Data compiled by the State Bank of Pakistan shows that Pakistan’s IT export revenue totalled less than $50 million in fiscal 2004-05, rising to just under $75 million in fiscal 2005-06 - which is a tiny fraction of India’s estimated global IT revenue of $36 billion.

According to the Pakistan Software Export Board, however, the size of Pakistan’s IT industry, including global export receipts, export earnings retained outside the country, domestic IT services and hardware, is "probably considerably understated."

PSEB’s managing director, Yusuf Hussain, says that a BearingPoint study titled "Strategy for increasing exports of BPO" (prepared in October 2005) placed Pakistan’s global IT revenue in fiscal 2004-05 at around $400 million.

Hussain says: "The basis of the figure was the State Bank of Pakistan’s IT export revenue figures of just under $50 million. BP multiplied this figure by 2 to account for IT export revenue brought into the country but not registered with the State Bank. BP further estimated that for each dollar brought into the country, three dollars are retained by Pakistani companies overseas. Therefore, global IT revenue of Pakistani companies added up in fiscal 2004-05 to $400 million. Therefore, for official IT export figure of just under $75 million reported by the SBP for fiscal 2005-06, actual global receipts of Pakistani IT firms should be around $600 million."

PSEB says that the State Bank is "not reporting Call Centre Revenue under IT exports, and that the PSEB is working with the SPB to correct this anomaly." Should global IT export revenue - rather than export earnings - be used as the key measure for exports? According to the PSEB, it should - if that is the international norm.

In support of this contention, the PSEB cites the fact that a "Trade in Services Brief" prepared by the World Trade Organisation’s International Trade Centre in Geneva in 2004 lists "Mode 3," i.e., revenue generated by commercial offices overseas, and "Mode 4," i.e., compensation received by temporary workers who have travelled abroad, as export revenue streams which must be included in trade revenue calculations.

Even if this argument is accepted, however, there is no getting away from the fact that Pakistan’s IT export revenue is a pittance. The question is, why?

IT firms say that one reason for this is that personal agendas in the government undermine industry objectives. They say that PSEB, the facilitating arm of the government, is actually telling the industry what to do instead of asking the industry what policy measures are needed to boost export revenue.

IT firms say that a lot of money is being spent by government functionaries on visiting software parks in China, India, Singapore, Turkey, Malaysia and other countries. "What is so different about the mechanics or infrastructure of an IT park that it needs to be seen up close in so many destinations?" says an industry executive.

Government functionaries have been talking about software parks for the last four years, but nothing has materialised yet.

The Pakistan Software Export Board, which is a government-owned private limited company registered in the Ministry of Information Technology, has a large number of employees who, according to IT firms, "contribute very little to the growth of the sector."

Each PSEB project has a project manager, and there is a director for each function - Marketing International, Marketing Domestic, Legal, IT, Human Resources, etc.

Industry executives say that Rs 100 million a month is being spent on maintaining the PSEB. "Think of how this money could be used to fund various activities to promote the IT sector," says an industry executive.

PSEB, for its part, says that it has taken a number of steps to promote Pakistan’s IT sector. It says it conducted an internal study entitled "Assessment of IT Professionals in Pakistan" in 2005, which reported the figure at 75,000. It also sponsored an "IT HR Needs Assessment Study" conducted by BCCI FAST in 2005.

PSEB says a detailed study is required to accurately estimate Pakistan’s IT revenue and provide a basis for planning. It says it plans to retain an international IT research firm to conduct such a study. But there is no indication so far of just when this study will be carried out.

It is not clear just what PSEB’s role is in promoting the IT sector. An E-Governance Directorate already exists for automation projects for government bodies. IT firms say that PSEB "should stop undermining the steps that the private sector takes to help itself." They say: "PSEB is the government, and must stop interfering and dipping its fingers in every pie."

The Ministry of Information Technology has shown little interest in promoting or developing the IT sector. Its focus has been totally on telecommunications.

Following liberalisation and deregulation of the telecom sector, teledensity in Pakistan crossed 20 per cent in 2006 from a mere 4 per cent in 2003. Pakistan now has 5.4 million fixed-line subscribers and 46.4 million cellular phone subscribers, as against only 3.6 million and 1.4 million, respectively, in 2002. Wireless Local Loop (WLL) services are available in more than 160 cities in Pakistan and the number of WLL subscribers increased to 1.4 million in November 2006 from 81,000 in January 2005.

With internet connectivity now available in over 2,300 cities, towns and villages, there are now more than 2 million internet subscribers in the country.

Issues affecting the growth of Pakistan’s IT industry include a lack of ready, usable office space available for existing companies to grow into. Many companies have offices in two or three locations within a city because of insufficient space availability in any one location.

New companies, investors and expatriate Pakistanis returning home to set up IT companies are disappointed at the unavailability of a ready, hi-tech office environment where a young, vibrant industry can flourish and grow.

Other impediments include connectivity/bandwidth issues, power back-up issues, exhibition/showcasing issues, and a ready environment with everything at close access - a real IT park where young professionals can innovate, can interact, can carry out R & D, can work as teams and develop their talents. Secure surroundings for showcasing are another issue.

Tax policy issues affecting the industry is another area that needs to be looked at by the government. Hi-end computer components and equipment like servers, networking equipment, etc. is all imported at a 15 per cent tax. This tax is a big hindrance in fulfilling demand requirements and needs to be done away with. India has a zero-tax regime for computer equipment imports to allow its IT industry to spread its wings.

Human resource issues include problems arising from the fact that most Pakistani universities are still not providing the kind of education that is needed by the IT industry. The curricula are still outdated. Lecturers and professors still lack quality - the Higher Education Commission’s programme has been "a waste of money that has produced low-quality PhDs," say critics.

No IT-related R&D is being done at most of the universities. R&D, funded by the government but driven by industry, needs to be a major requirement of all university engineering and computer science programmes. Things like the National ICT R&D Fund exist, but are limited to paper. Who will administer the fund? And companies are still perplexed about how to actually get this funding.

Most funds are going into numerous consultant reports full of recommendations by Gartner, etc. But there is nothing beyond commissioning a report by some international consultant. There is no execution capability.

Education in Pakistan is not preparing young people to be confident and good communicators with a thirst for knowledge and innovation. There is a great gap between the quality of supply and the demand for IT-related human resources.