P S E B  A C T I V I T E S - J U L Y 2 0 0 6

MARKETING

1. Tradeshows

   1. ITCN: PSEB has sponsored nine member companies to attend the event. Minister of State is the Chief Guest for the inauguration in the absence of the Federal Minister. MD PSEB is chairing two technical sessions.

   2. CeBIT Australia was attended in May 2006. Upcoming events include CeBIT China and GITEX Dubai.

2. Delegations
   
   

   1. Visit undertaken by Secretary IT and MD PSEB to China resulted in an action plan with next steps in the areas of IT Parks, Marketing and Training.

   2. Recent ASOCIO (Asian-Oceanian Computing Industry Organization) sponsored visits by PASHA delegation to China and by ASOCIO delegation to Pakistan will be funded by PSEB once approval is received from Ministry.

   3. Chinese IT delegation to visit in November 2006.

3. Marketing Collateral
   
   

   1. New and improved Website should be commissioned in September 2006. This will be far more aesthetic and user-friendly with more useful information.

   2. A proposal is submitted for the creation of an IT industry yearbook and an interactive CD should be ready in September 2006. An online campaign on Yahoo is also being run.

4. Media
   
   

   1. Several television and print media interviews by MD

   2. Several print media articles on PSEB projects.

   3. Fortnightly press releases issued

   4. Starting from August 2006 a monthly newsletter will be circulated to member companies, Ministry, press, expatriate organizations and individuals. There will be sections on PSEB activities, Pakistan IT Industry Business News, Offshore Outsourcing news and headline international IT news.

5. Niche Marketing Plan
   
   

   1. A plan to achieve dominance of six IT niches and six geographical markets has been submitted to the Ministry and will be submitted to the BOD for approval

STRATEGY

1. IT exports in FY 05-06, as reported by the State Bank of Pakistan were USD 72.210 million thus exceeding the target of USD 72 million. This represented an annual increase of 56% over exports of USD 46.355 million in FY 04-05.

2. It has also been noted that the State Bank of Pakistan (SBP) reports Call Center revenue under telecom services rather than IT services. PSEB is working with SBP to reclassify this revenue stream under IT services which should give a significant boost to IT exports as reported by the SBP.

3. A preliminary study undertaken by PSEB estimates total IT industry size, using a WTO-prescribed formula, at USD 2 billion. This includes global export receipts, domestic hardware sales, domestic ISV (Independent Software Vendor) sales, domestic software services and IT enabled services sectors, and first year earnings of non-immigrant IT professionals abroad.

4. A four year draft action plan has been prepared with the target of achieving total IT industry revenue of USD 10 billion in the calendar year 2010. Eight strategic thrust areas with missions and annual targets have been identified: Office Space Provision, Human Resource Development, Telecom Bandwidth Provision, Marketing, Industry Finance, Public Policy, Quality and Facilitation.

5. The plan was verbally communicated to Deputy Chairman Planning Commission on his instruction at an inter-ministerial “Export Plan” meeting on 31 July 2006. The Deputy Chairman expressed his appreciation of the plan and assured support.

6. A survey of Pakistani IT companies was launched on 5 June 2006 to acquire latest data on the number of companies, growth, space requirements, and classifications by type of business. The goal is to visit every IT company in Pakistan by September 2006. PSEB’s current company database has become obsolescent and cannot support planning and other important activities.

7. Preliminary results indicate that conservatively there are at least 700 active IT companies in Pakistan with around 300 active companies in Karachi, 200 in Lahore and around 230 in Islamabad. Growth in Islamabad over the last three years was around 300%, Lahore was around 150% and Karachi was around 180%. Lahore was most adversely affected by the downturn in the USA and Global IT markets – probably because it has the most export-oriented IT firms. Islamabad may be the destination of choice for returning expatriates following 911.

8. Consultations are underway with Gartner Group and McKinsey for the undertaking of a detailed industry study.

OFFICE SPACE PROVISION

1. IT Parks Construction

   1. Three new private sector buildings have been identified; two in Karachi and one in Rawalpindi as potential private sector STPs, which are expected to provide approximately 180,000 sq.ft. of office space for the IT companies.

