Outsource to Pakistan

DESTINATION OF CHOICE

Strategically located in South Asia, Pakistan is at the crossroads between Eastern and Western Asia. With three major international airports and thirty-eight domestic airports, Pakistan is accessible via fifty international airlines. Pakistan’s geographical location, a rapidly expanding transportation and communications infrastructure and an environment conducive to business makes it an attractive destination for investors.

Pakistan is fast becoming the destination of choice for a significant number of international IT/ITeS companies looking to relocate their operations offshore. The ready availability of skilled professionals, an appropriate IT infrastructure, and affordable rates for connectivity result in considerable time and cost savings for entrepreneurs.

Pakistan is shaking off decades of “also-ran” status. Funds invested into building educational institutions in Pakistan (when there were not enough jobs to absorb all the graduates from those institutions) are paying off as Pakistan begins to field a modern, highly productive labor force that is the envy of more prosperous but less tech-savvy nations elsewhere in the region.

8 REASONS

Pakistan is emerging as the destination of choice for IT outsourcing in Pakistan for the following reasons:

An IT workforce of 133,000 with good English language and people skills growing at a phenomenal rate of almost 20,000 a year.
A hundred and ten ISO-certified IT companies, with over 25 undergoing CMMI rating.
A reliable digital telecommunications infrastructure with backup and reliable energy and transport networks.
An ambitious program of world-class IT Parks, with a rental rate of approx. US$1 per sq ft /month.
A prosperous economy that offers lucrative domestic opportunities and is attracting increasing amounts of international investment.
A steadily improving risk rating and a tightening environment for intellectual property protection.
A streamlined government regulatory process of one of the most attractive incentive programs anywhere, which includes tax exemptions, 100% foreign equity and earnings repatriation.
International leaders such as BearingPoint, NCR Teradata, Mentor Graphics and ZTE have chosen to locate their development and consultancy center in Pakistan.

GOVERNMENT INCENTIVES

In order to promote its IT industry, the Government of Pakistan has provided several incentives to investors. The establishment of a reliable IT infrastructure and the provision of an incentives package are instrumental in the development of the local IT industry.

Other benefits provided to the IT companies are in the form of tax holidays for 15 years and 100% foreign equity ownership. Because of these incentives, an increasing number of foreign IT companies have chosen Pakistan for their outsourcing operations. Some of the areas in which the Government is facilitating the private sector companies include:

Information Technology Parks with low rent, fiber optic connectivity, libraries and conference rooms
Provision of funds for software companies to get ISO-9000 and CMM-level certifications
Foreign investors allowed 100% ownership of equity in “IT/ITeS companies” Details
Tax exemption for IT companies till 2016
100% repatriation of profits allowed to IT companies
Seven years’ tax holiday for Venture Capital funds
The rate of depreciation on computer equipment is 30%
The State Bank of Pakistan (SBP) has allowed the opening of Internet Merchant Accounts by banks
Instant, reliable and high-speed connectivity available
Over 85% of telecommunications infrastructure is on fiber optic cables
Internet access is available in over 1862 cities/towns across Pakistan
Pakistan is the first country in this region to establish DWDM telecommunications infrastructure
Several cellular companies are using digital transmission (GSM and TDMA)
The cost of 2 Mbps connection has been lowered to US$ 1000/month
Redundant backup connectivity is available through PTCL for call centers.

INFRASTRUCTURE OVERVIEW

Pakistan 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 laid 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.

The following statistical indicators depict reliable and vibrant growth in Pakistan’s ICT infrastructure:

A total of 12 LDI licenses have been awarded to various companies. PTCL earned a record profit of Rs. 74 billion during 2004-2005 from this transaction.
Cellular penetration has reached 15.5 million, achieving a growth rate of 156% in one year; it is expected to grow more than double next year.
Total lines installed are 5.5 million fixed and 17.3 million mobile subscribers. This has resulted in an enhanced tele-density of 13.7%, which is 3% more than India’s.
In 2004, the number of Internet subscribers in Pakistan was 2 million; this has now increased to nearly 10 million. Over 1900 cities and towns are currently connected to the Internet.
132 ISP licenses have been awarded to ISPs, out of which 70 are operational, and a broadband policy has been announced for ISPs in Pakistan.
279,320 wirelesses PCOs are earning a marginal profit in Pakistan.
17 companies have been awarded WLL licenses. There are presently 267,363 WLL subscribers in Pakistan.

INVESTMENT POLICY

Pakistan’s Investment Policy At A Glance

All economic sectors open to foreign direct investment.
Equal opportunities for local and foreign investors.
100% foreign equity allowed.
No Government sanction required.
Attractive tax/tariff incentives package.
Remittance of royalty, technical & franchise fee, capital, profits, and dividends allowed.
Foreign Private Investment (Promotion & Protection) Act, 1976.
Protection of Economic Reforms Act, 1992
Foreign Currency Accounts (Protection) Ordinance, 2001
Tax exemption for IT companies till 2016 (the Government of Pakistan has given tax exemption on income from export of computer software and related services)

Source: PSEB

Five Advantages of IT outsourcing to Pakistan over India and other countries.

Western experience: Executives at IT firms in Pakistan often have worked and gone to school in the U.S., which is Pakistan’s largest export market. Indian IT firms whose managers have worked in the West are generally more expensive than similarly positioned Indian IT firms, without always providing noticeable differences in program implementation capabilities. The willingness of Pakistanis to return home from the West stands in marked contrast to most Indians who arrive for school or work in the West and never look back.
Professionalism and integrity: The personal integrity of Pakistani IT professionals and managers is easy to identify and appreciate, especially by Westerners with business experience elsewhere in the region. However, the relatively open and trusting nature of Pakistani professionals working in IT firms has made them easy prey for Indian IT business brokers who have managed to cheat several Pakistani IT firms by offering to provide them with outsourcing contracts in exchange for up-front fees. The Pakistanis assumed that these Indian IT professionals and business owners were open minded and charitable for coming to help less experienced IT companies in Pakistan gain access to international contracts, until the Indians took their money and disappeared.
Higher labor availability: Fewer holidays in Pakistan means less slippage in staff availability compared to Indian companies. Compared to Pakistani IT companies, IT firms in India are advised to hire a diverse workforce so that members of one community can enjoy important festivals while members of other communities cover the phones and keep production going.
Good accents: Pakistan’s official language is English. Language skills and accents provide Pakistan with a major advantage over all other Asian outsourcing destinations.
Low cost talent pool: India’s top-tier labor force for IT work has been stretched thin in many areas, especially Bangalore, where escalating wage rates, turnover and higher outsourcing prices are reaching critical mass at the same time that the urban infrastructure Relevant Products/Services from Sybase ASE Linux Express Edition – FREE has exceeded its carrying capacity. Annual turnover rates reported to InternationalStaff.net for most merchant call center Latest News about call center facilities in India at the beginning of November are approaching 100 percent. High turnover rates are causing a shift to second tier Indian cities and to Kolkata. Escalating turnover rates are one of the Indian outsourcing industry’s dirty secrets. In comparison, outsourcing services of Pakistan’s top-tier talent pool is largely untapped and turnover rates are less than 20 percent.