Inzamam and Saurav cavorting round a football in a TV ad, Musharaf and Manmohan sitting together in the VIP box at Delhi's Ferozeshah Kotla, Lahore heartthrob Meera acting in Mahesh Bhatt's Nazar, goodwill buses plying to and fro between Muzaffarabad and Srinagar-Indo-Pak co-operation seems to be the flavor of the season as relations between the two neighbors hit an all-time high in more than half a century. With bilateral relationships flourishing in every sphere, it was natural and expected that IT too would soon be witness to the camaraderie between the two sides of the Wagah border.

Especially, when one takes into account that India is the reigning IT superpower and Pakistan has a fledgling IT market worth over $700 mn, with the potential to grow manifold in the coming years. The first seeds of co-operation in the IT arena were sown early in 2004 when the Pakistan Software Houses Association (P@SHA), the Pakistani counterpart of Nasscom, sent a delegation of a dozen companies to the annual Nasscom event in Mumbai. Subsequently, Nasscom President Kiran Karnik and the then chairman Jerry Rao took a delegation of 20 Nasscom members to Pakistan for the first India-Pakistan ICT Summit, in December 2004.

CBMs in the IT roadmap
This momentous occasion not only witnessed the signing of an MoU between Nasscom and P@SHA, concrete interactions started between companies in both countries. These negotiations have now started bearing fruit-the first JV between an Indian and Pakistani IT company was inked between i-flex Solutions and Karachi-based Emmaculate Solutions, with an aim of foraying into the Pakistan financial services market.

Seeds sown in 2004 when the P@SHA sent a delegation to the annual Nasscom event. These negotiations have now started bearing fruit Pic: Pakistani software delegation with the Indian delegates at Nasscom 2004 in Mumbai

Khurram Minhas, CEO of Emmaculate Solutions, informed that his company would act as the local representative of i-flex in Pakistan. Incidentally, the i-flex-Emmaculate agreement coincided with a bigger P@SHA delegation visiting Mumbai for Nasscom 2005. This is understandable considering the interest generated by the deal and, therefore, came as no surprise that close on its heels two more companies from Pakistan joined hands with Indian technology firms: First, Karachi based Millennium Software tied up with Mumbai-based communications solution provider Spanco Telesystems & Solutions, to set up a call center in Pakistan.

And then, Karachi-based company Creative Chaos has joined forces with Delhi's Compare Infobase. Arwen Tech of Karachi and Evolve Services of Delhi have jointly bid for a training project floated by the Sindh government in Pakistan. Arwen is also exploring an alliance with Bangalore-based Hewitt India for similar projects on call center skills training for the Sindh as well as Pakistan federal government in Islamabad.

In Pakistan it is not just the private sector enterprises, even the governments, both federal and provincial, are going for increasing IT adoption. Its defense sector is also a major buyer of IT. After years of lukewarm growth, the Pakistan economy is growing at a fast clip and this is resulting in the increasing need for automation amongst Pakistani enterprises. While Pakistan now does have around 250 significant IT and BPO players, even they are looking at Indian expertise to help them address the needs of the local market. With an atmosphere of general cordiality, Indian IT players too are recognizing the potential business opportunities in the Pakistan market.

Both Karnik and Jehan Ara, President P@SHA and CEO of Karachi-based Enabling Technologies, acknowledge the needs of each side and are trying to facilitate co-operation and collaboration between member companies by providing a platform of continued interaction. Asserts Ara, "It is my sincere belief that many synergies exist between the IT companies of both the countries and business opportunities abound." For example, the restructuring in Pakistan's banking sector offers i-flex a huge business potential, with the State Bank of Pakistan going aggressive on IT deployment in the country's financial sector. The game plan seems straightforward for Indian companies looking for opportunities in Pakistan-already there are local IT companies trying to address the IT requirements of large enterprises, forming alliances with them to open up a virgin territory for many of these Indian players (see Table The Hot Targets for Alliances).

