Saturday, May 25, 2013

Why are there no IT companies with more than 10,000 employees

Why are there no IT companies with more than 10,000 employees

In a speech made by Dr. Ishrat Husain, Dean IBA at the CIO Summit on May 21, 2013, he asked the question why is it that we do not have in Pakistan any IT company similar to WIPRO or InfoSys of India. We do not even have an IT company with more than 10,000 employees. He raised this question following an impressive talk by Dr. Ata ur Rahman outlining the great and wonderful work he had done as Minister of S&T and as Chairman HEC in jump starting the telecommunication revolution and development of policies that have improved R&D.

I was wondering at this question thinking about the time when State Bank of Pakistan had millions of dollars of funds in the early 2000s for spending on IT. Similarly, HEC and Ministry of Science and Technology had millions of dollars to spend on IT projects. Unfortunately when it came to giving the contract for the acquisition of software, these organizations gave millions of dollars of contract to foreign companies bypassing the demand of PASHA that such contracts are essential for the development of indigenous capacity. The arguments in favor of foreign packages are always similar. We don't have time. Well, looking back at the year 2000 when these initiatives were being taken, one can see that there was enough time. Had the local banks, State Bank and other government agencies would have supported our local industry then we would have by now companies that could have achieved a great deal. It is possible that many of those IT companies would have by now several times the figure of 10,000 employees quoted. The experience of implementation of a  foreign ERP software PeopleSoft over the last several years at IBA and other universities world-wide indicates that such implementations are not delayed necessarily due to the technical inadequacies. There are human factors involved related to change management, change resistence and willingness to change and belief in IT. Without these even the best software implementations are in jeopardy.

I remember in year 1999 visiting a company Millennium Software in Karachi being led at that time by the president of computer society of pakistan, Ahmad Allauddin. Ahmad Allauddin had been IT head of UBL before retirement and had spent several years working on a web based banking application. I don't know what later happened to that application, but the project fizzled out because of this drive of the banks to go for foreign software. There were several software houses in Pakistan at that time who had been working on banking applications for several years. Any of these companies such as CresSoft or TechLogix would have broken that 10,000 employee barrier within a few years had they gotten some of these big projects.

The problem with Pakistani decision makers is the following. They would gladly give a foreign company 50 million rupees for the software. But would grudge giving one-tenth the amount to a Pakistani company. IBA before spending an amount of such proportion to PeopleSoft gave a project to a Pakistani company for peanuts and expected a performance level of a 50 million software.

I am being told that we are buying a national license for a software from microsoft that is available open source and can be customized to meet our requirements at a fraction of cost. Similarly, we gladly go for 30 installations of a foreign ERP at Universities without blinking an eye for hundreds of millions of ruppes and without evaluating the Pakistani developed software.

State funding and support is always necessary to jump start a new industry. IT industry in USA could not have achieved the wonders without big contracts from the government and defence industry. The learning curve of the IT industry indicates several failures on the way to success. But this did not deterred the US government and DoD not to invest in their own companies.  IT industry in India also benefitted from the government contracts. However, in Pakistan we have gone ahead and given fabulous contracts to foreign companies for software that is available open source and could have been easily extended and implemented. Whether it is the plagiarism checking software or whether it is the banking software it could have been supplied by local companies. If a Pakistani company like TPS can provide ATM switch for intra-bank and bank to bank transactions and could provide a service level similar to PULSE network in USA, other companies were capable of providing such software to SBP and MoST. TPS' 1-Link network is state of the art and is being implemented world wide. TPS is now a true multi-national. Initially TPS was challenged by another foreign product being promoted by a consortium of banks named M-Net, but it could not compete with I-Link and eventually it merged with it. We now hope that TPS can provide a challenge to even VISA.

ICT-RD fund gave funding to and see how it is thriving. I will not be surprised if the number of employees at this organization are nearing 10,000 mark in a few years.

If we want Pakistani IT companies to grow to the level of WIPRO or InfoSys we need to have faith and confidence. We need to invest in them. There may be some costly mistakes on the way such as those made by NADRA during its early years. But, in the end we will reach there. We will have the confidence and strength to compete internationally.

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