56
SOFTWARE HOUSE PROJECT
SUBMITTED TO:
MR. FAROOQ JAMAL
SUBMITTED BY:
AMEER ABDULLAH KHAN 06-NTU-063
SHOAIB IQBAL 06-NTU-095
TAHA BIN YAHYA 06-NTU-095
TABLE OF CONTENTS The Rough Idea_____________________________________________________________________________________________11
Objectives__________________________________________________________________________________________________11
Market Analysis_____________________________________________________________________________________________12
Estimated Size of IT Industry___________________________________________________________________________________________12
Software & Services Sector with 61% Growth for 2008 – 09__________________________________________________________________12
Employment of Professionals by 41% Growth_____________________________________________________________________________12
Segmentation_______________________________________________________________________________________________________14
We are____________________________________________________________________________________________________________16
We target__________________________________________________________________________________________________________17
Where We are______________________________________________________________________________________________________18
Demographic Segmentation___________________________________________________________________________________________19
Psychographic Segmentation__________________________________________________________________________________________19
80/20 Principle______________________________________________________________________________________________________19
Philosophies________________________________________________________________________________________________20
Product Philosophy__________________________________________________________________________________________________20
Marketing Philosophy________________________________________________________________________________________________20
Societal Philosophy__________________________________________________________________________________________________20
Quality Standards & Assurance_________________________________________________________________________________________21Product Philosophy____________________________________________________________________________________________________________21Post Sale Customer Care________________________________________________________________________________________________________21Customer Care_______________________________________________________________________________________________________________ 21Relationship & Core Concept____________________________________________________________________________________________________21
Market Research Analysis_____________________________________________________________________________________21
Environment Analysis_________________________________________________________________________________________22
Company__________________________________________________________________________________________________________22
Competition________________________________________________________________________________________________________22
Customers_________________________________________________________________________________________________________22
Macro-Environment__________________________________________________________________________________________22
Demographic & Economic_____________________________________________________________________________________________22
Technological_______________________________________________________________________________________________________23
Marketing Mix______________________________________________________________________________________________23
Product Classification________________________________________________________________________________________________23
Product Mix Modification_____________________________________________________________________________________________23
Brand_____________________________________________________________________________________________________24
Name_____________________________________________________________________________________________________________24
Logo______________________________________________________________________________________________________________24
Slogan_____________________________________________________________________________________________________________24
Brand Effectiveness__________________________________________________________________________________________________24
Product Branding____________________________________________________________________________________________________24
SWOT Analysis______________________________________________________________________________________________24
Strengths__________________________________________________________________________________________________________24
Weakness__________________________________________________________________________________________________________25
Opportunities_______________________________________________________________________________________________________25
Threats____________________________________________________________________________________________________________25
Buyers_____________________________________________________________________________________________________25
Actual_____________________________________________________________________________________________________________25
Potential___________________________________________________________________________________________________________25
Level of Marketing___________________________________________________________________________________________25
Entrepreneurial_____________________________________________________________________________________________________25
Product Classification_________________________________________________________________________________________25
Industry @ a glance__________________________________________________________________________________________26
Software/BPO______________________________________________________________________________________________________26
WHY PAKISTAN_____________________________________________________________________________________________28
Well Connected!____________________________________________________________________________________________________28
The New Frontier in Low-Cost and High Quality Project Development:_________________________________________________________29
Join Pakistan_______________________________________________________________________________________________________29Putting the Capital in Human Capital______________________________________________________________________________________________29
Wealth of Affordable Human Capital:___________________________________________________________________________________29
Opportunities Abound:_______________________________________________________________________________________________30
A Dynamic and Vibrant Economy:______________________________________________________________________________________30
The World Is Doing Business With Pakistan:______________________________________________________________________________30
PAKISTAN__________________________________________________________________________________________________31
PAKISTAN: KEY METRICS & INDICATORS__________________________________________________________________________31
THE INDUSTRY TODAY________________________________________________________________________________________33
EMERGING TRENDS IN THE INDUSTRY___________________________________________________________________________33
IT Policy of Pakistan:_________________________________________________________________________________________________34
Human Resource Development:________________________________________________________________________________________35
Infrastructure Development:__________________________________________________________________________________________35
Software Industry Development:_______________________________________________________________________________________36
Hardware Industry Development:______________________________________________________________________________________36
Internet Policy:______________________________________________________________________________________________________36
Government Incentives:______________________________________________________________________________________________36
Tax and Regulatory Incentives:_________________________________________________________________________________________37
A superior Telecom Infrastructure:______________________________________________________________________________________37
Powering IT Growth through Pro-active Telecom policy:____________________________________________________________________37
Islamabad- The New Software Capital of the World:________________________________________________________________________38
Software Technology Parks:___________________________________________________________________________________________38
Low Operating Costs:_________________________________________________________________________________________________38
IT Promotion and Awareness:__________________________________________________________________________________________39
IT Usage:___________________________________________________________________________________________________________39
Legislation:_________________________________________________________________________________________________________39
Regulations:________________________________________________________________________________________________________39
Main Idea__________________________________________________________________________________________________40
Prospecting Projects_________________________________________________________________________________________________41Supporting Fresh Graduates, Students & Free Lancers:________________________________________________________________________________41Data Base for Institutions_______________________________________________________________________________________________________41
Technical Analysis:___________________________________________________________________________________________41
Labor______________________________________________________________________________________________________________41The pros:____________________________________________________________________________________________________________________41
Location and Size:___________________________________________________________________________________________________42
Machineries and technology___________________________________________________________________________________________42
Software House capacity:_____________________________________________________________________________________________42
Input Constraints____________________________________________________________________________________________________42
Methodologies______________________________________________________________________________________________________42
Projects in Controlled Environments____________________________________________________________________________________42
Software House Sequence_____________________________________________________________________________________________43
Financial Analysis____________________________________________________________________________________________44
Cost of Project______________________________________________________________________________________________________44
Means of Financing__________________________________________________________________________________________________44
Projections_________________________________________________________________________________________________________44Financial Projections:__________________________________________________________________________________________________________44
Bibliography:_______________________________________________________________________________________________46
Let us start in a way to express gratitude to Allah (saw) Who blesses the mankind with an immeasurable power of intellect and perception.
