State of Telecom Industry in Pakistan

Pakistan is in second place compared to other South Asian countries in terms of certain economic indicators according to a report from World Bank on global business ranking . The business rankings report highlights the business reforms which have been implemented in Pakistan and provides details of various aspects of starting and running a business. In terms of issues, energy shortage is one of the major problem in Pakistan just like other emerging economies.

Here’s a summary, taken from Dawn Blog.

A recent World Bank report has declared Pakistan as one of the top favourable economies in the world. The “Doing Business 2008″ report states that Pakistan is in second place compared to other South Asian countries in terms of certain economic indicators, such as: ease of doing business, dealing with licenses, and protecting investors.

Pakistan is quickly emerging as a powerhouse in the region, partly due to its fast paced IT industry. The government’s policies towards foreign investors have also contributed in helping the country stand out. These include 100 per cent foreign equity ownership, 100 per cent repatriation of profits for foreign investors and tax exemption for the sector till 2013.

An increasing number of foreign companies also prefer Pakistan for their outsourcing operations. This is due to the large pool of English-proficient professionals, cheap connectivity rates and competitive operational costs.

‘Doing Business 2008? is an annual report that evaluates the regulations that directly impact economic growth and provides objective measures of business regulations and their enforcement. The report evaluates business
activities based on regulation affecting the “10 stages” of a business’s life: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

Story via Telecom Grid Pakistan.

The recent boom in Pakistan’s technology sector has brought in a number of changes in the way businesses conduct their operations. However one thing which I have observed is that till recently Pakistan had lacked good quality market research. Yes, there were some research companies like AC Nielsen but their skills, reach and approach were rather limited. When it came to telecom and technology research, there was almost no local firm with this special skill set. Things are about to change. To fill this gap, Arif Hussain, a former Lucent executive, has launched SourceOne, a US company with an office in Karachi.

SourceOne aims to deliver, for the first time in Pakistan , unbiased market based intelligence, insight and a strategic perspective for the communications industry. The Communications Practice of SourceOne offers a portfolio of market-focused services, each built around high-value, high-impact market analysis. There is a sample report, ARPU Strategies for Mobile Operators in Pakistan, available on the website. A flagship Newsletter “The Source” will also be available to subscribers.

According to my discussions with SourceOne leadership, their market intelligence services are different from others because their thoroughly researched market reports are built on data from primary and secondary sources. I think this is a key factor, as most analyst reports I have seen depend on assumptions which are removed from ground realities. One has to be embedded in the local environment in order to add real value. 

Of course a highly sought after service is that of customized reports for specific client needs such as outsourcing and doing business in Pakistan. “We offer a high degree of customization in terms of reports that can be tailored to the individual needs of clients. Potential clients that can best benefit from our services are Service Providers (fixed – wired or wireless and mobile), Vendors and Investors. We underscore everything we do with a total commitment to quality, accuracy and attention to detail”, said Arif Hussain, CEO of SourceOne.

This is a welcome addition and I am certain that a large number of local and foreign companies and investors will benefit from the professional services of SourceOne.

DIDX+Voip in Pakistan+Super Technologies=Rehan Allahwala

TM has written a success story explaining the above equation. I want to share an excerpt here.

Super Technologies started its journey from the (then) innovative idea of Internet faxing back in 1987, morphed into a VoIP service company with a Pakistani network, changed to a hosted VOIP platform and finally, the team hit the sweet spot (incidentally as a by-product) of becoming a marketplace for an unusual telecommunication resource that nobody had not spotted before in the same context. The company has a number of developers working OUT of Pakistan.

So what is DIDX and what do they do? DIDX is about selling and buying an unusual, untapped asset that a lot of telecos are sitting upon - the E.164 numbers they give out to ‘their’ subscribers who take one (or more) service from them.

One of the core forces behind DIDX is Rehan Ahmed Allahwala. Rehan works alongside his American mates who front the company worldwide in commercial and marketing domains. Rehan leads the team that works on new ideas …… Read more.

On a related note for job seekers, Super Technologies is hiring for full time staff and interns - see this post and check out their site to learn nore and apply.

This is an inspiring success story about an innovative telecommunication company with connections to Pakistan. Mobile Complete is a mobile technology company focused on improving the user experience on mobile applications and services. Their products are being used to test, monitor and support mobile services. It is based in California and has an operational presence in Karachi.

