Business Process Outsourcing in Pakistan

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Business Process Outsourcing (BPO) sector has experienced tremendous growth in Pakistan, especially as a career amongst the relatively large population of fluent English speakers. Majority of this population comprises the youth of the country and they take up even part-time jobs at call centers, primarily because of the lucrative salary packages offered. BPO businesses enjoy the competitive advantages Pakistan offers in terms of low labor cost which is estimated to be 30% cheaper than the neighboring country (as reported by sourcingmag[1]), low corporate taxes and reliable infrastructure. Time zone difference of Pakistan is also an advantage to certain global offshore outsourcing setups.

Pakistan’s BPO sector has seen double-digit growth in the number of agents employed in voice-based call center work over the past year, including both domestic and international call centers. At this point, there are approximately more than 500 active call centers in Pakistan employing approximately 21,000 agents. The majority of these call centers have operations in major cities such as Karachi, Lahore and Islamabad.

Call Centers serving international customers are an important segment of the Pakistan IT-enabled Services market and are providing employment to thousands of the country’s urban youth. The training institutes set up currently in the country are of varying quality. To counter this, Pakistan Software Export Board has recently embarked upon a project that has allowed a number of these call center training institutes to be eligible for subsidies. This, in turn is being channeled as benefits to trainees in the form of reduced fees.

Pakistan’s BPO sector has not only grown in the number of Call Centers established throughout the country, it has also emerged in other subsets of outsourcing such as Medical Transcription, Telecommunications, Marketing, Legal, Banking and Financial Outsourcing.

Gartner, the world's leading information technology research and advisory company place Pakistan amongst the top countries of the world in terms of suitability for offshore outsourcing. Pakistan has been recognized by the global community as 'Market Leaders and Challengers' and has been placed in the First Category countries in 2007. Previously, in 2006 Pakistan was placed amongst the Third Category countries.[2]

Based on a total of ten criterion, including language, government support, labor pool, infrastructure, education system, cost, political and economic environment, cultural compatibility, global and legal maturity, data and intellectual property security and privacy, Gartner rated Pakistan as 'very good' in cost, 'good' in language and 'fair' in most of the areas despite the prevailing political environment.

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[edit] Industry size

Pakistan’s IT Industry exports are estimated at US$ 1.4 billion, while the industry size is estimated at US$ 2.8 billion These figures are based on WTO’s methodology which is used by other countries to calculate their industry’s revenue stream. This method also accounts for various other factors like cross border, consumption abroad, commercial presence abroad and temporary movement in addition to the revenues reported by SBP. This methodology was first used by BearingPoint (BP) in their study about Pakistan IT Industry “Best Practices & Strategic Challenges”.

According to the study, Pakistan’s Global IT Export Revenues in FY04 were valued at around $ 400 million as reported and calculated by BearingPoint. The study also reports on the official IT export figures valued just under USD 75 million for FY 05 as reported by the State Bank of Pakistan, where as the figures calculated by BP valued the actual global receipts of Pakistani IT firms at around USD 600 million. Details on Pakistan’s IT Industry size and figure can be found on Pakistan Software Export Board’s website.

It is significant to note that Pakistan IT exports growth in each of the last few years has been more than 50%, while percentage growth of the industry in the last one year has grown by 61%. Observing this pace of IT sector growth, Pakistan is eyeing to increase the size of this sector to over US$ 11 billion by 2011.

“Doing Business 2008”[3] a report released by World Bank 2008 ranked Pakistan as one of the favorable economies in the South Asian countries [4]. The ranking was based on certain economic indicators such as; ease of doing business, dealing with licenses, and protecting investors as identified by the analysts.

[edit] MNCs Development Centers in Pakistan

[edit] Opportunities in Pakistan

With the current incentives and policies developed for the BPO sector by the Government of Pakistan, there are certainly many opportunities for the investors to capitalize on what Pakistan has to offer.

  • 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 110 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.

The Government of Pakistan has worked towards encouraging foreign investment in Pakistan’s technology sectors, of which BPO is at the forefront. The result has been an almost 100% growth rate in the country’s ICT sector with BPO firms being successful in segments such as Accounts, Medical Transcription, Legal Services, Data Entry and Call Centers.

BPO firms in Pakistan have not only enjoyed success in the hands of foreign investors, rather local entrepreneurs have also taken to the benefits on offer from the BPO industry. Companies such as Mobilink, Crescent Insurance, Ufone and other domestic leaders have opened their own call centers, aiming to maximize customer relations, improve efficiency, increase telemarketing opportunities and primarily improve upon revenue generation.

