‘IT exports to increase to $10 billion by 2020’

An interview with Kashif Jadoon, CEO Blutech Consulting

Kashif Jadoon is the CEO of Blutech Consulting (A Company of Jaffer Business Systems). He has over 17 years of international experience as IT Enterprise Solution Leader and Entrepreneur specialising in Big Data and Analytics. For the last 11 years, his focus area has been the International market for delivering complex data warehousing and big data programs, helping fortune 500 companies grows their business while making informed decisions.

He has held various strategic positions globally such as Team Leader Asia, Strategic Manager, Executive Account Director, Global Delivery Manager, Executive Regional Program Manager, Director Managed Services International & Director Consulting Services Eastern Europe and is currently working as CEO for Blutech. He is also a commercial Pilot.

Following are the edited excerpts of the conversation BR Research recently had with Mr. Jadoon: 

BR Research: In your view, how large is the IT sector in terms of annual sales or IT exports in Pakistan? What is your view on the nature of market opportunity from an investment point of view?

Kashif Jadoon: Pakistan’s IT industry has demonstrated positive growth trends for the last four years. During 2016-17, Pakistan’s IT exports were $3.3 billion, which have climbed to $5 billion and are expected to grow to $6 billion in the coming year.

With ‘Digital Pakistan’ policy, incentives are expected to increase IT exports to $10 billion by 2020 and accelerate the digitisation of key economic sectors locally.

From an investment point of view, Pakistan is a hot cake for very obvious reasons: high quality resources at low cost and committed youngsters. One of the key reasons towards the positive growth signals for Pakistan is its 60 percent young population. It is this segment of the population that is very committed and enthusiastic with an urge to learn new technologies. Another factor is the lack of opportunities causing youngsters to take entrepreneurship route. Also, lots of incubation centers are promoting youngsters to convert their ideas to more commercial needs. They just need proper guidance and adequate resources.

BRR: Compared to the region, how competitive do you think Pakistan’s IT-BPO scene is? What human, financial and technological factors impede its competitiveness globally? 

KJ: Pakistan has a great potential for software development, BPO, and export to other countries. That’s because of the quality of skilled resources and the cost arbitrage compared to neighbouring countries. Creating a positive image of the country is vital to improve our IT exports.

Technology is changing rapidly, and it’s very important that our talent pool remains on top of the change. However, to remain competitive, the local industry must adapt to new technologies and give platform to our youth to stay relevant. That is why investing in our people is of critical importance as we move forward.

We need to have vocational training programs that give people exposure to technological changes in the global market and generate foreign exchange for the country. Due to the ever-evolving global technological landscape, curriculum in Pakistan needs to evolve accordingly. What was relevant in the past isn’t relevant any more.

If large enterprises don’t adapt to new technologies, it’s difficult for our skilled resources to stay relevant to global market because they don’t have the mechanism to learn and be competitive.

BRR: Actual quantum of IT exports doesn’t get recorded. Why is that so? How can we improve IT exports?

KJ: The IT sector is not a highly regulated industry; hence don’t expect the numbers to be recorded properly. You have a choice as a company to be registered with PSEB or not. And secondly, the role of PSEB itself hasn’t been very active. Also, IT companies are still using non IT/expense codes. More understanding needs to be created to use proper codes against the IT export to provide the true picture.

To improve IT exports, government has to take more proactive steps to help IT business. It has to create a friendly business environment within the country and then abroad. Within the country, if you are a start-up, getting a footprint with large businesses is a nightmare. If top enterprises don’t even consider young start-ups and only buy top brands, how would you expect startups to produce world-class products and sustain their existence during the process? Incubation centers are more about an office place for a few months with Internet and electricity, and that’s it. What is needed is proper guidance, a conducive environment and opportunities to young start-ups by top enterprises in the country to help grow the ecosystem, which is not the case now.

For the international market, access to businesses and the right people is important. People who are deputed as commercial counselors in Pakistan embassies abroad have a responsibility here. They must promote what we build locally by connecting IT companies abroad. They are responsible for connecting our local products with international needs.

Our IT consultants struggle in getting visas and/or work permits to go out and work internationally. So local companies lose lot of business because of visa delays and difficulties. Compared to this, our neighbouring countries get visas quickly. So customers get the skilled workers quickly from our neighbouring countries and we lose on the revenue.

BRR: Why do you think that even leading local software houses have been unable to scale despite being in this business for decades? 

KJ: For any company to scale in Pakistan, they have got to go abroad. Local market has a smaller pie with more companies to eat. The competitive situation in Pakistan for IT industry has been made a red ocean where competition fights for business more on price than on value. Customers are willing to compromise on quality for a better price. So how would you expect a business to scale if they don’t have government support? Customers are willing to take any price at the cost of quality and the overall business environment is not collaborative.