Mobile Complete’s flagship service, DeviceAnywhere.com, gives mobile application developers remote access to over 600 handsets in US, UK and Canada today – more countries and handsets are coming soon. Developers no longer need to buy hundreds of handsets and travel to target markets to test their applications. Instead, with a cost-effective DeviceAnywhere.com subscription, they are able to get access to and operate the handsets from the desktop with an ordinary Internet connection.

Regularly featured in the wireless press Mobile Complete offers many innovative and distinct services to handset makers, network carriers and application development companies. Mobile Complete has an impressive client list (it has over 1000 customers) and supports handsets on 11 global carriers today. Earlier this year Mobile Complete received Frost & Sullivan 2007 Mobility Award for Best User Experience Management.

I had a chance to talk with VP Solutions of Mobile Complete, Mudassir Sheikha, and asked him a few questions.

Babar: Please tell us a bit about your Pakistan office.
Mudassir: We established the office in the first quarter of 2004 and are now about 60-people strong, spread across engineering, customer support, product marketing and finance. Overall, it has been a very positive and gratifying experience. The office helped us launch our products and get the first few customers in our pre-funding days. It continues to be a key component in all our initiatives.

Babar: What are the challenges and benefits of outsourcing work to Pakistan?
Mudassir: Benefits: Cost-effective operations, high quality and committed staff.
Challenges: Law and order situation, especially the high frequency of strikes; poor infrastructure around inconsistency of power supply; some advanced skill-sets are not readily available.

Babar: Do you have plans to offer solutions to mobile phone companies in Pakistan?
Mudassir: We will probably look into it in a few months. Our initial focus was North America. We have started making overtures in the European marketplace recently. Asia is next on the roadmap.

Babar: What is your take on next 5 years of Telecom market in Pakistan?
Mudassir: Just like operators elsewhere in the world, data services should start to take hold. Some services like banking and brokerage services are already available on mobile devices; more sectors may start to come online. The penetration of mobile devices is unprecedented, so we have a unique opportunity to reach out to the masses with modern services, cost-effectively.

While I think market forces will take care of much of the above, we need to do something about theft of mobile devices. I feel people are somewhat scared of using their handsets in open public, and that might be hampering the growth of mobile services, data services in particular.

Babar: Any advice for technology entrepreneurs in Pakistan?
Mudassir: To some extent, the Internet has leveled the playing field for everyone. You can target any market from anywhere in the world – cheaper from Pakistan. Find a focus, build a team, and deliver high-quality results. There is opportunity in anything that you can do better and cheaper than anyone else.

You can also check out the Device Anywhere blog, written by CEO of Mobile Complete, Faraz Syed.

Let’s go back to overview of Mobile Complete services - here’s how it is used: (taken from Mobile Complete website):

  • Network Operators: Use Mobile Complete for handset/application testing, QoS monitoring, roam testing, creating virtual developer labs, delivering try-before-you-buy experiences for handsets/apps/services and delivering enhanced consumer education & support.

  • Handset Manufacturers: Use Mobile Complete for handset/application testing, field testing, remote handset access, creating virtual developer labs, delivering try-before-you-buy experiences for handsets/apps/services and delivering enhanced consumer education & support.

Read more »

Outsourcing of technology or business operations by telecom companies  is an area which has recently been in the headlines.  One of the reason for this trend is the popularity of managed services trends. Telecom outsourcing has a huge potential for Pakistani technology industry as well. Currently there is no large IT company in Pakistan which competes globally for telecom outsourcing projects. Here are some of the recent mega deals in South Asia which have made global headlines:

As noted by Analysys Research, IT vendors such as IBM and HP are building on their IT solutions and equipment businesses to capture outsourcing deals in the enterprise telecom space. They have been working hard to develop strong service offerings and, in some cases, have even set up telecom practices within their service divisions. The illustration below from Analysys shows how telecom companies are positioned in the outsourcing chain. Note that in this post I am focussing only on the outsourcing BY telecom firms and not any work which is outsourced TO telecom firms.

In Pakistan most of the telecom technology solution deals seem to be happening with foreign technology product and solution providers - at least that is the impression one gets from the press releases and the media articles. Si3 is a notable company - it has offered payment solutions to many telecom providers in Pakistan. I do not know if Pakistani companies such as Techlogix, NetSol, TRG etc. serve the telecom vertical but I’m sure there must be other outsourcing (Technical, BPO or otherwise such as HR services)  from Pakistani IT companies. However one thing is clear: the scale of such business seems to be on the small side or the work is limited to certain hot areas such as call centers. Is this another sign that Pakistan lags behind in depth of skills and technical resources needed for larger telecom outsourcing deals?

