What Ails the BPO Industry in Pakistan?

Re:anil#77

[..Therefore, I am optimistic that India and Pakistan can jointly fight terror as the common enemy. Rather than Pakistan identifying India as the common enemy alongwith the terrorists. When this change happens, terror looses institutionalization of terror against India. A big win for India, especially if India does not loose Kashmir in the process....]

Anil, your assumption is that in the future Pakistan will behave with India based on rational self-interest. History shows that it is a wrong assumption. The Pak establishment displays rationality and self-interest in all matters, except where India is concerned. With respect to India, it is atavastic historical impulses that governs the public psyche and state policy in Pakistan.

Even today Pakistan names its missiles as Ghauri, Abdali etc, who are external Islamic warriors who defeated hindus. Mind you, they are not naming them after normal muslim heroes or famous personalities, it is specifically named after people who slaughtered hindus. Secondly Pakistan has doggedly resisted opening trade and business ties with India, unless the Kashmir issue is settled to its satisfaction, even if it hurts its own economic interests. For instance, it imports tea from African countries rather than India, even if it means paying 10 times the costs. The only collaborative project it has ever signed up with India is the IPI pipeline from Iran, but there may be a hidden agenda there to get parity with India`s control over water flowing into Pakistan via controlling the energy inflow to India`s economy.

As far as fighting terror is concerned, we all know that Pakistan is a reluctant party to that process, having been pulled into it kicking and screaming. Its institutions i.e. the army and ISI are wedded to using jihadis. It is simply a matter of controlling the jihadi volume - high volume or low volume depending on international pressure and political objectives. Even now Pak is under the US radar again for sponsoring the Taliban revival in Afghanistan. Once the US retreats from this area, as it surely will in a post Bush administration (probably a Democratic one), it will not take long for Pakistan to ratchet up again. If it can revive the Taliban even with US threats, what will stop it from revving up Kashmiri jihad, once India makes some political concessions and opens up the LOC? Pakistan is waiting to see how much India will give up on the bargaining table before it falls back to its familiary strategy of jihad.

I guess all I am saying is that India must not get intoxicated by its economic success and start to minimize the very real threat to our interests from the west. We did that in the past and paid a drastic price for it. Eternal vigilance is the price for freedom. Lets sign peace deals and friendship treaties at a government level. No problems with that. But NEVER do two things - open up borders and/or relax visas with Pakistan. Any free movement of Pakistanis into India will be a disaster both for Kashmir and for our economic resurgence. We cannot trust Pakistanis to be good neighbors. It is as simple as that.

#79 by harish_hyd on January 31, 2007 2:19am PT

harish bhai...where have u been all this while. get to unplugged and see for yourself the kind of jack ass manto is making out of him self.

rgds,

devkant.

#78 by ranjit

Whoa!! Did Yasser really make that claim? If that is indeed so, the guy`s really gone nuts. To crow about his dad being able to afford a better car than Azim Premji! Premji has always been spartan with his own needs to the extent that he owns only a mid-size car (don`t remember which) and not a luxury car, and prefers to travel by cabs when not in his hometown or abroad.

One`s got to be really insecure to boast the way Yasser mian does. The truly great ones like Premji quietly go about their business.

Re:burpy#70

[.... friend Yasser Hamdani, who seems to be going steadily insane, crowing on unplugged that even his pop, a Mercedes sub-dealer, can afford a better car than Azeem Premji (estimated personal net worth: $15 billion) and that he himself (Yasser not Premji) bought a Honda City on a schoolteacher`s salary and is now considering a 40 lakh Merc-manufactured SUV, something no IIT graduate his age in India can afford....]

Burpy, in a few more days Yasser will claim that he is considering marriage with Aishwariya Rai... :-)

Anyone can boast about themselves on an anonymous forum. Who is verifying anything? And if he is indeed doing that well in Pakistan, good for him. Let him enjoy!!

Re: # 69
Ranjit:

I do understand what you are saying. Indeed WIPRO and INFOSYS are modern day Somnaths, economic temples are indeed more important.

However, I do question your Ghaznavi analogy with modern day Islamic terrorism. Ghaznavi was in power, terrorists are being hunted down world-wide. The strategy against terrorists is to deal with them as far away from your home as you can. It is for this reason; the U.S. probably will have a presence in Iraq and Afghanistan for some time. This requires another analogy of honey sting bees that are attracted to honeycomb, and you do not disturb the honeycomb, and keep the honeycomb as far as possible.

