An Analysis of The Software Industry In Pakistan
Faraz Hoodbhoy September 6, 1997
#4 Posted by msarwar on June 11, 2001 12:29:29 am
Can Russia’s techies mimic India?
http://www.msnbc.com/news/502330.asp
Fledgling “offshore programming” firms pop up and prosper
By Rebecca Santana
MSNBC CONTRIBUTOR
June 11,2001
MOSCOW — Barely anyone came to work on a bright autumn day at one of Russia’s biggest software development companies, but that was perfectly fine with management. Business is doing so well, the company moved into new office space and many employees stayed home while the move took place.
“IT USED to be a factory producing some big construction materials, and it is still a factory but producing software,” said Dmitri Loschinin, managing director of Luxoft, which employs 220 people in its production staff.
Luxoft is one of a growing number of companies developing software for mainly foreign clients, an industry often referred to as offshore programming. India leads the field in offshore programming, but Russia possesses the fundamentals to compete for market share if the country overcomes certain obstacles.
Although there are no official statistics, insiders estimate that Russia will generate somewhere between $70 million and $100 million in revenues from its “offshore programming” operations this year and employ around 3,500 full-time programmers. Many others, especially university students, will work as freelance programmers.
“There’s no downside to bringing this offshore development to Russia. It doesn’t pollute the air. There are no health risks. Maybe your eyes will get bad sitting in front of the computer too much, but it’s such a major jobs creation,”
— MATTHEW IGEL
Kelly Services in Moscow These numbers are tiny compared to India, which generated $6 billion in revenue in 1999, but Russia’s offshore programming industry is growing at 50 to 60 percent a year, according to a McKinsey Global Institute report.
One of the main reasons Russian companies are attracting business is their low costs, which make it cheaper to outsource business to Russia than simply hiring programmers and moving them to the United States. The main centers are located in Moscow, St. Petersburg, and the Siberian city of Novosibirsk where there is a wealth of educational institutes as well as good communications infrastructure.
Alexander Egorov, CEO of St. Petersburg based Reksoft, one of the oldest offshore programming companies in Russia, says Russian companies charge about $40 for an hour’s work compared to $90 to $120 in Europe and the United States. Russian programmers make $300 to $1,500 a month depending on experience and skills.
The low wages almost make one forget this is a country that put the first person in space and still has an education system emphasizing mathematics and science that made such a feat possible. Last spring, a team from the prestigious St. Petersburg State University beat out teams from Cal Tech, MIT, and Harvard to win the International Collegiate Programming Contest World Finals.
“The traditionally limited computer resources in Russia make Russian programmers more creative in their solutions,” said Dan Dougan from St. Petersburg based Jensen Technologies. To put it more bluntly, Russian programmers can’t afford to buy their own computer so they put it together by hand.
But Russia is lacking many of the incentives that made India such a powerhouse, including special government sponsored schools to teach programming languages, tax incentives and subsidies.
“Don’t even speak about it or I’ll cry!” said Egorov. “That’s why India will sell software near to $6 billion this year and the whole Russia industry will sell near $120 million. That’s the difference.”
``The president plays tennis? Everyone plays tennis. The president started to talk about offshore programming, said it three times, everyone became terribly interested,`` says Anatoly Karachinsky, who is sometimes referred to as Russia`s ``internet oligarch.
Many companies, though wary of too much government involvement, are optimistic that the Russian government may be moving in the right direction. Anatoly Karachinsky, president and CEO of IBS, which spun-off Luxoft, said Russian President Vladimir Putin is supportive of the idea and other government leaders, are falling in line.
“The president plays tennis? Everyone plays tennis. The president started to talk about offshore programming, said it three times, everyone became terribly interested!” said Karachinsky.
But-deservedly or not-the country has an image problem. Russia’s international reputation as a snow-covered Wild West where legal protection for intellectual property rights-as well as just about all other rights-are flimsy and easily violated, rattles many foreign companies. Surprisingly, says Jim Hitch from the St. Petersburg branch of the Baker & MacKenzie law firm, Russia has all of the right laws in place.
“The difference between Russia and the U.S. and other countries is really not what’s written in the laws but how they’re enforced,” says Hitch. He added that foreign companies can minimize their risk when doing business with Russia.
