The Pakistani government has fixed a target to export $5 billion worth of IT products in fiscal year 2023. On several occasions, government officials have also stated that they want to target $15 billion in IT exports in three years.
However, the target seems to be just lip service because in the first seven months of fiscal year 2023, IT exports stood at mere $1.52 billion, which is a mere 2% higher than the corresponding period of last fiscal year. Analysts do not see Pakistan achieving the annual target if it fails to address its problems.
In an exclusive interview with Business Recorder, Emeritus Vice President for Solutions and Engagement Mary Ann Barge pointed out that Pakistan was not investing in human talent to achieve IT export targets.
“The IT exports of the country can rise but there is need a for a talent base to support it,” said Ann. “I think that’s the biggest problem right now.”
Headquartered in Singapore, following its $650 million Series E funding round in August 2021, Emeritus is valued at $3.2 billion. The company imparts online learning and certification.
“Pakistan needs the right investment, right people and right plans and processes to unlock human capital,” Ann said.
Mary Ann flew to Pakistan especially to meet the first batch of 50 certified software engineers, who are all now working for Xloop.
Xloop collaborated with Emeritus for the certification of upcoming software engineers to ensure they met Silicon Valley standards.
Xloop is a newly founded digital engineering company with ambitious plans to train up to a thousand engineers a year. The company’s investors include Gul Ahmed Energy, Tapal Energy and Agha Steel.
During the interview, seasoned IT professional and Xloop CEO Mir Nasir and Xloop COO Ali Abbasi were also present.
Nasir said market statistics showed that an average software engineer brings $20,000 to $25,000 of foreign exchange annually.
“For every $1 billion, you need 50,000 engineers. Are our institutions preparing them to provide quality services to international clients? I’m afraid not,” Nasir told Business Recorder.
Although Ann and Nasir both said that the government of Pakistan has the “intent” and “they know the problem”, they think there’s no “firm” plan up the government’s sleeve to take the IT exports to the level it wants.
“Government is focused on increasing IT exports. They know talent is the problem. They know that they do not yet have the talent to do that (increase IT exports) today,” Ann said.
Problem with human talent in Pakistan’s IT sector
Mir Nasir said that the traditional education imparted to computer engineers isn’t helpful.
“We have not stayed abreast with the tech curriculum. Fast paced technology and the way it has been taught. I think we are failing there at the university level.
“Out of 500 people who attended the Emeritus bootcamp entrance test, only 50 were able to pass. This test is reverse engineered from US client needs and checks the skills, capabilities and acumen needed to deliver quality work to US clients.”
If 25,000 students graduate with computer science degree in Pakistan, only 2,500 can become Emeritus standard certified developers and join a software house, this will not help us increase technology exports as fast as we want.
“The test was for basic undergraduate coding. These are the skills that the students should know. With a 10% success rate, it shows that whatever is being taught in colleges is irrelevant. That’s the biggest challenge.”
Nasir said bootcamps could help bring graduates of related disciplines in this sector to help reach the quota of engineers required to increase exports significantly.
“So we are bridging that gap with our world class technical training. Even if a student has just passed intermediate and attended vocational training, he can become a programmer if he has the raw talent because this is very specialised training system,” he said.
Nasir said the government should play a role in this.
“Traditional education isn’t helping as much as it can. A framework for national level pedagogy is needed based on what works and what doesn’t,” he said.
Mary Ann said that in comparison with other countries that made their mark in the sector, Pakistan had an opportunity to do more.
“If you look at other countries that are major players in this area, they have spent a lot more time developing the talent,” she said.
Massive demand for software engineers
Mary Ann said that demand is increasing year after year. It is because every company is becoming a tech company. Demand will not fall anytime soon.
“By 2025, we expect that the number of tech vacancies will double or even triple. The demand is rapidly increasing but the talent is not keeping pace,” she said.
“It is now up to Pakistan how it harnesses its potential and turns its professionals in the tech sector into a big share of its exports,” she said.
Speaking about global numbers, Nasir said that there is a shortage of over 2.5 million of just cyber security officials, which is just one segment of the IT services.
“Just here in Pakistan, there’s only one trained professional for five positions. Everyone is running after that one person,” he said.
Meanwhile, Xloop is focusing on full stack cloud native engineering and data engineering for its engineers as it sees demand coming in these areas.
‘Declare digital emergency’
Mir Nasir said that if Pakistan wanted to increase its exports and address economic woes, the country should declare a digital emergency.
He said that issues with curriculum needed to be addressed which should be brought closer to international requirements and standards.
Unless Pakistan doesn’t address this issue, Pakistan would end up losing its edge to competing countries. This happened with textiles when stakeholders didn’t invest in world class machinery and value chains while the rest of the world was doing it.
“We are investing in training people because it makes perfect economic sense. Three of our investors are big industrialists and not technologists. They don’t have a tech background but they have the vision that the future is technology,” he said.
“When other groups realise that the future is tech, they will also start investing in the tech sector,” he added.
Lack of human capital hurting startups as well
Just like there’s a shortage of software engineers, startups in Pakistan are also struggling to find the right human resource.
“Startups have done a great job in Pakistan in attracting international attention. But due to lack of human capital, they start hiring each other’s employees,” said Nasir.
“When there’s not enough talent around, if there’s a good employee, another company will hire them.”
Xloop’s business model
Xloop has spent over $10,000 on each of its engineers to get them trained and certified by Emeritus. After training, they are hired for a three-year contract. A fresh graduate starts at over Rs100,000. Xloop gets work especially from the US where its own sales, presales and project management builds and supports a pipeline of business. Xloop also works with many third party companies that are bridges between customers looking to outsource work.
“Our vision is to become a top 3 tech firm in the country,” Nasir said.
“We want to reach a market cap valuation of $1 billion in the next five to seven years,” he said. He further said that they plan to get listed in the next five to seven years.