Of course we cannot compare directly with giants like Tech Mahindra in India (see below) but there is room for improvement. Here’s a relevant article from The Times of India.

The phenomenal growth in telecom, combined with severe competition and cost pressures and rising customer expectations, is driving a slew of huge outsourcing deals in the sector.

The telecom outsourcing story started with the Bharti-IBM deal and then the Idea-IBM one. Now, analysts and industry expect several more similar 10 or seven year deals to conclude soon. Hutchison (Vodafone) Essar is said to be looking for an outsourcing partner. The market speculation is that it could once again be IBM, in a deal worth $1.6 billion. Reliance Infocomm is said to be in talks with companies like Accenture and EDS for a $1.5 billion outsourcing contract. Sources say Aircel is also in talks for a large deal.

About three years ago, Bharti Tele-Ventures had signed a 10-year contract worth $750 million to outsource its entire IT infrastructure to IBM. Idea Cellular followed, a few months ago, with a $800 million deal with IBM for consolidating and managing its IT infrastructure and applications.

Read more »

This post is a brief overview of the contact /call center industry in Pakistan. The contact center is an increasingly important part of today’s globalized economy. With outsourcing growing with full speed, more and more companies are relying on oustourced contact centers to provide service and more importantly, building customer relationship. Riding on this wave, Pakistan’s call center industry has been steadily growing. In recent news ZRG announced its deal with U-fone for the automated implementation of U-circle package.

According to Farrukh Aslam, president Call Centres Association of Pakistan (CCAoP), the call center industry crossed $20 million figure during 2005. However, the Pakistan industry is hampered by a lack of skilled manpower. “We can do much better,” said Nasir Lone, country manager, The Resource Group - a US-based private investment firm with a focus on the business of call centres and outsourcing. Pakistan Software Export Board (PSEB) has published a report: Setting up Call Centers in Pakistan. The objective of this report is to create awareness among existing and potential investors and venture capital companies to explore Pakistan’s IT sector for the growth of their business.

A BusinessWeek report from May 2005 titled “Better Late Than Never In Outsourcing” also points out some of the challenges and opportunities of outsourcing to Pakistan. According to this article:

Pakistan is trying to copy India’s success in luring IT work, but it’s slow going. “As a natural course, American companies would not look at Pakistan,” acknowledges Jehan Ara, president of the 250-member Pakistan Software Houses Assn. “So we have to get them to look at us, and once they do business with us and credibility is established, they come back for more.”

Some 120 centers have opened in Pakistan in the past two years. Today they employ 3,500 people, and that number is expected to grow by 60% a year. Arwen Tech, a Karachi company that runs a 600-seat center, saw its sales double last year, to $10 million, serving clients such as Pakistan International Airlines and the local franchisee for KFC Corp. Now the company is building a 1,500-seat facility and hopes to boost revenues tenfold, to $100 million, in the next five years as it attracts more international clients.

Pakistan may face a shortage of IT workers. About 75,000 people work in the sector today, and the government believes a further 7,000 will be needed each year to keep the industry growing at current rates. But the country’s tech schools produce just 5,500 graduates a year — and only about a fifth of those are competitive and well trained, the Software Export Board says.

To fill in the skill gaps, Indian companies are training Pakistani companies on business process outsourcing (BPO) and call center setup as reported here and here.

The industry faces many other challenges: there is the security issue and political environment is shaky. Then there was a raid on call centers which created tension. Read more about it here.

And last but not least let us not forget the Internet and communication outage of 2005. The cable outage caused widespread economic damage and disruption in Pakistan, with 3,000 staffers reportedly laid off among the roughly 30 call centers that did not have backup capacity. Nine call centers in Pakistan reportedly had backup satellite connections provided at no cost by the government. In 2007 the situation is much better with redundancy and fallback options - but still a long way to go before Pakistan becomes an established hub of contact centers.

The overall prospects for the contact center industry in Pakistan are pretty good. Solution providers like ZRG, TRG and Arwen Tech need to keep delivering and evolve to the next level of expertise to ensure continued success.

Resources:

• PTCL Tariffs for Call Centers
• Call Center Conference 2005
• Pakistan Call Centers
• News about Touchstone’s Cotnact Center Operations