      1. 14.49 acres of land allotted to PSEB at Chak Shahzad, National Park Area, Islamabad for construction of IT Park.

      2. MOU on IT Parks presented during a meeting of the Minister for IT with the CEO's of major IT companies in Islamabad.

      3. Advertisement published in the national newspapers to invite Expression of Interest from PSEB member IT Companies interested to participate in the development of IT Park.

      4. Preliminary meetings with renowned international technical consultants for the design and development of IT Park.

      5. Civil Aviation Authority has agreed to provide land for development of IT Parks at Karachi and Lahore International Airports.

2. STP

   1. Following an Expression of Interest (EOI) process, PSEB is finalizing the establishment of three new Software Technology Parks (STP): Tariq Center and Honda Defense in Karachi and Rose Building in Rawalpindi. Owing to delay in the provision of OFC by PTCL, expected commissioning of these buildings is in September/October 2006. This will bring total square footage of STP from 630,000 sq ft to 810,000 sq ft.

   2. STP contracts with Aiwan-e-Iqbal Complex Lahore, which had expired in 2004 was finally renewed in July 2006 thus considerably reducing legal and financial risk and liability. Importantly, financial claims against PSEB of PKR 25 million were settled without any financial payment whatsoever.

   3. Similarly private sector STP contracts with NetSol, Bahria Complex, JGC Descon Building and Imran House were renewed.

3. Internet Service Provision (ISP) by PSEB to STP
   
   

   1. An Operations and Management (O&M) agreement with PTCL is expected to be signed in August 2006. Once signed, this will considerably reduce the legal, financial and operational risk associated with ISP provision by PSEB.

   2. A financial and technical plan has been developed to upgrade obsolescent ISP equipment which currently suffers from severe reliability issues

INDUSTRY HR DEVELOPMENT

1. A meeting was held with Executive Director HEC in early July 2006 in which requirement for IT graduates was communicated. PSEB and HEC will work together to verify graduation statistics, formulate curricula, explore standardized testing and increase enrollment.

2. HEC will also provide information and assistance to the proposed PSEB Career Development Center program.

3. Initiation of the New and Expanded Internship Program, Apprenticeship Program and Career Development Program has been delayed as the R&D Fund Committee has not yet been convened. Meanwhile PSEB sent out letters to IT firms soliciting their support and feedback for these proposed programs. Significant support has been received.

4. Training for Siebel/Oracle CRM and Oracle Financial is scheduled in August.

PUBLIC POLICY

1. GST

   1. The imposition of 15% GST by GOP in the FY 06-07 budget is being perceived as a serious set back which will particularly impede domestic PC assembly. PSEB facilitated issue resolution by assembling 44 industry representatives and several industry associations including – PASHA, CSP (Computer Society of Pakistan), PCA (Pakistan Computer Association), CCAP (Call Center Association of Pakistan), APCAI (All Pakistan Computer Assemblers/Importers) – and evolving a joint industry position.

   2. Secretary IT then facilitated interaction with Chairman CBR on the issue. Meetings between industry reps, CBR, and PSEB are underway.

2. Data Protection Act
   
   

   1. This project has been stalled since late 2005 due to polarized industry positions. A new approach is now being taken to address the deadlock by diluting clauses of major concern.

3. Trade Policy
   
   

   1. Recommendations have been submitted to consider electronic communication as a trade channel in addition to land, sea, and air.

   2. Recommendations are under scrutiny to promote arbitrage and re-export.

INDUSTRY FINANCE

1. An ongoing VC Fund study project has been restructured to include RFP development, assessment of proposals, and selection of a VC company for the award of the fund. The new approach will help ensure fast track results-orientation rather than an academic exercise.

