Pakistan’s IT industry hurt and helped by attacks

With the launch of U.S. and U.K. military action against Afghanistan, neighboring Pakistan’s fledgling IT industry is buckling down for shaky times – but at the same time hoping to reap some benefits from the world’s attention.

While some in the business are worried about unrest, others view their country’s support for the U.S. and its allies in the current conflict as a potential boon.

“I think people are expecting things to improve here, because all the restrictions that the U.S. government have imposed on Pakistan have been lifted, so there will be a flow of trade and business,” said M. Ayaz Ghaznavi, chief editor of Computerworld Pakistan, an IDG News Service affiliate.

U.S. President George W. Bush waived economic sanctions against Pakistan after its government pledged its help in the aftermath of the Sept. 11 terrorist attacks in New York and near Washington, D.C.

“For IT there should be a lot of potential improvement with the kind of money that appears to be coming into Pakistan,” said Ghaznavi.

Among the most optimistic IT entrepreneurs are those in the software outsourcing business, where Pakistan hopes to follow in the footsteps of its giant neighbor India. Since about 1994, software companies in the city of Lahore have looked to offshore markets, but the industry is still in its infancy, said Salim Ghauri, chief executive officer of IT consulting and software company Network Solutions (Pvt.) Ltd. (Netsol).

“All of us were selling on the basis of our own niches, and we were continually selling. A normal customer didn’t care that there were sanctions, as long as we could deliver. But when we were going to big customers, they knew there were sanctions on Pakistan. That stopping us from bidding on bigger projects and asking for help from the government,” Ghauri said.

A local hardware manufacturer lamented the lack of support from U.S. investors.

“For some odd reason, Pakistan hasn’t enjoyed the support of U.S. investors and U.S. businesses up till now, and I really don’t see a reason why they should not invest in the Pakistan market, because at the end of the day it has a very similar demographic to India,” said Ghias Khan, chief executive officer of Inbox Business Technologies, which assembles locally-branded PCs for the domestic market.

“I know that people far away think there’s a lot of unrest in Pakistan, but that’s not really the case. Pakistan is slowly but surely becoming a very advanced technological nation, and there’s really no reason it should not get the same kind of attention India is getting,” Khan said.

Pakistan’s home market offers plenty of potential for hardware vendors, Khan added.

“There’s a tremendous lack of infrastructure in our country. For a population of 140 million there are, I would guess, only about 800,000 to 1 million PCs installed at present,” he said. “Plus a lot of the smaller and medium-sized enterprises are automating, and a lot of educational institutions are opening up, and in the home user sector there’s tremendous growth.”

Ghaznavi echoed Khan’s thoughts, adding that state interest in IT and electronic government programs has been on the rise, but that so far the funds have been lacking – a situation he hopes the end of sanctions will improve.

In the short term, however, there are fears that business will be disrupted by war in the region, and fears of potential unrest in Pakistan itself, where in some regions sympathy for Afghanistan’s ruling Taliban runs high.

“Because of the uncertainty, there is hesitation in investing in IT; and secondly, the multinationals also put a stop on expenditure and IT gets hit,” said Ahmed Basit, general manager of systems integrator Sysnet Pakistan (Pvt.) Ltd., in an e-mailed response. “Yes, war is going to affect the industry negatively; the priorities change in times of war.”

Another systems integrator echoed this sentiment, adding that anti-Muslim prejudice is also having an effect.

“We are afraid of the growing prejudice against Muslims in general reported throughout North America, Canada and Europe. This can have long-lasting negative effects on all kinds of businesses,” said Saud Khan, chief executive officer of content integrator Pakistan Information Networks, in e-mail.

The departure of foreigners from the country, concerned for their own safety, has also raised worries in the industry, he added.

“The IT industry in Pakistan is looking for strong partnerships in the West and is heavily dependent upon Western countries in terms of value-added services and IT software exports (and) such a situation does not help at all,” he said.

Netsol’s Ghauri said that despite the difficulties, business will go on.

“Obviously we are on the hotplate here,” Ghauri said. “The first weeks (after Sept. 11) were very difficult, because obviously all my customers were concerned about what would happen. Yes, it’s a problem, yes we are very close to Afghanistan, but we live in a big country with 140 million people. Although we are not expecting any new customers, we are continuing to do business for the customers we have.”

Khan hopes that, in the end, the media spotlight will help the local IT industry by highlighting Pakistan’s capabilities.

“Although the whole issue starting from Sept. 11 is very tragic, I am also hoping that this attention will create awareness amongst the outside world about the high potential of Pakistan… changing the image of a perceived hostile country to a more friendly and productive nation,” said Khan.

For Ghauri, the events will put Pakistan on the map.

“Whenever I used to go to the U.S., they didn’t know where Pakistan is, they didn’t have a clue,” said Ghauri. “So I am sure that now people are very well aware… I think our government took the right step (in supporting the U.S.) So in the short term I think we will see some disturbance, but we are very confident that we will come very well out of this incident.”

Computerworld Pakistan’s Web site is

Netsol, in Lahore, is at

Inbox, in Karachi, is at

Sysnet, also in Karachi, is at

Pakistan Information Networks, in Islamabad, is at