With reference to outsourcing the software development, cost effectiveness has once been the only advantage Pakistani software development sector had over other countries. But now Pakistan is among those few countries who provide end-to-end solutions, and this is not only developing a sound base for Pakistan to become more suitable outsourcing hub, but also providing the outsourcers a complete range of solutions. Provision of end-to-end solutions demands effective client relationship and standardization of technology as its pillars, and in past few years Pakistan has made a good record in both the areas.[5]

With Pakistan Telecommunications Company Limited, being privatized and general customs tariffs being reduced in order to encourage investment, BPO firms have seen large scale growth in not only attaining clients in Western countries such as USA, UK and France but also in Pakistan. A number of firms have had success in harnessing companies such as Habib Bank Limited (HBL), National Bank Limited, Pakistan International Airlines (PIA), Government of Punjab, Dawood Cement, Atlas Honda, etc., as clients. As a result, the public relations and customer services of these companies have improved and more contracts are being provided to BPO firms.

[edit] MNCs Outsourcing projects to Pakistani companies

Following is a list of companies sending work to 3rd parties in Pakistan or having partners to run their centers in the country.

Data warehousing:

Custom Software Development:

Geological & Seismological Data management:

Car leasing:

[edit] Niche Areas & Expert Companies

Demonstrating competitiveness and creativity, Pakistan claims to have several quality product and service companies. A number of Pakistan’s companies have performed well in domestic as well as international markets, making illustrious success stories in the following niche areas.

Telecom Wavetec: Specialized in wired and wireless, information display systems and electronic queue management systems

Innov8: Mobile transaction management platform

Mobile Complete: Mobile Testing Suite

PixSense: Multimedia convergence solutions for wireless carriers
Job Portals Rozee.com.pk: Online recruitment solution

Personforce.com: US online recruitment solution
Document Management eDox: Document management and office automation solution with over 150 international customers
Personal Productivity Scrybe: Web-based email and calendaring solution
Retail ITIM: Fast growing retail solution with over 50 UK customers
Social Networking Naseeb.com: Muslim social networking portal
Retail Banking & Financial Solutions NetSol: Car Leasing and Services. Daimler Chrysler, Toyota, BMW

Mixit: The company’s Stock Market Order Management is running in NYSE with half a billion dollar daily transactions

Systems Limited: The company’s Mortgage Lien processing software has major share of the US market

AutoSoft: The company’s Retail Banking Solution is running in three countries.

Metalbid.com: World metal exchange

TPS: e-payment and e-banking. Customers of the company include Al Bilad KSA, CBK, BoK, ESB, UBL Kuwait, 1Link, Allied Bank
Healthcare TSG: Specialized in medium-sized hospital data warehouse. The company has 200 customers in USA.

Cure MD: The company has developed unique web-based HIPAA compliant healthcare system.
Enterprise Computing Ultimus: Business Process Management. The company has 160 international customers including Microsoft & White House

Five Rivers Technologies: Clear Cube Partner and world leader in fast growing field of centralized computing.
Software Services Visualsoft: Hardware and software system integration

KalSoft: Advanced infrastructure design and implementation

Averox: Enterprise client/server based solutions

Si3: System integration solutions

Techlogix: Business process improvement solutions

Techaccess: Enterprise management solutions

Systems Ltd: IT and BPO services

Pi Sigma Group: Consulting and software development

Comcept: Innovative telecom solutions

Cube XS: Level 4 Data Center for AT&T

Apple Solution & Resources Software Development & MT
IT-Enabled Services Post Amazers: Animation. Acclaimed work includes, “Son of Mask” and “Exorcist: The Sequel”

LMKR: Seismological and Geological Data Management.

iEngineering: Platform Management. The company has the most comprehensive database in the world.

Apple Solution & Resources: Appointment Setting Services for Banks, Staffing for Hospitals and overseas recruitment firms

Touchstone BPO, Ovex, Infospan, TRG, ARY Communications, Associated Consulting, Ensign Communique, Apple Solution, InfoSpan, Mindbridge, Quest Marketing, SNL Pakistan: IT-enabled services/Call Centers

[edit] References

  1. ^ Offshoring BPO to Pakistan: TRG's Experience
  2. ^ Analysis of Pakistan as an Offshore Services Location
  3. ^ Doing Business 2008
  4. ^ Economy Rankings
  5. ^ Why To Outsource Software Development To Pakistan Zigron Inc. Blog

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