The well-organized team work is much appreciable and we are also really thankful to all those who put their congenial cooperation and efforts for the compilation of this directory.
There were many names but we prefer to choose one name whose guidance and moral support has never left us alone throughout our life at NTU. He is always there as our mentor and a source of motivation for us, a sincere, humble and true thanks to Anna, MBA(LUMS).
We would close our words of acknowledgement with great thank and gratitude to all those names are beauty to this project. Thanks to all those who played their role in the best way.
The Rough IdeaWe will provide software to companies and especially industry. We can provide these on custom demands but our specialty is
Accounting and business software. Office and human resource management systems.Textile software.
ObjectivesServing the industry. Bringing more value to investments. Provide exposure at international levels. Provide solutions to run business according to the local requirements. Lowering our dependency on international companies.
METASH is the software house which is concentrating on Pakistani projects specially to participate in development of Pakistan thus enhancing IT value and strength in country.
Market AnalysisThe Pakistani IT & ITES industry today has an impressive story to tell. Much like the successful startup that one would have not heard of a few years ago but is all of a sudden the talk of the town. The Pakistan IT and ITES industry has started to appear on the radar of firms like Gartner and IDC and in reports by AT Kearny and the World Bank. It is a transformed industry growing exponentially and creating a stir.
Estimated Size of IT IndustryFrom its nascent beginnings in the late 1980s, the industry has successfully arrived to a point where its value proposition has been validated over and over again. The largest members are grossing 15-25 million dollars in revenues, and receiving 100 million dollar valuations. Most tech companies are growing in excess of 30% a year annually. The industry as a whole is doing over 2 billion dollars a year in revenue, up from less than a billion dollars a few years ago.
Software & Services Sector with 61% Growth for 2008 – 09About half of this growth is coming from foreign, software and high end services projects. IBM, Cisco and Microsoft are expanding Pakistan operations aggressively while several startups are now backed by VCs such as e-Planet Ventures, Motorola, and Adobe.
Employment of Professionals by 41% GrowthSectors and countries have achieved in 15-20 years, Pakistan’s technology scene is poised to achieve in less than a decade.
Putting it all together, the Pakistani Technology industry is very different from what it was in the early 1990’s. From 4 founding companies in 1994, PASHA’s current membership exceeds 1082 apart from 60 foreign software companies. From 4,619 full-time employees in 2004, current employment is at 110,000 (15,000 attached directly to software export) and rising with a total direct investment of more than 8.2 billion US dollars.
The number of QA Professionals has doubled in the last 3 years and 20% of those employed in the sector are foreign qualified. There are almost 20,000 professionals being produced every year.
Fast becoming a hub of high performance business, the questions now asked are if growth this year will be 28% or 50%, if there will be enough skilled HR to staff demand, if there will be enough office space available next year.
Segmentation
High-Investment
Big-Scale
Quality & Standards Conscious
Businesses & Industry
Textiles IT & Telecom Chemical Agri-
Based Others
We are
Business
Service Industry
Customer FOcused
We target
Human Resource Management
Accounting & Banking
Finance
Management
Customized
A sia
P a k ista n
P u n ja b
F a isa la b a d
D -G ro u n d
Where We are
Demographic SegmentationAs discussed earlier, we will industry which have high investment and are big-scale i.e. they have a large no. of staff & workers, inventory level and input/output. This is because the smaller firms do not have enough finance to and also they do not have the major need of automation of the processes. While the big firms are in High need to smoothen and fasten the process by freeing the staff from handling and managerial duties.
Psychographic SegmentationPakistan is stepping into the Global Table (previously called Global Village). The companies are entering the international market. To survive and compete with others, they are in high need of standardizing their processes, focus on quality, and increase their efficiency by effectively considering and focusing the production process.
Also the generation which is currently controlling the industry is literate in business mostly from globally recognized business institutes. They are hiring people which are specialized in the management and marketing process. These people require specialized softwares to do this efficiently. Also the top management is interested in this to follow international business methods.
80/20 PrincipleThis is to every bit true about software industry in Pakistan. 80% of industry is not in the state to change the long-going process they are already following or at least they are reluctant to do so or at least they are reluctant to do so.
Only 20% of the industry & business is considering this. They are willing and investing in the automation of the industry and the business process. But this is good as this is resulting in higher profit rates for them which is not only enforcing them to invest more but also urging others to follow up.
