Current Status and Future of the IT and Telecom Sector in Pakistan

1. Current Status and Future of the IT and Telecom Sector in Pakistan M. Tariq Badsha Member (IT) Ministry of Information Technology Government of Pakistan Dec 19, 2009

2. Outline • Background • Start-up Phase • Consolidation Phase • Sustainability and Scalability • Challenges and the Future

3. Background • IT Division Formed in 2000 - consolidating IT & Telecom functions under M/o Science & Technology • IT Policy Approved by the Cabinet in August 2000 • Mandate of the IT Division: • IT Sector Development and use of IT for better government services • Telecom Sector Development • IT Ministry formed in 2002

4. Start-up Phase(Inception to 2002) • Recruitment of IT and Telecom Professionals • Setting up Organizations: • Electronic Government Directorate (2002) • Higher Education Commission (2002) • Strengthening of Pakistan Software Export Board • Virtual University • Creating an Enabling Environment • Pilot projects of a wide variety • Major thrust on HR and Infrastructure Development

5. Start-up Phase(PSDP allocations)

6. Achievements and Lessons • Achievements: • Breaking the inertia • Building the team • Creating Basic Organizations • Developing the Telecom Infrastructure • Testing the waters in various sectors • Long lead activities (HR) put in motion • Key policies and Legislation • Lessons: • Bring Focus • Strengthen Implementation

7. Consolidation Phase(2003-2007) • With the formation of HEC a significant part of the HR program was shifted to HEC • Program was focused on: • Citizen Services • IT for improving efficiency as a means to support Services • IT industry Development - increasing exports and/or creating local employment • Infrastructure to meet specific needs • Targeted HR Development • Telecom Sector Deregulation and Privatization • Legislation and Enabling Environment

8. Activities/Major Functions IT Industry Development • Advisory and Information services • Infrastructure Support (STPs) • Exhibitions and Events • Industrial Automation • Quality Certifications • Corporate Training Programs • IT Industry Internship Programs • Open Source Resource Center (www.osrc.org.pk) • Facilitate resolution of Industry’s Operational Issues

9. E-Government Strategy • Basic Infrastructure Hardware, LAN at Ministries, Centralized Data Centre • Common Applications E-Office comprises of Common processes (IC, HR, PM, Budget, Inventory) • Agency Specific Applications Example: Hajj Applications. Online registration of companies with SECP, Online recruitment at FPSC, Online Access to case laws, Court Automation, etc • E-Services Domicile, Driving Licenses, International Driving Permits, Arms License Issuance, Food, Agriculture & Livestock Information Repository (FALIR), Land Record Revenue MIS etc • Replication and Reuse Replication of E-Office applications to 45 Divisions

10. HR Development • National ICT Scholarship Program (R&D Company) Opportunities for students from remote areas to study in ten top universities of the country • Internships (PSEB) Match making between fresh IT graduates and IT companies by placing IT graduates in IT companies • IT Apprenticeship Program (R&D Company) Rs. 15,000 per student per month to groom young professionals • Corporate Training Program (PSEB) A program that brings in trainers from abroad to train and subsequently certify individuals nominated by their companies • Capacity Building Programs (PSEB) “Specialized Training” for local IT companies in and  “General Training” in the field of project management, network/security systems and business process modeling • Federal Govt. Employees Training Program (Computer Bureau) Training in basic IT to Federal Govt employees working in various Ministries/Divisions • Virtual University with enrollment of over 50,000

11. Telecom Sector • Governing Legislation • Pakistan Telecommunication (Re-Organization) Act 1996 (Amended 2006) • Sector Policies • De-Regulation Policy for the Telecommunication Sector – 2003 • Mobile Cellular Policy – 2004 • Broadband Policy – 2004 • Universal Service Fund Policy – 2006 • Formation of Companies to manage USF and R&D Funds

12. National ICT R&D Fund Company • Independent Company . • Activities funded by mandatory contribution from Telecom Operators • Goals: • Cultivate industry-academia partnership • Enhance the national ICT related human resource development capacity • Make Pakistan an attractive destination for high tech jobs • Use ICT as a tool for wealth creation  • Spread the ICT activities at the National level.