2. Both MD PSEB and Director Finance PSEB have become members of a State Bank IT Industry Finance task force which will help create an ecosystem for IT company financing including Intellectual Property (IP) valuation, IP protection, supporting legislation, cash flow financing and venture financing.

QUALITY

1. ISO

   1. 100 IT companies have been ISO 9001 certified making Pakistan a world leader in this area.

2. CMM
   
   

   1. Over last three months two companies appraised a Level 3, one at Level 2 bringing total number of CMM appraised companies to 5. Target by fiscal year end is 20-25 IT appraised companies which will make Pakistan a world leader in this area.

3. Information Security
   
   
   1. Project launched and two ISO 27001 consultancies awarded.
      
      
   2. A request for funding sponsorship of an Information Security Workshop from Ecommerce Gateway – organizers of ITCN Asia – is under consideration.
4. COPC
   
   

   1. M/s COPC is expected to send a proposal shortly for audits of customer service centers. The new proposal is based on the revised and higher priced 4.0 standard.

5. Security Implications of IT Collaboration
   
   
   1. A draft strategy paper on addressing security concerns of collaborating with foreign IT firms has been prepared and submitted.

 FACILITATION

1. Pakistan IT Industry Survey
   1. A survey of Pakistani IT companies was launched on 5 June 2006 to acquire latest data on the number of companies, growth, space requirements, and classifications by type of business. The goal is to visit every IT company in Pakistan by September 2006. PSEB’s current company database has become obsolescent and cannot support planning and other important activities. Preliminary results indicate that conservatively there are at least 700 active IT companies in Pakistan with around 300 active companies in Karachi, 200 in Lahore and around 230 in Islamabad. Growth in Islamabad over the last three years was around 300%, Lahore was around 150% and Karachi was around 180%. Lahore was most adversely affected by the downturn in the USA and Global IT markets – probably because it has the most export-oriented IT firms. Islamabad may be the destination of choice for returning expatriates following 9/11.

2. IT Industry Issues
   

   1. PSEB arranged a meeting with PASHA executive committee members and other stakeholders in Karachi on 26th July, 2006 to discuss issues of concern to the IT industry. The meeting was a quarterly follow up to previous meetings held in Karachi, Lahore and Islamabad for which minutes and progress updates were circulated by PSEB. This meeting was chaired by Secretary IT.

      1. Secretary IT assured support to the IT industry on issues facing them. MD PSEB provided an overview of PSEB activities.

      2. PTCL officials were also invited to the meeting as PSEB and the industry raised concerns about bandwidth cost and quality and delay in providing OFC to STP. PTCL EVP and GM South were appointed as focal point to resolve IT industry issues in Karachi.

      3. Venture capital and cash flow financing for the industry were discussed with Center for International Private Entrepreneurs (CIPE) which hosted a seminar on the subject two months ago. Secretary IT would hold meeting with Governor SBP to provide momentum to this effort.

      4. The finalization and implementation of the Data Protection Act were also discussed with stakeholder

       

3. Open Source Industry Automation

   1. ERP have been completed for APTPMA (All Pakistan Textile Processing Mills Association), PRGMEA/PHMA (Pakistan Readymade Garment Manufacturers and Exporters Association) / (Pakistan Hosiery Manufacturers Association) and PAAPAM (Pakistan Association of Automotive Parts and Accessories Manufacturers). Modules are undergoing acceptance testing in model units.

   2. A toolkit on Open Source technologies comprising manuals and CD has been developed.

4. Mobile Urdu Contents

   1. Major IT players in this area and other stakeholders have been identified. In the next stage, impediments to widespread use of Urdu mobile content such as cellular technology, absence of standards, programming, and potential revenue will be investigated. It will also be ascertained what if anything should be done by MoIT/PSEB in this area.

5. Telecom Bandwidth Provision

1. Quality of Service

   1. Several complaints have been received particularly from the Call Center industry and PASHA on the quality of services (QoS) being provided by PTCL. Secretary IT chaired a meeting between President PTCL and Mr Zia Chisty, CEO TRG, at which MD PSEB was also present. In this meeting, CEO TRG asserted that international quality requirement was an uptime of 99.99% while the PTCL uptime was 96%. Also PTCL costs were relatively high. The poor quality would destroy the Call Center Business. President PTCL invited a proposal from TRG on its quality and pricing requirements.