Philosophies
QualityFeatures
Product
RelationshipAdvertisement
MarketingFree LancersFresh Graduates
Societial
We will follow the three marketing management Philosophies as follows:
Product PhilosophyMainly we will follow the Product philosophy i.e. we will focus on the features and quality of the products. We will introduce the latest concepts and technologies in IT industry and follow the modern business trends and methodologies. We will achieve this by hiring Free Lancers with innovative ideas and fresh-graduates with adequate knowledge of modern technologies.
Marketing PhilosophyWe will sell our products by marketing. We will achieve this by building close relationship with the industry and employers. We will do this by seminars, visits and expos.
We will also do the proper advertising online. We chose the online media just to enforce image of our segment.
Societal PhilosophyWe will hire free lancers, this will help us in having the latest and innovative features at lower cost and will also enhance our image.
One other focus will be to hire fresh graduates. This will help us ensuring the use of latest technology. But this will enhance the image of our company as we will support and attract hem by certification and experience certificates. This will also help
us as they will take our name to companies and industry, which permanently hire them.
Quality Standards & Assurance
Product PhilosophyAs discussed earlier, this will be our main target. We will always focus on it and by no mean, compromise on it.
Post Sale Customer Care We will empower our customers by giving them all minor updates free of all cost. This gets them the access to all updates having a version change in decimal i.e. from X.0 to X.9.
Societal Marketing
Society (Human Welfare)
Company (Prices)
Consumers (Want
Satisfaction
Customer CareWe will also provide them full access to our Marketing and Technical Departments. We will be available all the time and will provide in-time help & support due to local availability.
Relationship & Core ConceptWe will keep a close relationship with the customer. This will help us make us recognize and gain attention in industry resulting in indirect marketing. This will also help us in getting close to customer thus recognizing their needs and providing appropriate solutions.
IndustryAs discussed, we will keep in contact with the industry. This will be achieved be arranging seminars and making visits to industry. We will also book good locations during industrial and IT Expos.
EmployersAs our main targets are free-lancers and fresh graduates, we will have to take enormous steps to get with them. We will have to arrange seminars in different universities of Pakistan. Also we will have to run our Ads on social websites and those attracting the youth.
Market Research AnalysisWe will have to do market research on large scale as the industry and It world is changing every moment in Pakistan. It will be achieved by our Relationship strategy. As taking it to step further we will develop questionnaires and will get them filled from the industry. It will have following sections.
Total InvestmentInventory Level & GodownsHuman Resources i.e. workforceDepartmentsCustomersSoftware needs & DemandsCurrently Using Softwares
Environment Analysis
CompanyMETASH is a customer focused, society-based software house set to fulfill the needs of the industry in Pakistan. It will develop the softwares needed in Pakistan. It will use the enthusiasm found in the next generation. We will allot the projects to them and they will be managed by professionals. We will support them with money and others.
CompetitionThere is not so much competition in Pakistan. But there is high competition being faced due to industrial software companies. They are big giants having good repute and a large amount of resources.
In Pakistan only two companies are registered with P@SHA for software development.
Business Beam Pvt. Ltdhttp://www.businessbeam.com
NC Inc.http://www.ncinc.com.pk
CustomersIndustry and related businesses will be targeted. In Pakistan will be focused as they are in high need of this and are ready to accept it with some exceptional cases but due to the globalization, they are being faced to accept it as soon as possible.
Macro-Environment
Demographic & EconomicIndustry working on large scale will be targeted. They are ready to and mostly using the industrial softwares and thus it will be easy to attract them but the only problem that will be faced is loyalty. It is very high in software industry. If a company changes its software, it requires training on high scale, so they prefer to stick to already ones they are using.
On the other side, companies that are stepping into globalization and are expanding are easy targets but they are very much conscious about the investment and it can be a big hurdle in targeting them.
Companies that are small and are having lesser investment cannot be targeted as they do not have enough resources to target these.
TechnologicalIt is a great opportunity as the technological factor is very less in Pakistani industry. They are not very advanced. Also the software houses in Pakistan are not very advanced and mostly do not target the needs of industry on general basis.
Their focus is just to produce customized software house.
The companies in Pakistan have a high need of industrial softwares and they demand is increasing day by day.
Marketing MixOur product mix will have different product lines but we will provide only one product in each line. This is to avoid cannibalization. Also this will help customer as we will provide all his need in one package and he can choose the features according to his requirements.
HRM(Minerva- Brochure Attached)
Accounting & BankingFinanceManagementCustomized
Product Classification
Homogenous products means that we will provide same product for each category / segment. This will ease customers in choosing the product and us by focusing on features instead of grouping features in different packages.
Our softwares will not fit into general needs and will be specializes according to the industrial needs.
Product Mix ModificationWe will have to modify out product on regular basis to fulfill the industry needs. Our modification will be only feature based i.e. we will always
HomoGenous Speciality
introduce new features in the softwares but we will make sure that we never compromise on quality.
BrandNameWe will work under the name of METASH.
Logo
It represents that we hold and support you by and fulfilling all your needs.
SloganYour One Stop Multi Solution Provider
Websitehttp://www.metash.com.pk/
Brand EffectivenessOur Brand Name is a short form of
Management, Engineering, Technical & Automation Software House
It represents all fields we are in.It represents our multi-directionality.It follows the modern trend in naming.
It is an attention catching word.It is easy to remember and pronounce.The logo is simple & easy to remember and comes to mind often especially the colors play an important role as the most common colors are used.
Product BrandingAll the products will have individual brand name. it results in following benefits:
Earn higher profitsLess pressure to mark down pricesWe can drop or introduce any product anytime.We will make sure that all product brand names represent the core philosophy of the company as “MINERVA by METASH” does.