Getting foreign companies to overcome their hesitations of doing business with Russia is one of the main obstacles to offshore programming, says Pavel Cherkashin, president of Moscow-based Actis Systems.
Getting foreign companies to overcome their hesitations of doing business with Russia is one of the main obstacles to offshore programming, says Pavel Cherkashin, president of Moscow-based Actis Systems.
“We have to prove a lot that a Russian company in theory can be a good partner,” said Cherkashin. “If we can sell the concept of Russia, it’s 2/3 of our own sale.”
Quality control and proper management are other factors that make Russia a hard sell. Russia trails far behind India in the number of companies certified to assure consistent quality. Only one Russian company has an ISO 9000 certification — one of the globally recognized measures of quality, according to the McKinsey Global Institute report. India, on the other hand, has 109 certified companies.
Another concern is the level of management skill in Russia. While computer programmers are abundant, managers to guide them are not. Only a handful of Russian offshore programming companies employ more than 80 programmers, partly because there aren’t managers with the skills to coordinate that many people.
But none of these problems seem insurmountable. Most of these companies are growing at a very quick pace, which means more jobs and more money for Russia.
“There’s no downside to bringing this offshore development to Russia,” said Matthew Igel, general manager of Kelly Services in Moscow, who recruits IT personnel for offshore programming companies. “It doesn’t pollute the air. There are no health risks. Maybe your eyes will get bad sitting in front of the computer too much, but it’s such a major jobs creation.”
http://www.msnbc.com/news/502330.asp
Fledgling “offshore programming” firms pop up and prosper
By Rebecca Santana
MSNBC CONTRIBUTOR
June 11,2001
MOSCOW — Barely anyone came to work on a bright autumn day at one of Russia’s biggest software development companies, but that was perfectly fine with management. Business is doing so well, the company moved into new office space and many employees stayed home while the move took place.
“IT USED to be a factory producing some big construction materials, and it is still a factory but producing software,” said Dmitri Loschinin, managing director of Luxoft, which employs 220 people in its production staff.
Luxoft is one of a growing number of companies developing software for mainly foreign clients, an industry often referred to as offshore programming. India leads the field in offshore programming, but Russia possesses the fundamentals to compete for market share if the country overcomes certain obstacles.
Although there are no official statistics, insiders estimate that Russia will generate somewhere between $70 million and $100 million in revenues from its “offshore programming” operations this year and employ around 3,500 full-time programmers. Many others, especially university students, will work as freelance programmers.
“There’s no downside to bringing this offshore development to Russia. It doesn’t pollute the air. There are no health risks. Maybe your eyes will get bad sitting in front of the computer too much, but it’s such a major jobs creation,”
— MATTHEW IGEL
Kelly Services in Moscow These numbers are tiny compared to India, which generated $6 billion in revenue in 1999, but Russia’s offshore programming industry is growing at 50 to 60 percent a year, according to a McKinsey Global Institute report.
One of the main reasons Russian companies are attracting business is their low costs, which make it cheaper to outsource business to Russia than simply hiring programmers and moving them to the United States. The main centers are located in Moscow, St. Petersburg, and the Siberian city of Novosibirsk where there is a wealth of educational institutes as well as good communications infrastructure.
Alexander Egorov, CEO of St. Petersburg based Reksoft, one of the oldest offshore programming companies in Russia, says Russian companies charge about $40 for an hour’s work compared to $90 to $120 in Europe and the United States. Russian programmers make $300 to $1,500 a month depending on experience and skills.
The low wages almost make one forget this is a country that put the first person in space and still has an education system emphasizing mathematics and science that made such a feat possible. Last spring, a team from the prestigious St. Petersburg State University beat out teams from Cal Tech, MIT, and Harvard to win the International Collegiate Programming Contest World Finals.
“The traditionally limited computer resources in Russia make Russian programmers more creative in their solutions,” said Dan Dougan from St. Petersburg based Jensen Technologies. To put it more bluntly, Russian programmers can’t afford to buy their own computer so they put it together by hand.
But Russia is lacking many of the incentives that made India such a powerhouse, including special government sponsored schools to teach programming languages, tax incentives and subsidies.
“Don’t even speak about it or I’ll cry!” said Egorov. “That’s why India will sell software near to $6 billion this year and the whole Russia industry will sell near $120 million. That’s the difference.”