   2. PSEB also circulated a newsletter to all call centers inviting proposals.

2. Cost
   

   1. Several complaints have been received, particularly from ISP, on high PTCL tariff structure. PTCL has filed a case in the Lahore High Court asserting that it cannot suddenly reduce costs but can only reduce costs in a phased, negotiated manner. Costs have not been recently reduced.

   2. MoIT and PSEB have invited the ISP industry and other stakeholders to assemble under its facilitation to develop a clearer understanding of the situation and to develop a joint proposal. This approach was taken on the GST issue with some success.

    

    

L O C A L  N E W S

Pakistan's IT Exports Increase by 56%; Netsol Top IT Exporter

The State Bank of Pakistan informed PSEB recently that in the fiscal year ending June 30, 2006, IT exports registered with the State Bank of Pakistan (SBP) amounted to US$ 72.21 million - representing an increase of over 55% from preceeding year's exports of US$ 46.355million.
Netsol Technologies emerged the top IT/ITeS export company in Pakistan with exports of US$ 4.23m for the fiscal year 2005-2006, according to SBP. Ovex Technologies and TRG followed with 10.9% and 8.3% respectively. The top ten ranking IT/ITeS export companies include Systems, Elixir, Descon, Trivor, TIG Netsol, Geopaq and Fusion ITech (Enterprise DB).

Source: SBP


Pakistani and S. Korean IT Companies Ink Agreements

Four Pakistani IT companies - Sofizar, Synergy, SiSservices and Buraq Integrated Solutions (BIS) - formed solid collaborations with S. Korean IT companies recently, in a PSEB-sponsored programme. This programme was open to its registered companies from October to December 2005.

Sofizar recently signed a contract with M2Soft of Korea, which won exclusive rights to export Sofizar's software products and services pertaining to Search Engine Optimization, Web Metrics Technology and Click Fraud Detection Technology in Korea and Japan.

"We are also currently in negotiations with three notable Korean companies, including Korea Telecom and are very close to signing large contracts with them," said  Zafar Khan, CEO, Sofizar, while talking to PSEB.

"Korea Telecom is especially interested in our Web Metrics engine Zaralyzer. Also, there is significant interest from M2Soft’s largest market, Japan, which is a much larger market than Korea. We at Sofizar feel that the quality of our services surpasses that of local Japanese companies," said a confident Mr. Khan. In another breakthrough, Synergy collaborated with M2Soft of Korea for a reporting tool that found an eager market in Directorate General Immigration & Passports for its Machine Readable Passport project.

SiSservices has partnered with BITComputer which holds 45% market share in hospital management software in Korea, to share knowledge of picture archiving and imaging of electronic medical records, and will be jointly marketing products in Middle Eastern and Central Asian countries, apart from their respective countries of origin.

Becoming a Regional Partner for Haansoft's Linux and related product, BIS is also preparing to market its product, eDox, a document and workflow management system in collaboration with Korea's Union Information System (Union IS) in Korea, Japan and Canada.

"After reviewing our product for a month, Union IS has started its conversion into Korean language. We are now mutually working towards finalizing a comprehensive sales plan," said Mr. Muhammad Asad, Director Operations, BIS.

The World Technology Network (WTN) announced on 24 July, 2006 that Zaheer A. Kidvai, CEO Beyond Information Technology Solutions Pvt. Ltd. Pakistan, has been selected as a nominee for a 2006 World Technology Award, presented by the World Technology Network, in association with the New York Stock Exchange (NYSE), Dow Chemical, TIME magazine and CNN, among others. Zaheer A. Kidvai is eligible to be selected as the Winner of the 2006 World Technology Award for Education.