SWOT AnalysisStrengths
Fresh talent & New conceptsDue to fresh graduates
Modern TechnologyFree-Lancers
Cost effectiveProduction in Pakistan
Local availability24/7 Customer Service
On-time Help & supportFree Updates
All minor VersionsComprehensive
One Product for all needs of a specific segmentLegal Liabilities
New industry in Pakistan so very less legal liabilitiesGovernment Support
To support this industry, Government is providing enormous support
Banking & Insurance SupportAll insurance companies and Banks require the usage of Insurance Policies & Loan Sanction.
WeaknessUnconsciousness
Industry is not conscious about these softwares.Reluctance
The industry is not ready to acceptLow trust in Local Sector
Industrialists are not ready to invest in local industryNew name & Loyalties
Industrialists are loyal to software companies and are not ready to change
OpportunitiesModernization
Industries which are modernizing
Economic FactorCustomization
We provide customized software to fulfill industrial needs
ThreatsBig giants
There are large competitorsInternational Software houses
BuyersActualIndustry in Pakistan
PotentialCustomer Related Businesses
Level of MarketingEntrepreneuriali.e. we will do personal marketing by relationship, references and seminars etc. These type of products usually are not sold by formal ads. Also we do not ads to reach everyone as we are related to a segment only.
Product ClassificationOur products are business focused.
Industry @ a glance
Software/BPO
WHY PAKISTANPakistan is the gateway to Central Asia, the Gulf, and Far East. Rapid urbanization has resulted in the workforce of our country being education in various specialized concerns, and proficient in Urdu, English, and many other languages spoken worldwide. Our country is one of the fastest growing economies of the world. Today Pakistan has 160 million consumers with an ever growing middle class. Foreign investment has risen sharply. Liberalization, de-regulation, Privatization, and facilitation are the foremost cornerstones of the Current investment policies.
Well Connected!Over 15 million internet users by September 2006 with 7.2% penetration130 ISP licenses have been issued connecting 1900+ cities and towns3500+ internet cafés are in operation300 Billion Rupees spent on internet and communication services in the last two yearsOver 50 Million cell phone users in the countryAlmost 50 national and international airlines serving millions of passengers annually5 international and 20 domestic airportsOver 250,000 kilometers road network country-wide
Over 52 Million passengers using country wide railway network per annum.
Located at the foot of Himalayas off the depths of the Arabian Sea, Pakistan is centrally located at meeting point of East and West. While its Northern Areas offer routes - both geographical and political - into the uncharted economies of Central Asia and the fast growing economic giant - China, its southern shores offer unencumbered traffic to and from Australia, South Asia, the Far East, Middle East, Europe and Africa.
With a new road planned to China and unrestricted access to Central Asian States, Pakistan offers a viable base for expansion in to emerging markets. Securely located in one of the world's most commercially and politically strategic areas, Pakistan today offers a gateway into any and every conceivable medium. As the country grows by leaps and bounds, we invite you to grow by gigabytes, megahertz and terabytes!
The New Frontier in Low-Cost and High Quality Project Development:Completely customizable outsourcing models… On hand highly trained resources…
Send your work in the evening; get it the next day… When people the world over are enjoying
the benefits of working with Pakistan. Why don’t you benefit from cost and time saving in a hassle free environment?
Join Pakistan
Putting the Capital in Human CapitalPakistan's Government is cognizant of the value of its labor pool, and even more conscious of the importance of value-added skills information. With Pakistan’s entry into the digital age, Pakistan’s population growth is being outdone by its massive investment in human capital.
Within the past two years, the Government of Pakistan has:
Committed almost Rest. 1.5 billion to the development of human capital.Distributed nearly Rs. 1.1 billion to over 45 human capital projects.Set up facilities that will impart training in a host of value-added skills and services to over 30,000 students
Areas of Training:Systems Integration (Such As Microsoft, Cisco)Business Applications (Such As Oracle)Networking (Such As Linux)Web Design and Development
Quality Assurance and Testing Tools.Net, Flash, PHP and Many OthersEstablished a fund that caters annually to over 4,000 graduate and post-graduate students, specializing in Information TechnologyBegun the process of training the entire spectrum of government servants in the use of Information Technology, as specific to their area of work/expertise.
Wealth of Affordable Human Capital:Pakistan's population, one of the youngest in the world has consistently provided the country with its greatest wealth - a steady stream of skilled labor.
The demographic profile of the country ensures that it will be supplied with a continued and growing labor pool.
In Particular:
33% of Pakistan's total labor force of 41.2 million workers is composed of urban labor.Over 43% of Pakistan’s population is below 15 years of ageThe skilled urban labor force of Pakistan is over 15 million, strong and growing.
Opportunities Abound:There are clear and obvious advantages of doing business in Pakistan. Low costs, a wealth of trained professionals and a government actively engaged in creating a facilitative and enabling environment.