These sting bees are damaging Pakistan more than any other nation outside Afghanistan, Sudan and Somalia. There is a faith and tremendous international pressure on current Pakistani leaders of Musharaff and Aziz that they do see it too. Otherwise alternatives have been read to them like riot act that it can be bombed back to stone age. Therefore, they are sincere to cure their country from this cancer that the terror is to the Pakistani fabric.

Individual level jealousies are common among neighbors. The problem comes when jealousies do not convert into competitive forces and become instutionalized. Institutionalization creates leverage and increases the destructive reach of terror.

Indian government is doing the right thing to ensure that Pakistan takes steps to cut insurgency. There is a hope that Manmohan Singh will prove to be another Indira Gandhi in kashmir negotiations with Pakistan. You can say that she did not formalize LOC in writing as the international border, and therefore was not effective. Somethings are better left unwritten, as long as you have advantage. Even the world community made Pakistan move back to LOC after Kargil, what better can be an example of visionary negotiation of Indira Gandhi?

Pakistan for its own security must sweep terror traffic out of its heartland and at the most confine it near afghan border. Therefore, it is in Indian interest to cooperate with Pakistan to achieve it, as Pakistan will be a very big buffer state for India with common interests and dividends derived from ensuing stability. Something, the U.S. has not yet achieved in the Middle East, India and Pakistan can achieve it for mutual benefits. I for one do not susbcribe to Hindu-Muslim divide theory, however pursuasive arguments you make. Even Shivaji was aided by Muslims, and so was Maharaja Ranjit Singh. Hari Singh Nalva could not have captured Peshawar and march into Kabul. I do not know as much about Guru Gobind Singh. Likewise Bangladesh would not have been born in modern times.

Let us see what the terms of settlement for Kashmir problem are. Seeminlgy, Pakistani leaders have achieved consensus among Pakistanis during the recent AHPC visit to Pakistan. If in India, the settlement has support of BJP then majority of Indians will support, as they know BJP has a tougher position on Kashmir than Congress.

Therefore, I am optimistic that India and Pakistan can jointly fight terror as the common enemy. Rather than Pakistan identifying India as the common enemy alongwith the terrorists. When this change happens, terror looses institutionalization of terror against India. A big win for India, especially if India does not loose Kashmir in the process.

Interesting discussion - i have a slightly different perspective, as a customer. The people i have outsourced to in madras have a lot of native intelligence and are creative (i happen to know that they are products of ordinary, private engineering colleges) and hard working - but the code they write comes with little or no documentation and where such exists, it is almost indecipherable. They also seem unfamiliar with logic diagrams and such and rely almost exclusively on verbal communication. The positives outweigh the negatives so far. Oh, and there is cost saving as well.

Tatas are `very happy` after Corus win

LONDON: And so ends the winter of our discontent on a cold January night in the one square mile of the city of London. For Ratan Tata, it ends almost a four-month-old battle to conclude the largest ever Indian overseas acquisition.

And this is truly the mother of all deals. The Tatas walked off with Corus to become the world`s fifth largest steel company with an offer of a staggering GBP 6.2 billion for Corus in fully diluted equity value, plus adjusted debt of GBP 500 mn. The enterprise value of Corus is now at an astronomical GBP 6.7 bn.

In a midnight auction held in London, Team Tata beat Brazil`s CSN with a final bid of 608 pence per share in the ninth and ultimate round of bidding. Reports are that the initial rounds were a bit slow to take off, as the opponents circled around each other, but the final round was of sealed bids, in which the Tatas trumped CSN.

CSN`s last offer was of 603 pence a share, which was topped by the Tatas with the 5 pence differential stipulated by the Takeover Panel in the UK.

Speaking to TNN right after the auction, Anwar Hasan, managing director of Tata Ltd in UK, said that the bidding was tense and at many times hectic, but finally the mood in Camp Tata is ``naturally, very happy,`` at the outcome.

The auction, slated to go on for 10 hours, actually lasted about eight-and-a-half to nine hours.

Lord Karan Billimoria, the founder of Cobra beer and chairman of the Indo-British partnership network, said in a lighter vein that this would complete a phenomenal Indian `hat-trick` in the UK this week, after Shilpa Shetty winning Celebrity Big Brother on Sunday night, the successful visit of the FM on Monday, and now the Tata win on Tuesday night.