Winners will be announced on November 3rd, 2005, in San Francisco, at the World Technology Awards gala ceremony at San Francisco City Hall at the conclusion of the two-day World Technology Summit. The World Technology Awards honor individuals and corporations from twenty (20) technology-related sectors viewed by their peers as being the most innovative and doing the work of the greatest likely long-term significance. Award categories range from biotechnology, space and energy through to ethics, design and entertainment.

Nominees for the 2006 World Technology Awards were identified based on an intensive, global process over a period of many months in which current individual WTN members (primarily elected WTN Fellows from previous Awards cycles), who now number over 800, spread out over 60 countries) made their nominations based on who they think is doing the innovative work in their field of the greatest likely long-term significance. After the WTN gathers further information from nominees, WTN individual members then vote on their preferences within their category. The top five selections are then inducted into our WTN membership base as Fellows, and one of them will be announced as the Winner of their Award category at the Awards ceremony.

Sources: PSEB, PASHA, World Technology Network

O F F S H O R I N G / O U T S O U R C I N G

India Faces Offshore IT Skills Crisis by 2010

A huge IT skills shortage and poor physical infrastructure could threaten India's position as the leading offshore outsourcing location by 2010, according to a new report. The report by McKinsey and Nasscom warns that labor market pressures could leave India facing a shortfall of 500,000 IT staff for the offshore outsourcing industry.

Source: http://www.zdnetasia.com

Outsourcing - It's No Longer Just About Saving Money

"It's no longer just about saving money, it's about adding talent, too," says IBM's head of outsourcing for Asia-Pacific, Randy Walker. According to him, the most important trend in outsourcing is not how much money such arrangements save, but what kind of value they add. 
"The most important growth over time is in business process services like accounts payable", Walker says.

Source: http://www.businessweek.com

I N T E R N A T I O N A L

Asia Warms to Network Outsourcing

Recognizing the opportunities in the managed services market, Motorola and Wipro recently formed a joint venture to offer managed services to public and private network customers. The joint venture, called WMNetServ, will offer outsourced telecommunications services.
Singapore-based IT services provider Datacraft also announced recently a new service to help clients manage their IP telephony systems, deployed over 2,000 IP networks and more than 60,000 IP handsets in the Asia-Pacific region.

Source: http://www.zdnetasia.com


HP to Buy Mercury Interactive

Hewlett-Packard agreed to buy Mercury Interactive for about $4.5 billion in stock, or $52 per share, in a bid to expand the computer maker's business software operations. The deal, which sent shares of the No. 2 personal computer maker down 4%, should help boost sales of HP's systems management software, which makes it easier for far-flung businesses to monitor the hardware, software and networks running throughout their organizations.
The purchase of the former star Israeli technology company also puts HP in closer competition with other major systems management software providers, including IBM's Tivoli unit.

Source: http://www.cnn.com 


KKR Group Looks to Win Philips Chip Unit
        
Private equity firms Kohlberg Kravis Roberts & Co. (KKR) and Silver Lake Partners appear to have won an auction for Philips Electronics NV's semiconductor division. The price could not be immediately determined but was believed to be more than €8 billion.Philips had earlier said it planned to sell or float the unit, the world's 10th largest chipmaker, by the end of 2006.

Source: http://www.cnn.com

 
Alcatel Eyes Some of Nortel's Mobile Assets 

Alcatel is in talks to acquire the high-speed mobile arm of rival Nortel Networks to boost market share. A Nortel spokesman said the company doesn't comment on rumor and speculation. Alcatel completes its merger with U.S. competitor Lucent by the end of the year. The deal with Nortel would be worth about $1.91 billion, according to source.