Areas for Which Pakistan Should Be Considered:
Customized Software DevelopmentEnterprise Application Development and MaintenanceOffshore Call CentersOffshore Back End Support and ServicesTranscription ServicesBusiness Process ImprovementSystems IntegrationProduct DevelopmentPerformance TestingOutsourcing and Quality Assurance
A Dynamic and Vibrant Economy:Since attaining freedom in 1947, sustained economic growth has been a hallmark of Pakistan's Economy. The country has never experienced negative growth. Indeed, the new millennium has only served to whet the economy's appetite for growth. Countless consumer goods, financial, insurance and
technology firms have set up shop in Pakistan. Now more than ever before, Pakistan offers a low cost, high quality Information Technology Frontier
The World Is Doing Business With Pakistan:Leading edge firms are doing business with Pakistan, some of which are listed below:
CitibankNortelCisco SystemsABN-AMROMerrill LynchHSBCSiemensIntelMotorolaEricssonMicrosoftOracleCompaqUnileverProcter and GambleBritish PetroleumShell
PAKISTANPakistan has a well-developed communications infrastructure, and a high degree of computer literacy, coupled with innovations in software
development. Its improved service delivery mechanisms, and a growing appreciation of international quality standards, serve to emphasize Pakistan's suitability as a destination of choice for global companies seeking to offshore their business activities.
Pakistan offers state-of-the-art technology and infrastructure for establishing a world-class ICT setup. Its telecom infrastructure is 100% digital, and provides a robust backbone for providing mission-critical services, such as call centers, ISPs, software houses, voice and video conferences. The fiber optic infrastructure, initially lay during the early 1990s, now accounts for well over 85% of the backbone that supports international and national data exchange. More than 40 Pakistani cities are currently interconnected through fiber optic exchanges, and there are nearly 2950 digital exchanges.Tele-density is steadily increasing, and the Wireless Local Loop (WLL) sector is now open to private sector investment. Broadband licenses are open to ISPs since 2004.Pakistan offers the most competitive bandwidth charges in the whole Asia Pacific region. A dedicated E1 circuit is currently
available at the cost of US$ 2000 only. Pakistan is using 1700 MB of bandwidth for Internet traffic, which is 2.42 times greater than the bandwidth used in 2005.
Pakistan provides strong protection for foreign investors, ranking 19th worldwide on protecting investors, according to the World Bank report Doing Business In South Asia 2008.
PAKISTAN: KEY METRICS & INDICATORSIn 2007, Gartner released a report titled, “Analysis of Pakistan as an Offshore Service Location” which placed the country in the First Category destinations and also acknowledged Pakistan’s labour costs to be 30% lower than India’s, with Telecom costs the lowest of any outsourcing destination.
The same year a World Bank report on ease of doing business ranked Pakistan at number 2 in South Asia and at number 74 globally in a group of 159 countries.
Besides telecom and lower costs for highly skilled HR, there are some key competitive advantages that Pakistan enjoys which has put it on the fast track as an upcoming global destination for technology product and services.
To its global clientele, the industry offers a vast and growing skilled English speaking population, an impressive HR development program, a conducive policy environment, 100 percent ownership of equity and repatriation of the foreign investors’ profits as well as tax exemption on these investments and exported software until 2016. The cost of setting up and doing a business is relatively low, lower than China and India.
The country is also investing heavily in creating human resource to meet the needs of the future and has one of the world’s most ambitious programs to invest in higher education. (30,000 private sector university graduates, 150,000 total university graduates a year).
From a macroeconomic perspective, the country has shown solid fundamentals in the last five years with strong GDP growth averaging more than 6% per annum. The Karachi Stock Exchange with more than 600 listed securities and an active trading history boasts the lowest listing costs in the region.
Attracted by the country’s strong economic sectors and demographic fundamentals, a number of multinationals, venture capitalists and angel investors have been attracted to the country. A multinational angels network with roots in Boston
and Karachi has been launched and a number of venture funded cross border transactions realized.
Direct foreign investment is booming. Companies like Etisalat – the state-owned Telecom provider of the UAE and one of the leading brands in the Middle East, acquired a majority stake in the country’s largest telecom provider, PTCL for $2.6 billion in 2007. Other companies entering or expanding in Pakistan include Orascom of Egypt, OmanTel, Telenor of Norway, Cisco, Dell and China Telecom, Bank Nomura, Barclays, Standard Chartered Bank, IBM, Oracle, SAP, HP, Microsoft, NCR and Terrada.
THE INDUSTRY TODAYIn 2006, the 85 companies surveyed for this study recorded a global revenue impact of $716 million. That figure grew to about $909 million in 2007 – a growth rate of over 15%. This puts the estimated overall global revenue impact of the entire industry at well over $1 billion mark.
In 2006-2007, these 85 companies also recorded domestic revenues of $269 million. This was a 39% increase from $193 million in 2006, showing an even stronger demand for IT products and services locally.
This increase points to an important, fast growing trend. As domestic customers demand for higher quality software and services increases, several companies that previously focused on foreign-only clientele now look to addressing these needs and treat this opportunity as a significant revenue source.
In terms of products and service offerings, as many as 68% of companies describe themselves as IT-services companies, about 40% as IT consulting companies, and around 27% as business process outsourcing companies.
EMERGING TRENDS IN THE INDUSTRYAs the industry evolves, market forces and customer demands have shown similar patterns emerge amongst players. Expect these trends to enforce over the next year as the shift to the domestic market gathers pace as customers in Pakistan demand a greater number of services ranging from Software, BPO, ERPs and Data centers.
Trend # 1
Driven by domestic demand for IT product and services, the mix of domestic and export revenues
have grown from 40:60% in 2004-5 to 52:48% in 2007.