Going forward, this should be greeted with relief within Corus as well, although no spokesperson was available for comment. The company`s management had earlier strongly recommended the Corus bid, and the future of chairman Jim Leng and Philippe Varin was tipped by insiders to be stronger in a Tata regime.

For the city which tends to be deserted by 6 pm on weekdays, and plays host to Bollywood shootings in the evenings, Tuesday night was one of unusual and hectic activity.

At offices around London, the midnight oil burned - the Takeover Panel was conducting the emailed auction, a heartbeat away from the London Stock Exchange and St Paul’s Cathedral. In the shadow of the Big Ben, in Westminster, Corus` top brass monitored the event. Camp Tata was parked in Primrose Street, just off Liverpool Street, the hub of the growing financial clout towards the east of the City. CSN and its advisors were entering the fray from Lazard`s offices in London`s West End.

#67 by anil on January 30, 2007 8:49pm PT

well good for them..I have nothing but the best wishes for the Sri Lankan dudes..don`t know what the Indian law is but India should allow them to work in India for as long as they want..

have you visited colombo..it`s a very nice place..not third world at all..

as you already know, there is a huge difference between manufacturing lingerie and IT..a manufacturing unit requires investment, smart people running it at the top, half decent middle management and almost-half-decent workers...The IT market(leave aside call center, that`s not really IT) is quite different..It doesn`t matter if you are in India or China or the US..Based upon my experience, there`s only a very small % of the population that can ever be trained to cut half decent design, architecture and code....you need this critical pool to be leads, managers and architects....without these people, it`s hard to get a project off the ground..the problem with Sri Lanka was that the people who were good enough to be in such a role were all in the US or Europe...they just didn`t have the volume that India did....

The Indian boom story.. also played a large part in India`s success..When a lot of IT workers were here in the late 90s, the very people cab driving pakis mock, there was a level of confidence in them that was contagious..they were confident in themselves and in India`s prospects..I`ve lost track of the number of people who had good careers here but chose to go back for better things..there was even an article about it in the Washington Post..

#66 by taikonaut on January 30, 2007 8:23pm PT


Wipro only wins if the American division-chief vouches for them.


Yup..that`s right..that`s how outsourcing decisions are made..no bidding...no competition..no objective criteria..no cost-benefit analysis...

the horrible hindoo^TM running the American division vouches for Wipro and Wipro gets the work...

What amazes me is not that a paki is this deluded but that the majority of pakis probably agree with this...

nomanfaisal #68: ``I would like to disagree with this. If people who are educated/talented and are in position to make some positive changes in their motherland (even if it means some hit to the `bottom line`) and they dont and instead invest in real estate,``

any business system based on patriotism will crash eventually.....it will not allow a country to be competitive......a country has to attract capital and investment and skills through competition, and not through patriotism......relying on patriotism for such attraction is an acceptance of defeat......

......in the end it is people in pakistan who are going to make the software industry grow....not people sitting outsid....the indian giant offshore companies were built by people inside india, not be indian expats......tata, premji, hakku, murthy etc. all live in india and operated from india.......

.....if expat pakistanis are investing in real-estate and not in IT, it implies that real-estate offers them a good business model and security for a profit....while IT does not......this implies that the IT business models need to change.......

.....there is a whole ministry in pakistan catering to IT....what do they get paid for?....what is their achievement?......the only thing i have heard from them is the telecom boom.....however, if you dig deep into the telecom boom, you will realize that it is nothing more than people buying cell phones......it is nokia and motorola and warid etc. making money....not pakistan.....there is not value-add within pakistan into this industry....pakistan is not making cell phones.....at best this boom is simply employing some pakistanis in the industry and making lives more comfortable for day to day individuals.....nothing else.....

......now compare this to what has happened to banking......i specialize in software in the banking industry...so i have some knowledge of both......pakistani banks have actually had a revolution, in all aspects.......from the state bank down......they are more efficient, more customer friendly, less of a risk, far more automated and thus far far more profitable....to the point that everyone from malaysia to dubai to uk is lining up to buy them......you may be surprised to find out what hot property these banks have turned into....