Source: http://www.techweb.com

T R E N D S
 
Call Center in India? That's So 2004

Indian outsourcers have begun turning down call center contracts, preferring better-paying deals for processing mortgages, handling insurance claims, overseeing payrolls, and more. Outsourcing powerhouse Tata Consultancy Services Ltd., for instance, has turned away potential clients offering call-center-only work.
In June, Apple pulled the plug on a call center in Bangalore due to the high cost of operating in India. Two months earlier, British utility Powergen cited rising wages when it withdrew from a contract with call center operator Vertex Data Science.
As a result, call centers are becoming a less important feature of the Indian business landscape. In 2000, they represented 85% of the total back-office business; now they are about 35%, according to Nasscom, India's outsourcing industry trade association.
The reason for the shift is simple: profits. Margins for call center work are in the low double digits, but they can top 30% for higher-end tasks, according to Nasscom.

Source: http://www.businessweek.com


Messaging - Asia's Top Data Revenue Earner

Despite the promises of 3G mobile content in boosting telco profits, messaging services remain the top data revenue earner in the Asia-Pacific region last year. It contributed 41.2% of the region's total mobile data revenues in 2005. This market was worth US$ 36.7m last year, and is expected to enjoy a compound annual growth rate of 16.4% between 2005 and 2010.

Source: http://www.zdnetasia.com

 
Asia's Hiring Trend

Headhunters and industry observers in Asia are optimistic that the hiring trend in the IT industry will continue its upward climb, as economies in the region strengthen. Permanent job prospects for China, Hong Kong, Japan and Singapore remain high for the second quarter of 2006. Expectations in Hong Kong, Japan and Singapore are also at a five-year high.

Source: http://www.zdnetasia.com


S T U D I E S

Big Gap in Asian Govts' IT Spending

Public sector spending in the Asia-Pacific region, excluding Japan, will increase at a CAGR of 9.5% from US$ 17.3 billion in 2005 to US$ 25 billion by 2009. The latest findings, however, show a "staggering" difference in public sector IT spending per capita across the region. New Zealand and Australia took the top two spots, with per capita government spending at US$ 198.78 and US193.82, respectively. Singapore, in third place, was the best performing Asian nation, with a per capita spending of US$152.89. Indonesia occupied the bottom spot, with a per capita spending of US$1.10, while India was second lowest in per capita spending, at US$1.29.

Source: http://www.zdnetasia.com


Macroeconomic Indicators and Buyer Intentions Converge

"The US economic picture for 2007, which is slower GDP growth and much slower corporate profit growth, seems to be taking a toll on expectations and macroeconomic indicators," notes IDC’s Chief Research Officer. Driving the indicators down the most in August were lower line of business manager expectations for IT spending and next year's lower GDP and profit growth forecasts. For instance, line of business executives polled said they expected IT spending in the next 12 months to hit only 4.6%. And the July poll sees U.S. corporate profit growth falling from 19.9% in 2006 to 3.2% in 2007.

Source: http://www.idc.com

 
Disk-based Data Protection Market to Generate More Than $50 Billion

Disk-based data protection is a very large market, reaching $8 billion in user IT spending in 2006 and poised to generate more than $50 billion in software and hardware purchases through 2010, a new IDC study reveals. Fueled by increasing regulatory compliance, business continuity, and fast recovery, the disk-based data protection market will continue to expand at a rate two to three times faster than the overall storage market.

Source: http://www.idc.com

 
VoIP Service Revenue Doubles; Will Hit $120 Billion in 2009

VoIP service revenue doubled in North America, Europe, and Asia Pacific from 2004 to 2005, and will continue to boom for at least the next five years, according to a new report. The report also found that a combined $120bn will be spent in the three regions on VoIP services between 2005 and 2009.
The report projects China will emerge as a major VoIP business market over the next several years. The number of worldwide VoIP subscribers will almost double from 2005 to 2006, when it will top 47 million.

Source: http://www.techweb.com

 
IDC Foresees Double-Digit Growth for Content Applications

According to recently published IDC research, the content applications markets will continue to be extremely vibrant through 2010, with double-digit compound annual growth rates (CAGRs) for content access tools, including search engines, content management software, and digital asset management software. As content management vendors play a key role in helping users adopt new technologies, IDC believes vendors that can leverage the latest technologies to bring content applications to market will experience the greatest growth.

Source: http://www.idc.com