get recorded for some reason. What do your estimates suggest about the size of Pakistani IT exports?  

MA: It seems like a quagmire, as there is no proper channel to record the calculations of Pakistan’s IT export and business transactions. The actual target cannot be achieved unless we inculcate growth acceleration strategies to enhance growth and increase exports of products and services. The most recent survey suggests that Pakistan’s IT industry exports are $3.5 billion. It is my personal observation, if we want to strive for greatness encompassing all business fields, we must utilise our maximum potential.

BRR: How competitive is Pakistan’s IT-BPO scene versus that of its peers? What human, financial and technological factors impede its competitiveness globally? 

MA: Regional dynamics are changing, and Asian countries are moving toward economic integration. Pakistan’s IT growth is not competitive enough at the local or global level as compared to its neighbouring country India.  It is evident in current surveys that India’s IT and its market have grown to $167 billion in 2018 and its target is to reach $215 billion within the next two years. Many developing countries are moving forward in this race.

I have reached on these 5 major factors, after observing Pakistan’s IT industry closely and conducting my research.  Its major drawback is the lack of IT infrastructure.

1. Internet Reliability- Every individual must be provided with at least 100 Mbps to connect and interact with the world, increasing IT growth.
2. Lack of payment channels for the international transaction is another obstacle.
3. Tax incentives to IT market and corporate industry will also foster the business and reach out to international platforms for growth.
4. Human development and lack of innovation in productivity is another issue. Pakistan requires cutting-edge technology and solutions with their immediate insertion in its various areas. Students’ lack of exposure to IT opportunities, including load shedding and political instability have also added difficulty in this area in the past.
5. The government must create IT infrastructure, innovative IT parks, calculating all the growth rate of IT exports/ imports/goods and provide IT firms with a strong foothold to reach potential clients for products and services.

I have had the opportunity to attend an event hosted by the Hungarian Investment Agency, it was stated that 30Mbps internet is provided to each individual in the country to the target of reaching 100Mbps by 2020. Corporate Income Tax (CIT) is reduced to flat 9 percent with friendly taxation policy, attracting a considerable number of investors and $12 Billion worth of investment (FDI).

BRR: You talked about tax incentives. What are the other critical regulatory barriers and challenges that you think the country faces in IT?  

MA: I believe that Pakistan shares a unique status due to its Eco-political nexus. There is a lack of competition driven atmosphere at top level between different local IT entrepreneurs and startups.  Due to the lack of tax incentives for corporations and digital firms, it becomes hard to invest at the global level with limited resources and market.

BRR: Local software houses have been unable to scale despite being in this business for many years. Why?

MA: Growth trends are changing the global economy. To start a sustainable business in Pakistan, one must fight with inherited challenges, including lack of infrastructure and unreliable internet services. Skilled labour is another issue.

BRR: Why do Pakistani corporate buy software licenses and IT services from Western and Chinese multinationals instead of sourcing from the local market? What can be done to encourage more local sourcing?

MA: Unfortunately, no significant effort is initiated to build an IT company or enterprise. Lack of quality service and vision in the IT market is hindering promotion of IT at the national level. Piracy issue is another hindrance, it has led to mistrust of foreign and potential investors in Pakistan’s IT market.

BRR: What is your view in the current scale of digitisation in Pakistan’s economy?   

MA: Our level of growth is currently hanging at a primitive level. Every sector in Pakistan needs to optimise and adopt digitalisation. Corruption can be eliminated by adhering to the Public Procurement Regularity Framework; we have the potential to save $8 billion per year by putting all the data on online sources. NADRA has benefited from this service, but many other areas have the potential to gain benefit, including police, government database offices, political parties, education sector, etc.

BRR: Where do you think tech startups stand in Pakistan in comparison to the regional peers? And what are the key factors that help or inhibit these startups?   

MA: The rise of tech startups and IT ventures in the last 5 years has gained potential benefit and progress. But, due to lack of infrastructure and IT market, the level of development has not flourished as compare to regional peers such as India. Although, growth acceleration programs will benefit the young entrepreneurs and enhance competition. Pakistan media must play a decisive role to promote the success stories and positive side of these rising entrepreneurs.

BRR: What is your view of the human capital of Pakistan specifically regarding IT? Do you think that the universities here can match the level of skills and knowledge imparted in the western counterparts? What can the aspiring tech firms learn from the success stories in the West?

MA: In Pakistan, the engineering field focuses on developing professional skills in students, but it is not utilised up to its maximum potential due to lack of cutting edge technology. Lack of professionalism; and work ethics is another issue, which is hindering the upward progress. The young workforce must strive to attain a visionary approach to move forward and enhance national productivity. Pakistan’s GDP has been suffering for decades due to these managerial and professional issues.

BRR: Tell us about ImpTrax and your journey as an IT professional.

MA: ImpTrax is New York-based digital company, so its most clientele is found in the USA. Our esteemed clients are spread all over the world, and we have provided our services to top 500 fortune companies around the globe. Some of the clients benefited from our digital solution service are JP Morgan, Bank of America, Siemens Healthcare, and Bayer Healthcare, etc. Our services deal with Big Data, digital transformation, process automation, IT infrastructure development and Al integration, etc. I have been demonstrating my abilities by transforming people and organisations. My vision to assist business leaders and companies to reinvent themselves is a testament to my professional capability, intense research, and experience in multiple dimensions of business areas.

I believe in a superior value that promotes success by continually reinventing oneself because the world needs change as well as innovative ideas.

BRR: Do you have any message for the government?

MA: Pakistan’s IT industry and the digital market have the potential to fix its budget deficit and external deficit if adequately regulated. It is fundamental to build an IT infrastructure and make substantial efforts to revolutionise and transform this field.  It should be included in Pakistan’s goals to develop a long-term technology vision that must be inculcated in governmental policies for the futuristic era.

Urgent work is required to fix current issues like availability of internet like 100 Mbps internet at a reasonable cost around Rs3000 by 2020. It is crucial that state bank should take its responsibility to channelise payment methods through systems like PayPal and AliExpress, etc. There is a dire need for digital integration in payment methods mainly for global clients and transactions. The tax break and incentives should be provided to IT companies to promote digitisation.

It should be the government’s top priority to revolutionise, improve, integrate and transform the IT market in Pakistan if it needs to compete with current and upcoming global economic trends.