.....i think the reason is simple....the correct people were appointed to the correct posts....shaukut aziz is one of the top south asian bankers in the world....for his age, perhaps the top.....ishrat hussain fixed state bank and automated it.......they brought in other bankers to lead the remaining banks........i gave a seminiar on risk and compliance in pakistan........within a notice of 24 hours, the hall was full, with bankers of all levels.......on the other hand, i presented at a software conference.........hardly anyone was there, even though it was advertised for weeks, with prominent indians speaking also.......

get the right people in the right positions....give them the freedom to execute and see what happens......i am not sure how someone with a feudal background and a degree in political science can run an IT ministry........

Except for the jihadist threat and the khaki shadows looming exclusively all over Pakistan, there is little difference between the two countries in terms of business climate, individual smarts, etc. Therefore, it is not too difficult to put the finger on the underlying cause of what ails the BPO industry in that country. The author has instead resorted to platitudes and to being wishy-washy and tried to cover up with euphemisms.

Re: # 36

Not to mention... (from Romair`s own post):
simiilarly, trg is nothing but the effort of one patriotic individual, zia chishti, who has established something in pakistan, against all odds.......technically speaking though, his company isn`t really a pakistani company....it has a very complicated set-up, spreading from us to bermuda(?), phillipines and pakistan.....if i understood his set-up correctly and remember correctly, there are actually only 9 employees who are officially part of trg pakistan.....

I am all for a prosperous Pakistan that doesn`t have the time or inclination to chase after Kashmir, but a little realism would help. This sort of hollow chest thumping makes you sound naive at best and disingenuous at worst. Not only did TCS make over a billion in the quarter gone by, it also crossed $250 million in profits for the first time. Infosys took 23 years to cross a billion dollars in revenue, but is going to end the FY 2006-07 at around $3.2 billion (a threefold increase in 2 years).

This is not rubbing in the face of the Pakis or anything of that sort, it`s a reminder of how much the industry is growing- its just the tip of the iceberg (TCS and Infy are largely IT services, the BPO market is much bigger- and both have not even come close to reaching their peak). It really amuses me to see guys like Romair trumpeting the virtues of the great behemoth TRG (with all of 9 pakistani employees) or friend Yasser Hamdani, who seems to be going steadily insane, crowing on unplugged that even his pop, a Mercedes sub-dealer, can afford a better car than Azeem Premji (estimated personal net worth: $15 billion) and that he himself (Yasser not Premji) bought a Honda City on a schoolteacher`s salary and is now considering a 40 lakh Merc-manufactured SUV, something no IIT graduate his age in India can afford (he is right in that- for a 30 year old BE working in India, I`d say even a Honda City would be a big investment).

Hamidm`s ``horrible hindoo`` posts are funny because you can see that he`s a nice guy just having some fun. But when supposedly ``serious`` interactors come up with such drivel, there`s little one can do but shake the head (sideways if you will) and sigh. Or snigger.

Re:anil#67

[....Pakistan needs to see business, and less emotions in its relationship with India....]

Anil, it will be fascinating to observe the geo-strategic impact of India`s growing economic juggernaut, not just in IT but in all sectors. As India`s success becomes unstoppable, how is Pakistan going to react? The hope is that Pakistan will reconcile itself to this situation, emulate India as much as it can and try to get ``spillover`` business.

However, the possibility also exists that Pakistan may get consumed by insane levels of jealousy and anger at Indian success. Given the zero sum nature of Pakistani mindset, they may view India`s success as a calamity and try their level best to sabotage India`s success. Terror attacks have already been tried out in Bangalore. Several prominent Pakistanis have hinted publicly at such a scenario. A couple of high profile attacks, especially on one of the IT business houses in Bangalore or Hyderabad, could severely damage India`s future prospects. Foreign investors and US companies do not like instability and risk.

The challenge to the Indian government is that any softening of relations with Pakistan will mean relaxation of visa controls. Indeed there have already been anouncements that the two countries will liberalize the visa regime. While that may lead to a positive effect, it could also provide a route for jihadis to get into India and wreck our booming economy. On the other hand, if India does not soften relations with Pakistan, it is also bad in the sense that it causes tensions to escalate, more jihadi actions at the border and overall geo-strategic instability due to nuclear standoffs. Therefore, either way, we Indians can get screwed - good relations leading to easy visas and possibly more terror in our IT hubs versus bad relations leading to more terror on the border leading to geo-strategic risk.