Trend # 2
A number of companies have jumped into the Systems Integration business using well-established platforms to deliver client value. These companies are well funded, have drawn back Pakistanis from abroad, and built up strong infrastructures and expertise in key enterprise areas such as ERP, BI, Storage, Networks and Hardware, and are comparable to the IBMs and Accentures of the world. They compete regularly against multinational SI firms for some of the largest domestic contracts each year. With domestic customers demanding standard enterprise solutions instead of the “let’s build our own ERP” approach, these companies are revving up for even greater demand of their services.
Trend # 3
The importance of domain expertise, intellectual property and idea content in new start-ups has increased. A number of innovative, product based and web 2.0 start-ups is on the rise. Supported by senior entrepreneurs, mentors, angel investors and Barcamp style events such as P@SHA’s Startup Insiders, more graduates are looking for
funding and launching start-ups as opposed to joining the workforce as employees. The MIT sponsored MITCEF business acceleration plan, TiE, and TAN (Technology Angels Network) have also helped in taking startups to the next level.
Trend # 4
The industry’s love affair with India-obsessed low cost all-purpose custom software house business model is over. Led by TRG, Techlogix, Sofizar, Pixsense and NetSol, the industry has begun using innovative business models to build ‘unfair’ advantage, high end skills and products for foreign clientele.
Trend # 5
While there are certainly some individual success stories in the low cost voice business arena, the industry has to a large extent moved away from the volume driven low-margin voice-based business into functional BPO which is higher value. The domestic market is also fueling BPO grown especially in the areas of Help Desk, Call center operations for banks and telcos as well as utility companies.
IT Policy of Pakistan:Information Technology (IT) has assumed unprecedented importance in the Global Economic Arena. In Pakistan, the present government is according a very high priority to this sector. One of the prerequisites for ensuring sustained growth of the Industry, maybe the Economy, is the provision of a definite framework consisting of Policy, Legislative, Financial, and Operational Guidelines, which can provide a stable umbrella for growth.
Thus, the Government, as the main facilitator, enabler, and promoter of the IT Sector, has evolved an effective National IT Policy and Action Plan that clearly caters to the needs of nurturing the Industry and is responsive to the dynamic forces of change that can affect its future growth. The Private Sector is being brought into the mainstream as the main driver for growth. The guiding theme for the Policy is that 'The Government shall be the facilitator and enabler to encourage the Private Sector to drive the development in IT and Telecommunications'. This one single element has galvanized the entire Pakistani IT Community to participate wholeheartedly in the process and over 200 Professionals mainly from the Private Sector participated in various dialogues and eleven
working groups meetings over the last four months to devise a comprehensive Policy and Action Plan Document.
The vision of the policy is to harness the potential of Information Technology as a key contributor to the development of Pakistan and the broad-based involvement of the key stakeholders is a must for its sustainable development. Core IT Policy Strategies have been proposed under several focus areas and some of the lead recommendations in each area are as follows:
Human Resource Development:Human Resource (HR) development is imperative for the local IT Industry to position the country as an important player in the international IT Market. Under the Hr Action Plan, a large pool of academically as well as technically skilled IT manpower would be developed to meet the local and export needs. The policy accordingly envisages the establishment of four new IT Universities, Virtual IT University, National Testing and Accreditation Services and Educational Intranet, strengthening of existing IT Institutes and hiring of faculty from abroad. A major portion of the funds under the IT action plan would be dedicated towards hr development initiatives.
Infrastructure Development:The local IT Industry requires a world class enabling infrastructure. An exercise for deployment of this infrastructure would be undertaken and a series of IT Parks and Incubators across the country would be established. These parks will be equipped with modern facilities and matchless incentives, to provide a one-stop shop for prospective investors in the IT Industry. Telecom infrastructure would be modernized to carry broadband access in the backbone and local loops. Other steps include the establishment of IT boards in Provinces (except Punjab where it exists already), increasing tele density and the introduction of new technologies such as Wireless Local Loop for data and cable internet.
Software Industry Development:Software development is a high growth industry and forms a major segment of the vast IT market and will continue to do so in the future. Integrated efforts to develop software industry with focus on exports (in addition to the local market) would be undertaken. this would include encouragement of local software houses to participate in government projects, local content development, Urdu and regional language software development, promotion of software exports
through establishment of international marketing network, special bandwidth rates for software exporters, encouraging joint ventures, hiring of international consultants for global business development and fiscal and regulatory incentives for software exporters through the state bank of Pakistan.
Hardware Industry Development:The Policy recommendations in the area of hardware industry development do not seek to initiate aggressive competition with the developed countries. Rather, they focus on developing the areas that are within Pakistan’s reach, in terms of technology and resources and in which the country could have a competitive advantage. Major recommendations include the waiver of duties and taxes on the hardware, incentives to reduce the cost of raw material and inputs, encourage and fund research and development in the universities and engineering colleges through faculty chairs, matching grants and focused joint projects.
Internet Policy: The internet is likely to continue to revolutionize the way people communicate and access information. The basic principles adopted for the Internet growth in the country would be to
encourage competition, avoidance of un-necessary regulations, provision of low cost, reliable and broadband Internet access, universal internet access in the areas connected with the telecom network, free internet access for public sector universities and support for the development of national internet content.
Government Incentives:The government has invested in various fiscal and non-fiscal incentives to nurture, develop, and promote the use of IT in organizations, to increase their efficiency and productivity. The strategies focus on promotion of venture capital industry through incentives, recognition of software development as a priority industry for financing by the banks and DFIs, creation of investment friendly environment, building investors' confidence and changes in rules to allow the technology companies to be listed on stock exchanges of Pakistan.