``The president plays tennis? Everyone plays tennis. The president started to talk about offshore programming, said it three times, everyone became terribly interested,`` says Anatoly Karachinsky, who is sometimes referred to as Russia`s ``internet oligarch.
Many companies, though wary of too much government involvement, are optimistic that the Russian government may be moving in the right direction. Anatoly Karachinsky, president and CEO of IBS, which spun-off Luxoft, said Russian President Vladimir Putin is supportive of the idea and other government leaders, are falling in line.
“The president plays tennis? Everyone plays tennis. The president started to talk about offshore programming, said it three times, everyone became terribly interested!” said Karachinsky.
But-deservedly or not-the country has an image problem. Russia’s international reputation as a snow-covered Wild West where legal protection for intellectual property rights-as well as just about all other rights-are flimsy and easily violated, rattles many foreign companies. Surprisingly, says Jim Hitch from the St. Petersburg branch of the Baker & MacKenzie law firm, Russia has all of the right laws in place.
“The difference between Russia and the U.S. and other countries is really not what’s written in the laws but how they’re enforced,” says Hitch. He added that foreign companies can minimize their risk when doing business with Russia.
Getting foreign companies to overcome their hesitations of doing business with Russia is one of the main obstacles to offshore programming, says Pavel Cherkashin, president of Moscow-based Actis Systems.
Getting foreign companies to overcome their hesitations of doing business with Russia is one of the main obstacles to offshore programming, says Pavel Cherkashin, president of Moscow-based Actis Systems.
“We have to prove a lot that a Russian company in theory can be a good partner,” said Cherkashin. “If we can sell the concept of Russia, it’s 2/3 of our own sale.”
Quality control and proper management are other factors that make Russia a hard sell. Russia trails far behind India in the number of companies certified to assure consistent quality. Only one Russian company has an ISO 9000 certification — one of the globally recognized measures of quality, according to the McKinsey Global Institute report. India, on the other hand, has 109 certified companies.
Another concern is the level of management skill in Russia. While computer programmers are abundant, managers to guide them are not. Only a handful of Russian offshore programming companies employ more than 80 programmers, partly because there aren’t managers with the skills to coordinate that many people.
But none of these problems seem insurmountable. Most of these companies are growing at a very quick pace, which means more jobs and more money for Russia.
“There’s no downside to bringing this offshore development to Russia,” said Matthew Igel, general manager of Kelly Services in Moscow, who recruits IT personnel for offshore programming companies. “It doesn’t pollute the air. There are no health risks. Maybe your eyes will get bad sitting in front of the computer too much, but it’s such a major jobs creation.”
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#3 Posted by mohajir on November 3, 2000 9:45:46 pm
http://news.indiainfo.com/2000/11/03/pakit.html
Indian techies to help Pak IT sector
Nov 03, 2000 18:20 Hrs (IST)
Bangalore: A group of Indian information technology (IT) entrepreneurs based in the United States said on Friday that they will set up offices in Pakistan to promote the country`s nascent IT sector.
``TiE is not concerned with political, religious and cultural issues. Entrepreneurship unites and not divides,`` Raj Popli, vice-chairman of The Indus Entrepreneurs (TiE), told reporters on the sidelines of a technology conference in Bangalore.
India and Pakistan have fought three full-scale wars since independence from Britain in 1947 and nearly came to blows again last year over the disputed Himalayan region of Kashmir. But this has not phased TiE, a network of IT entrepreneurs and professionals of Indian origin based in California`s Silicon Valley.
TiE advises tech entrepreneurs on raising capital, runs businesses and fosters entrepreneurship, and counts some of the biggest names in the global IT industry among its members.
Popli said the group would open offices in the Pakistani cities of Lahore and Karachi in February 2001. The organization currently has 22 offices around the world, he added.
Pakistan recently unveiled plans to invest up to 15 billion rupees ($250 million) in the next two years to promote the tech sector, including establishing a virtual university and seven other regular universities focused on information technology.
Pakistan`s software exports are worth something in the region of $30 million to $50 million, compared with India`s annual exports of $4 billion in 1999/2000 (April- March).
Indian techies to help Pak IT sector
Nov 03, 2000 18:20 Hrs (IST)
Bangalore: A group of Indian information technology (IT) entrepreneurs based in the United States said on Friday that they will set up offices in Pakistan to promote the country`s nascent IT sector.