The growth of exports from Pakistan is also limited because of the country’s risk profile, unfavourable travel advisories, and the issue of negative media perception. Most Pakistani companies don’t have an onsite presence abroad; and the visa-issuance process for western countries remains a challenge.

The IT industry needs government support to strengthen Pakistan’s national image and contribute towards a bright future for our future generations. In Pakistan, IT companies are more or less operating on their own without proper regulation, and internal and external support.

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?

KJ: For some multinationals, they buy because of their global arrangements with principles but in majority of cases, there are no specific reasons. It’s just about a local business not trusting local products. The issue is whether we have even tried local products before we explore outside. It’s the responsibility of top executives to give directions to their teams to first explore local products. This change can only be top down. To promote local products, we must create R&D centres. Incubation centres should be aligned and given business problems to solve and later on tested with local corporate. It’s our social responsibility to work together on this cause of building top class products locally that not only fulfill our local requirements but also can be taken globally to improve our IT exports and create a positive image of our country.

BRR: Where do you think tech startups stand in Pakistan in comparison to the regional peers? How successful has been the rise of incubators and accelerators? And what key regulatory barriers and IT challenges do you think the tech startups face?

KJ: There is positive momentum in the country for startups. After a very long time this topic is given importance, and a large number of incubation centers are built to cater the needs of the entrepreneurs. Universities are taking practical steps in developing students before they are sent to the field. All this is good. However, if a comparison is made with regional peers, we are far behind. We have lot of incubation centres, but how much innovation is coming out of those incubators?

I still doubt that people running these incubators really understand the actual needs of these startups. Have a look at pictures these incubator posts on social media. You will see office, sitting place and so on without really talking about steps they are taking to ensure proper guidance, governance and ensuring the success of these startups. One of the key challenges for these startups is getting support from the local IT industry. Large enterprises should allow these startups to come forward and get their business problems solved through these startups. This approach is a win-win situation for everyone. In such a scenario, enterprises get local solution without paying high premium to foreign companies, startups get their products mature locally, and take it global and Pakistan get the export revenue.

I was a startup two years back and even with great ideas, I struggled to get any footprint. Everyone asked me personally if I have 5 years of bank statement, at least 3-4 successful implementations, references etc. If our local industry doesn’t give chance to these startups and young entrepreneurs, how would you expect them to create their mark globally? We must create two-way communication and support system between startups and corporate within our country where needs are discussed with startups and in return they use their ideas to come up with prototypes that can be converted to world class commercial products.

BRR: How do you see the draft regulations for EMIs?

KJ: The central bank has issued a draft Regulations for Electronic Money Institutions. It invited potential stakeholders and companies for suggestions, comments and input for further improvement in the regulations and the system.

These regulations are primarily aimed at removing entry barriers for non-banking entities by providing them a guideline as well as an enabling regulatory framework for the establishment and operations of EMIs. These regulations also address potential risks in order to ensure consumer protection in line with legal framework of the country while promoting financial inclusion.

New technological innovations are now enabling non-banking sector to deliver innovative and efficient payment services to consumers at much lower cost. These innovative payment instruments have been instrumental in promoting cashless payments like merchant checkouts, e-commerce, transportation and toll payments etc. But to effectively use these technologies without losing consumer trust and to protect their interest, it’s important to regulate it properly and hence the regulation on the table makes sense.

BRR: What is your view of the human capital of Pakistan specifically in terms of 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?

KJ: It’s very clear that except for a few, majority of universities lack the fundamentals of producing top quality skills. Our curriculum is mostly outdated; the style of teaching and grooming students remains the same old fashioned.

I have personally met some of the best technical resources, but they can’t speak English. How would they compete or work at International level if they cannot even speak the language?

I am not very happy in general with the level of skilled resources our universities are producing. However, I am always excited to see personal efforts from our young people who are mostly taking it as a challenge and learning things on their own. They are working on their skill set and making it competitive to global market.

BRR: Tell us about Blutech Consulting? What are you offering that others are not? 

KJ: I consider Blutech as one of the best success stories of Pakistan IT industry. Our cashflow was positive within three months of our company’s launch. We signed five customers within the first quarter. Almost 70 percent of Blutech business is International. We have signed cross industry customers. In a very short period of time, Blutech became a trusted partner with large enterprises.

First of all, our proposition is very unique, and it helped us locally and internationally both. We are pure Big Data and Analytics Company focusing on data analytics, machine learning, Artificial Intelligence.

We have set two priorities for our company: One is to become customer centric. And second, our people are our asset. We hire top quality people and invest in them.

We are different because our big data solution helps customers unlock from propriety solutions and we make sure that our customers invest minimum on the infrastructure and spend more on the business value. That’s why our solution doesn’t even talk about technology as a starting point.

We are moving the industry towards business use case driven approach. We provide our customers clear ROI. We start small, provide value and then grow with our customers.