Tax and Regulatory Incentives:The government of Pakistan guarantee to facilitate profitability, and efficiency for investors in information technology every step of the way.
15 year corporate tax exemption for information technology companies.
100% repatriation of profits allowed to IT sector companies.100% foreign equity allowed in IT sector.0% custom duties and tariffs on import of all IT related equipment.7 year tax holiday for venture capital funds.0% income tax liability for software development firms.0% sales tax liability on sales of computer software and hardware.
A superior Telecom Infrastructure:Pakistan's telecom is among the world's widest covering and most sophisticated. Fiber optic infrastructure, initially laid in the early 1990s, now accounts for well over 85% of the backbone that supports international and national exchange of data.
The government has proactively worked with the national telecom giant, PTCL, to reduce rates, improve access, and increase the level of quality that is delivered. Voice-over-IP and other related auxiliary services are being integrated into the core of the telecom industry.
Perhaps most importantly, the telecom sector is to be fully de-regulated in January 2003.
Powering IT Growth through Pro-active Telecom policy:
Bandwidth costs reduced, from $60,000 to $6,000 a month for E1 circuits.Rapid response delivery mechanism in place-leased lines delivered in 8 weeks or earlier.Internet access expansion from 29 cities in August 2000 to over 1000 cities and towns by December 2003.Activation of 155 Mbits IP connectivity.De-regulation of internet delivery on cable TV full permission granted.DSL deployment in local loop for broadband internet access.Introduction of calling party pays (CPP) regime to boost wireless telecom resulting in explosive growth.License processing time period for telecom services reduced to 7 days.Enhancement of infrastructure for IT/ISPs (PRIs and Digital Cross Connect).
Islamabad- The New Software Capital of the World:Islamabad, the capital, described by foreign journalists as the virtual Shangri-La of world capitals. Ranked among the best cities of Asia, by Asia week Magazine.
Offering unlimited supplies of low-cost labor, bandwidth, real estate, and most significantly, Pakistan's first Software Technology Park.
Software Technology Parks:The jewels in Pakistan's IT profile crown, software technology parks were initiated to provide a haven of highly sophisticated, technologically robust, low cost centers of excellence in software development. Due to high demand, the initial phase of the establishment software technology parks has been followed up with detailed plans for new facilities.
Pakistan's software technology parks offer one-stop, one-window solutions to the logistical and functional requirements for setting up an IT business in the country.
Low Operating Costs:Commercial real estate: less than US$ 1 per sq foot, in the tech-enabled, highly sophisticated software technology parks.Included in this rent, air-conditioning, security, power generation services.Residential real estate: 3-bedroom houses/apartments in the upscale localities of urban Pakistan, average under US$ 300 a month.
Internet bandwidth: US$ 6000 per month for 2Mbit connections.Cellular phone charges: unlimited incoming, outgoing calls under US$ 0.10 a minute.Electricity charges: commercial rates under US$ 0.10 per kilowatt-hour.Average salaries for IT professionals under US$ 6000 per annum.Average salaries for clerical staff under US$ 2000 per annum.
And the most important reason why you should do business in Pakistan is also the simplest one. It costs less, far less, to do business here, than anywhere else.
IT Promotion and Awareness:A massive IT promotion and awareness campaign would be undertaken. The national strategy includes provision of continued support and funds by the Export Promotion Bureau (EPB) for the participation in world IT/ computer trade fairs, exchange of delegations, posting of IT specialists in embassies and consulates, promotion of IT use by the head of the government, ministers, and all other key figures who can influence public opinion at all public and private forums, declaration of the next fiscal year as 'IT Year' and organization of
special events during the current year including national and international exhibitions.
IT Usage:To embark on an aggressive program to improve efficiency and provide quality services to the citizens of Pakistan, IT would be inducted at all levels of government. Key projects thus launched would include Government Online, Electronic Governance Project and E-Commerce Network.
Legislation:To provide protection and enhance the confidence of users, providers, and facilitators of information services, legislation based on the recommendations of the working group comprising IT and legal experts would be framed. Action in the areas of Digital Signature Act, Intellectual Property & Copyright Act and the Consumer Protection Act, has been started. The government should seek legislative approval of changes to statutes that will encourage electronic commerce and revise statutes that mandate a paper-based or manual process.
Regulations:A regulatory framework is essential to avoid violating policy goals and direction. It would be
ensured that excessive regulations do not stifle industry investment and growth. In devising a useful regulatory framework, the focus would be on creating a fair, equitable and competitive environment, based on the principles of free market and open access.
The IT Action Plan is an integral part of the IT policy. The Action Plan provides a framework for implementation of the IT Policy which includes priority areas, specific projects that can be conceptualized, formulated, assessed, prioritized and implemented. The implementation of the Action Plan is very much dependent on the funding provision for the IT & telecommunications division and the mechanism from project approval to funds release so that projects could be implemented in a timely fashion to achieve the desirable results in the shortest span of time. A separate mechanism for expeditious project appraisal by experts' committees, approval and funding under National Scientific and Technological Research and Development Management Fund has been developed and would be submitted separately to the cabinet for approval.