13. National ICT R&D Fund Company Major Programs • National ICT Scholarship Program • IT Apprenticeship Program • Technical R&D Projects • International Publications

14. National ICT R&D Fund - Projects

15. Universal Service Fund Company • Independent Company • Contributions by Licensed Telecom Service Providers • No Government Funding • Spent by Telecom Service Providers to provide services in un-served and under-served areas • Ministry acts like a “Trustee” of the Fund • Disbursed through open competitive bidding by USF Company (bidder requiring least subsidy wins)

16. Universal Service Fund • Currently has three programs: • Rural Telecom and e-Services • Fiber backbone • Broadband

17. 26 “Lots” of Rural Telecom Universal Service Fund

18. Universal Service Fund Optic Fiber availability in Pak. Unserved areas Served areas

19. Universal Service Fund Broadband status in Pakistan • Previous efforts to improve failed • Affordability a major issue • Growth picking up but confined to large cities!

20. Score Card – IT industry Development • Exports- SBP – From US $ 23 million in 2002-03 to US $ 184 million in 2008-09 • IT Parks – 700,000 sq feet. • Land earmarked at Karachi, Islamabad, and Lahore for purpose-built technology parks • ISO 9001:2000 certification to 100+ IT companies • 24 companies certified in CCM/CMMI levels 2 to 5

21. Score Card – e-Government • Basic IT infrastructure at all Ministries • Electronic File Movement and MIS (Common Applications) implemented at the Ministry of IT • Over 30 agency specific applications developed for Health sector, Municipal services Recruitment, Law enforcement, District Courts, and federal government Ministries • Federal Government Data Center being established • Maintains Government of Pakistan Web Portal

22. Score Card - HRD • 600 apprentices through IT Apprenticeship program • Over 1,500 rural/non-metropolitan area students currently studying, through National ICT Scholarship Program • Training of 5,000 Government Servants in IT • Distance learning education to over 50,000 students through VU • Internships- 4460 graduates from 220 universities/institutes placed in 250 IT companies

23. Score Card - Telecom year ending 2008 statistics

24. Telecom Score Card (Cont..) Year ending 2008 statistics

25. Sustainability and Scaling Up2008 onwards • Update of policies • USF and ICT R&D Fund Companies gaining full momentum • Impact analysis of completed IT Projects • Scaling up successful pilots: • e-office at M/o IT replicated to all Federal Ministries • Federal Government Data Center • Adjusting policies and regulatory environment in light of changed telecom environment to maintain sector growth.

26. Challenges – e-Government • Acceptance of IT enabled processes by government functionaries (cliché: Culture Change) • Ownership of IT projects and resources for sustainability: • HR for operations • Recurring expenditure • Electric power and other infrastructure • Security of Networks • Hiring and retention of IT Professionals in government

27. Challenges – IT Industry • High Quality HR to feed the industry – technical as well as middle management • Affordable IT-enabled space • Country Perception • Increased global competition • Attrition of HR to lucrative markets • Venture Capital and Financing • Exploiting niche markets

28. Challenges – Telecom Sector • Sector health in light of • higher saturation levels • lower ARPU due to price wars • Shrinking margins • Introducing value-added services • Optimal Frequency management • Management versus speed of processing • Flexibility in terms and conditions of licenses • distribution (Defence, Public Sector, and Commercial)

29. Challenges – Telecom Sector • Maintaining Investors’ Interest • Legislation and Policies to deal with possible mergers and acquisitions – to maintain a fair competitive regime • Using ICT infrastructure for Socio-economic development • Increasing Broadband penetration – Supply side as well as demand (consumer appetite) • Convergence of media, telecom, and VAS

30. Challenges – ICT for Development • Cost of Access devices • Broadband service charges have come down significantly but still above the price point for mass acceptance • Content for Broadband services • Mindset of service providers • Literacy and Capacity for absorbing technology • Basic services (electrification, roads, drinking water, etc.)

31. Future • Telecom Policies are being revised in consultation with all the stakeholders to address the challenges of the current market dynamics. • Similarly, the IT Policy of 2000, is being updated. Targets would have to be set for government ministries • New legislation in the areas of Data Protection, Privacy, Consumer Protection, IPR • IT must be introduced in our SME sector more aggressively if they are to remain competitive • IT companies would have to scale up – partly through organic growth but mostly through mergers

32. Future • Work on affordable solutions • Using FOSS technologies where applicable • Lightweight software for extending the life of hardware • Localization • Public access points – like telecenters • Generate viable business models for small entrepreneurs around ICT