The IT revolution
can still change the destiny of Pakistan, but will require a readjustment
of the sights. This readjustment will require her to work with what
she has, and not what she currently doesn’t!
been unable to produce software developers in increasing numbers,
but does possess skilled workers in reasonable numbers in other
fields that can provide services to clients all over the developed
world through the Internet. These services range from data entry
to telemarketing to insurance claims processing to payroll management
to computer-aided designing to financial analysis and forecasting.
doctors can be employed for medical data analysis; lawyers can provide
legal advice over the Web; graphic designers can produce animations.
The possibilities are numerous and the opportunities lucrative.
The Internal Rate of Return (IRR) and Net Present Value (NPV) numbers
for many of these opportunities are similar to those for the software
As an example,
look at the function of an insurance claims processing company.
Say an automobile accident takes place in New York City. The claimant
fills a paper form describing the incident and providing his particulars
and submits the form to the insurance company’s office in New York.
The company scans the form and sends it to the offshore company
in Lahore, Pakistan. That form will be automatically routed to the
computer terminal of a claims examiner. The examiner goes through
the form and (using some simple business rules) determines the validity
of the claim and sends his decision to the insurance company in
New York. End result: the New York-based company saves 50 per cent
of the processing cost!
for such IT-Enabled Services (ITES) are looking for more than one
benefit: on the one hand, they want to achieve cost reductions of
around 50 per cent, and on the other, they want an improvement in
the current level of their services. By outsourcing the non-critical
tasks, they also want to focus all their energies on the processes
that form the core of their businesses.
Canada is the
easiest market to get ITES work from, as it has the highest percentage
of businesses that use outsourcing services. Number two on the list
is Australia, followed by the US. A higher percentage of companies
in the energy sector outsource, followed by the financial services
and then, technology companies.
outsource look for service level guarantees, a proven track record
and specialization in the business process of interest from the
providers. Many outsourcing relationships fail because of organizational
resistance in the client company, unclear performance metrics, or
the client’s loss of control over the outsourced business process.
advantage that Pakistan’s ITES businesses enjoy is the relatively
low cost of labor. Secondary advantages are zero corporate taxes
and low-cost infrastructure. The time zone difference between Pakistan
and the US can also be an advantage in certain ITES businesses.
The key challenges
that an ITES entrepreneur faces is marketing the service that he
or she is striving to provide and ensuring the confidentiality and
security of the client’s data. Another challenge is ensuring the
quality of the service that can only be achieved by having a clear
and continuous organizational focus on the training of the service
ITES businesses face three types of competitors. The most significant
competition comes from prospective clients carrying out the non-core
tasks themselves. However, if clients focus on non-core tasks, they
suffer from higher costs and lower efficiencies. Hence, they can
be enticed by offering high-quality service at a lower, fixed cost.
The second type
of competition comes from developed-countries-based outsourcing
operators. They run very efficient businesses but are hampered by
higher labor costs. The final type of competition comes from outsourcing
operators based in low-labor-cost countries like India and Philippines.
Pakistan-based ITES businesses don’t really have any advantage over
them, but can ignore that competition for now as the demand clearly
exceeds the supply.
ITES is Pakistan’s irresistible value proposition because of the
availability of the trained human resource in reasonable numbers.
Moreover, increasing the size of this human resource is easier as
compared with what is required for software development.
ITES is a lucrative
opportunity for forward-looking entrepreneurs. While selecting an
ITES sector, they should look for human resource-intensive business
processes in which the difference in the cost of labor between Pakistan
and the target market is the largest. They should focus on utilizing
their existing strengths and should also try to develop contacts
with Pakistan-origin expatriates for marketing purposes. To achieve
long-term success, they should look for value-adding partnerships
with international companies and focus on organizational excellence
and customer satisfaction.
The US economy
as a whole is depressed, resulting in squeezed revenues for almost
all companies. To meet their profitability targets, most companies
have no option but to cut costs. Pakistan’s companies can
benefit from this situation by offering IT enabled services and
software development services at attractive rates. These should
be the best of times for Pakistan’s companies.
downturn in the US is an opportunity for Pakistan’s ITES and software
development companies, not a setback!
About the Author:
Altaf Khan --
BPO Service Providers in Pakistan - Call Center, Data Entry, Accounting,
Medical Transcription Outsourcing http://www.altafkhan.com/ib/bpo-service-providers-in-pakistan.htm
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