We intend to work with Indian companies in the Gulf region, especially in Saudi Arabia where we have a strong presence in the oil and gas sector” Jehan Ara, president P@SHA and CEO of Karachi-based Enabling Technologies

Sources close to the Spanco-Millennium deal suggest that the fact that both companies serve Pizza Hut in their respective countries-one of their major clients-was the main trigger that helped them cement the agreement. Jehan Ara welcomes Spanco's decision to set up a call center in Pakistan. Agrees Abdullah Butt, president, Association of Call Center Operators (ACCO) of Karachi, "We have the right ingredients of low cost and English speaking workforce, necessary government incentives like tax holidays, and 100% foreign ownership and 100% funds repatriation are also available." Seems Pakistan is banking heavily on India to build its own BPO base. It has a few fledgling call centers like Touchstone, Voxel, Altsource, E-planet and Phonecast, but is still way off to scale up to the Indian magnitude.

However, the joint bid by Arwen and Evolve have opened up a completely new chapter in Indo-Pak IT co-operation. Informs Arwen Tech CEO Atiq Rehman, "The bids for the $1 mn project for the Sindh government involves mass training of about 1,000 people in call center skills." The two companies have jointly developed the course material and modules for the training programs and extended the offering to BPO services too. That seems to be the new hot area for IT services in Pakistan as the Federal Government is rolling out a slew of e-government projects in the country. These include provision of e-services at the Capital Development Authority, at the Chief/Deputy Commissioner's Office in Islamabad Capital Territory and also to the citizens in food, agriculture and livestock sector as well as e-enablement of Islamabad Police and the automation of the Patent Office in Karachi. Other major projects announced recently by Awais Ahmad Khan Leghari, Federal Minister for IT & Telecom include HMIS & networking facilities at Islamabad Hospital (PIMS) and Capital Hospital (CDA Hospital) as well as online processing of Hajj Applications and status tracking of arrangements for Hujjaj.

India's new offshore
One interesting opportunity that can emerge is that other than the local Pakistan market, many of its IT companies are doing significant amount of business in the Middle East and Africa, probably because of the traditional Islamic affinity. These are still potentially virgin markets for Indian players and possibly could leverage on Pakistani partner's presence there to make their own entries. Even in markets like Malaysia, Thailand, China and Korea, Pakistani IT companies are generating significant revenues through collaborative ventures. Recently, one of Pakistan's leading IT companies, Netsol Technologies signed a $2 mn contract with a Bangkok-based, top five auto finance industry major to automate all back office business processes for contract administration and management.

"Presently most of the work in telecom and financial services is outbound, but hopefully in the future, more high-end work like research, analytics, and design would also come in” Abdullah Butt, president, Association of Call Center Operators (ACCO) of Karachi

Jehan Ara hopes that with Nasscom and P@SHA now working together at a regional level through their membership of the Asian Oceanian Computing Industry Organization (ASOCIO), these efforts would receive significant boost in the future: "We intend to work with Indian companies in the Gulf region, especially in Saudi Arabia, where we have a strong presence in the oil and gas sector."

Shackles remain
Though both Track 1 and Track 2 diplomacy between the countries are working fine and they are courting each other like never before, a few concerns still remain that are hindering a total collaboration. The lingering doubts over the derailment of the peace process over the vexatious Kashmir issue still looms large in both countries. Though IT companies or industry bodies claim that they would not be impacted by political machinations, the fact is that any deterioration in relationship would severely hamper any business. This really is making many Indian IT companies still adopt a wait and watch policy before plunging into Pakistan. Even restricted visa rules in both countries are hindering movement of IT professionals. One delegate in the Nasscom group, who visited Pakistan during December, informs, on condition of anonymity, that it is still not easy for an Indian to freely move about Pakistan and that does not make it a very conducive business environment.

From the other point of view, Ara feels that though getting visas is not a problem, the process takes about three-four weeks, which is a long time in the IT industry. "We have to identify even the cities we are visiting. If we are to interact more and do business, we need to have a country visa rather than a city-specific visa."

Indian IT professionals visiting Pakistan face the same problems, she agrees. With the IT sectors of both countries uneasy about investments because of the political relations between the two governments, some suggest that the deadlock can be temporarily sorted out by using either Dubai or a third country till relations between India and Pakistan improve. However, it makes business sense to reach out directly to not only collaborate but bid for overseas projects jointly. Ara strongly believes that whatever be the political scenario, Pakistan needs companies like Wipro, Infosys and TCS to attract global investors. Are the Premjis and Murthys listening?

Rajneesh De

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