The main allocation of funds has been foreseen for training, re-training, human resource
development and provisioning of enabling infrastructure. There are a host of other incentives, which could be done at low or no cost, which include changes in governmental processes, legislation, administrative elements, incentives and rules. Some of these have already been submitted to the relevant quarters for approval whereas others are in the pipeline. A system of monitoring, surveying and compiling statistics on the extent and growth of the IT sector will also be devised to provide reliable data for planning and evaluation purposes and to set up performance indicators. The IT Action Plan will be implemented according to its well-defined phased targets and objectives. To ensure that the plan meets its objectives consistently and that suitable midcourse corrections can be incorporated in a timely manner, a mechanism will be set up involving the government, private sector, academia and other national representatives to coordinate and implement the policy and plan elements and provide strategic supervision over the longer term. The IT Policy and Action Plan being a dynamic document, would be subjected to formal review under this mechanism every six months, with more area-specific monitoring carried out on a monthly basis.
Main IdeaOur main idea is to open a software house in Faisalabad. We will have mainly two departments.
Prospecting Projects
Supporting Fresh Graduates, Students & Free Lancers:Our main focus will be on hiring fresh university graduates teamed with students and leaded by professionals. In return they can be provided with pays, certificates and training seminars. This will help us capturing the fresh ideas as well as boost the talent. We will also launch Free Lancing Projects which will offer us best at lowest cost.
Departments
Direct Projects Out sourcing
Data Base for InstitutionsBasically concentrating on the projects and solutions for institutions like Educational, Medical and Business Growing Institutes.
Technical Analysis:
LaborA professional software house normally consists of at least three dedicated sub-teams:
business analysts who define the business needs of the market software designers/programmers who creates the technical specification and next do codingsoftware testers who are responsible for the whole process of quality management
The pros:each person has full knowledge and innovative ideas about the full production cycle people are doing various tasks what makes especially young people excited about their work there is a very good possibility to manage the work load especially in crisis situations like "all hands on pump"
Location and Size:Our software house will be situated in main D-Ground, Faisalabad. Size of our software house would be approximately 2 acre.
Machineries and technologyWe need to install high quality machinery. For this purpose we will import our computers from Dell, as they also provide installation and after-sale Professional Technical Help & Service.
Software House capacity:We will arrange 24-hours open at our software house and employees will have morning and night shifts. So we can increase the production capacity of our software house and ultimately more people will get employment. Basically, Due to students and free-lancers, who work from home, the whole process will be carried out online.
Input Constraints Biggest constraint is load shedding. For this purpose we will have to arrange laptops and UPS for in-house staff. For others, as they work from home, we need not any featuring. This might increase our cost but not too much as we will not have that much in-house staff.
MethodologiesSoftware house may use a number of various methodologies to produce the code. These can include:
the waterfall model, including project management methodologies like PRINCE2 or PMBoK agile software development, such as Extreme Programming and SCRUM There are also some methodologies which combine both, such as the spiral model, RUP or MSF.
Projects in Controlled EnvironmentsWe will mainly follow PRINCE2. (Projects in Controlled Environments)
Software House SequenceThe sequential working of our Software house with the team and procedures of IT is given in pictorial form:
Financial Analysis
Cost of ProjectThe estimated cost of project is Rs.30 Million according to proposal research and market study.
Means of FinancingPartner’s Equity:
Mr. Farooque Jamal will invest Rs. 30 Million.
Projections
Financial Projections:Three years projected profit and loss and balance
Start-Up Expense
Expense Heads Amount in RsLegal 50,000
License 25,000Marketing 100,000Furniture 500,000Fixtures 200,000
ComputersHardware
LaptopPrinter
ProjectorNetworking
Broadband (PTCL EVO)-TOTAL
10 x 69,9002 x 49,9001 x 81,4901 x 32,99010 x 1,000= 923,280
SoftwaresMS Windows
Antivirus suiteMS Office
Corel SuiteAdobe Compendium
AutoCADMSDNOthers
10 x 17,49010 x 1,70010 x 27,8905 x 89,8325 x 211,4215 x 334,60210 x 211,421= 5,764,285
EquipmentsStationeryTelephone
500,000
ResearchDevelopment
=Total
300,000700,000
=1,000,000Rent Advances and Rent 1,000,000
Cars (Suzuki Liana) 4 x 1,230,000Van (Suzuki APV) 1,710,000Cell (Nokia E72) 3 x 34,000Other expenses 5,000,000
Total Start-Up Expense 21,794,565Website-1 year (2000 + 4000)
Employees(5 + 3)- 6 months
[(50,000 x 5) + (15,000 x 3)] x 6
Required cash in hand 8,000,4435TOTAL 30,000,000
Bibliography:
Resources from where the primary research work
is done
www.pasha.org.pk
IT professional of NADRA and Plexus (Pvt)
Limited
www.wikipedia.com
QuotationsLaptop
bit.ly/DI1464Printer
bit.ly/HPM1522Projector
bit.ly/AP1266Networking
bit.ly/BLKNN1PTCL EVO
Ptcl.com.pkMS Windows 7
bit.ly/MSWIN7
AntiVirus Suitebit.ly/escanASS
MS Office 2007bit.ly/MSOf07
Corel Suitebit.ly/corelP
Adobe Compendiumbit.ly/AdobeP
AutoCadbit.ly/AAC2010
MSDNbit.ly/MSDN08
Locationbit.ly/OFFDGF
Suzuki AVPbit.ly/SAPVPP
Suzuki Lianabit.ly/SLIANA
Nokia E72bit.ly/NE72PP
Web hostingwww.webhostingpakistan.net`