Therefore, the best solution for India would be to keep things cool with Pakistan but not let it go to the other extreme of pappi-jhappis. Lets not forget that Pakistanis still worship Ghaznavi who destroyed our Somnath temple, just like they will worship anyone today who destroys the modern day equivalent of Somnath - Wipro and Infosys.

Re: # 64
Bulleya,

I totally respect your position that business and Patriotism should not be mixed. If I am not wrong, our Ex PM Moeen Qureshi and our current PM Shaukat Aziz is of the same opinion. They do not invest in Pakistan at all.

I would like to disagree with this. If people who are educated/talented and are in position to make some positive changes in their motherland (even if it means some hit to the `bottom line`) and they dont and instead invest in real estate, than what does patriosim mean to them? Surely patriotism is more than getting teary when you hear national anthem. I dont mean to sound emotional. I think as few interactors pointed out, few econmies in the world are because of the strong lobbying by the ex-pats in north america.

Kind regards
Noman

Re: # 65

Arjun:

John Keells Computer Services is the company that I dealt about a couple of years ago, just before the Tsunami. John Keells is like Tata Group of Sri Lanka, the largest public limited company on Colombo Stock Exchange. The entire island produces about 1,000 engineering graduates each year, therefore, island based growth is limited, hence their strategy. Another company I had some dealings produces 30% of Victoria`s Secret langerie. They are actuely aware the sooner or later Victoria`s Secret will enter Indian market, and their production will disappear. These guys are quite proactive and sooner rather than later are setting up plants in India, and also trying to gain advantage through SAFTA, the free-trade agreement with India.

Sri Lankan are quite astute, and acutely aware that they have to faster on their feet, or gain advantage through SAFTA etc. Therefore, if SAFTA allows the factory in Sri Lanka to produce the langerie for Indian markets. The executives I dealt are highly professional, and have no problem to give a sob story of David Sri Lanka vs Goliath India to American corporations when this will work. After all I remember when Sri Lanka did have a cricket team with test status, and now they do beat India quite easily. Sri Lanka`s tea industry is again more efficient than India`s. The business wins when there is cold business professionalism than emotionalism. Pakistan needs to see business, and less emotions in its relationship with India. Everyone benefits.

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#63 by bulleya on January 30, 2007 4:50pm PT
...yes, these months were quite interesting.....pakistan has had a boom in two areas: banking and telecom (and real estate and stock market, but those are a bit different).....

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That`s correct!

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#63 by bulleya on January 30, 2007 4:50pm PT
.......for some reason, software development never took off......i think the reason is the incorrect business model that i mentioned earlier........pakistan should discard off-shore development now......it is a lost field......why would citibank give a contract to an unknown pakistani company, when it can give it to wipro?.......

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That`s totally wrong. Without naming names, one of the major US company had bad experience with an Indi-company. On the insistence of their division-chief (of Pak origin) they sent the same contract to Pakistan. The result of $million business for Pak, and the same company sent more work from other divisions.

As long as Pakistani Americans are buried deep in Islamism, Pakistani companies will suffer. Wipro only wins if the American division-chief vouches for them. The sheer numbers of pro-West Indian-Americans win business for Wipro and co.

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#63 by bulleya on January 30, 2007 4:50pm PT
.......the correct model is to concentrate on the domestic market and on indian (and chinese etc.) spillover....

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Domestic market in Desi countries (both Indi and Pak) is geared towards European-style in-house development instead of US-UK style outsourcing. Almost all the local CIOs (or equivalent) want to hire people and keep them under their thumb. Unfortunately the top IT-talent is not willing to suffer the baboo-style work environment.

The second issue with local market (or Indi-Cheeni market) is the margin. It becomes very hard for local companies to bid at rock bottom prices and still retain the talent pool.

How would you feel if you are suddenly moved from working at a high-paying State of Maryland project to a 1/20th pay while working at State of Sindh project? I bet the next day you will get PIA ticket out of the country.

The same is true with Indi or Cheeni market. Their own labor is so cheep, that Paks have hard time bidding for such projects.

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#63 by bulleya on January 30, 2007 4:50pm PT
....i have come up with a solution to this, which i am presenting to an indian company with whom i may be doing some contracts soon.......let`s see how it goes......

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Best wishes!