``TiE is not concerned with political, religious and cultural issues. Entrepreneurship unites and not divides,`` Raj Popli, vice-chairman of The Indus Entrepreneurs (TiE), told reporters on the sidelines of a technology conference in Bangalore.
India and Pakistan have fought three full-scale wars since independence from Britain in 1947 and nearly came to blows again last year over the disputed Himalayan region of Kashmir. But this has not phased TiE, a network of IT entrepreneurs and professionals of Indian origin based in California`s Silicon Valley.
TiE advises tech entrepreneurs on raising capital, runs businesses and fosters entrepreneurship, and counts some of the biggest names in the global IT industry among its members.
Popli said the group would open offices in the Pakistani cities of Lahore and Karachi in February 2001. The organization currently has 22 offices around the world, he added.
Pakistan recently unveiled plans to invest up to 15 billion rupees ($250 million) in the next two years to promote the tech sector, including establishing a virtual university and seven other regular universities focused on information technology.
Pakistan`s software exports are worth something in the region of $30 million to $50 million, compared with India`s annual exports of $4 billion in 1999/2000 (April- March).
#2 Posted by mohajir on April 26, 2000 1:02:13 am
Los Angeles Times
India, for instance, has 4.1 million technical and scientific workers and is churning out an additional 70,000 computer programmers and developers a year, said Navtej Sarna, spokesman at the Indian Embassy in Washington.
India, like Malaysia, Israel and other nations, is beefing up its high-tech sector ``with an eye toward attracting high-paying jobs from the U.S. and other developed nations,`` said Harris Miller, president of the Information Technology Assn. of America.
Mahboob Akhter, a Pakistani native who lives in Orange County, knows the hidden talent overseas. He first made extensive contacts in India and Pakistan in the mid-1990s while working at another U.S. firm.
As president of Focus Software International in Tustin, Akhter has sent much of his company`s software development work to India and Pakistan over the last three years.
Focus Software employs 15 Indian programmers, who are subcontracted through an Indian firm. Akhter said outsourcing saves him at least 30% on labor costs, part of which he passes on to customers.
``I`ve been happy with the results,`` he said. ``Programmers have been able to deliver the projects on time and [with] good quality.``
India, for instance, has 4.1 million technical and scientific workers and is churning out an additional 70,000 computer programmers and developers a year, said Navtej Sarna, spokesman at the Indian Embassy in Washington.
India, like Malaysia, Israel and other nations, is beefing up its high-tech sector ``with an eye toward attracting high-paying jobs from the U.S. and other developed nations,`` said Harris Miller, president of the Information Technology Assn. of America.
Mahboob Akhter, a Pakistani native who lives in Orange County, knows the hidden talent overseas. He first made extensive contacts in India and Pakistan in the mid-1990s while working at another U.S. firm.
As president of Focus Software International in Tustin, Akhter has sent much of his company`s software development work to India and Pakistan over the last three years.
Focus Software employs 15 Indian programmers, who are subcontracted through an Indian firm. Akhter said outsourcing saves him at least 30% on labor costs, part of which he passes on to customers.
``I`ve been happy with the results,`` he said. ``Programmers have been able to deliver the projects on time and [with] good quality.``
#1 Posted by Shahzad Khan on August 2, 1999 7:29:46 am
An excellent article Faraz. I totally agree with your conclusion that our problem in Pakistan is mostly with management.
However, the new breed of professional managers from LUMS and IBA may get into this field. I would watch out for the LUMS MBAs who will be graduating next year, some of the ones that completed their undergrad in computer science with me have a very strong technical background and have stepped into the MBA programme.
We need people who can keep projects on track. Who can understand the users needs and know the limits of the technology. We also need to let our people know what the productivity gains from IT look like.
Shahzad Khan
skhan01@syr.edu
Information Resource Management
School of Information Studies
Syracuse University
However, the new breed of professional managers from LUMS and IBA may get into this field. I would watch out for the LUMS MBAs who will be graduating next year, some of the ones that completed their undergrad in computer science with me have a very strong technical background and have stepped into the MBA programme.
We need people who can keep projects on track. Who can understand the users needs and know the limits of the technology. We also need to let our people know what the productivity gains from IT look like.
Shahzad Khan
skhan01@syr.edu
Information Resource Management
School of Information Studies
Syracuse University
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