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PAKISTAN, DESTINATION OF CHOICE

Strategically located in South East Asia, Pakistan is the world's bridge between the Middle East and the Far East. 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.

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

  • An IT workforce of 90,000 with good English language and people skills growing at a phenomenal rate of almost 20,000 a year.
  • A hundred ISO-certified IT companies, with over 20 undergoing CMM certification.
  • A reliable digital telecommunications infrastructure with backup and reliable energy and transport networks.
  • An ambitious program of world-class IT Parks, with a rent rate of under US$ 1 per day.

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"
  • 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$ 2000/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.

Above information courtesy of Pakistan Software Export Board. For more information please visit their web site at www.pseb.org.pk