The software industry in Pakistan has grown significantly in recent years but still has room for improvement. It is currently considered a tier-3 nation in software exports but has the talent and capabilities to become a tier-2 or tier-1 country. Key challenges include law and order issues, software piracy, a lack of specialization, and insufficient focus on strategic management. However, the industry shows promise for continued growth as more firms are established and Pakistan further develops its ICT policies and technological potential.

2. Pakistan 76th of 102 countries in Network Readiness Index

3. Actual spending under IT Policy 2000 lags allocations, esp. in Exports/e‐Commerce

4. Revenues in Export: $12.2M (growth of 84%) and Domestic: $5M (growth of 49%)

5. Current estimate of software exports at about $12 MThe domestic software scene is quite vibrant and has a lot of potential. It is only a matter of time, and what they want is just a few success stories, before the herd behavior of the local market could be channelized to its own advantage. The much‐awaited automation of the local industry will arrive one day. Some sectors may lead the rest of the industry but others are bound to follow. The government can play a role in hastening the process by intelligent and careful use of public policy. What is most needed is a shift in the attitudes and sophistication of the IT entrepreneurs, the business leaders and managers, the financiers, the industrialists, and the policymakers and government bureaucrats for everything to fall into place. Trust is the most critical ingredient of success in this multi‐faceted set of relationships. The entrepreneurs in Pakistan seem to be uncomfortable bringing in domain expertise, especially business managers, onboard for the fear of losing control of their venture. Sometimes, their fear may be justified but many a times it is not. Public policy and legal arrangements that strengthen the intellectual property environment and provide essential safeguards for each can sometimes help in creating a minimum threshold of trust among various stakeholders and bring them to the table. Q2: Explain in detail the ICT policies of developing countries. There has been considerable increase in the interest in software industries within developing country contexts in the recent years. Proponents of the school of thought that sees IT and software as a “great enabler” have argued that information technology in general, and software industry in particular, provides an opportunity to the developing countries to link themselves with the developed economies of the west. This “globalization of work”, some believe, is an indication of subsequent phases of globalization that would reduce the disparities across the world and provide an equal opportunity for everybody to participate in the global production and creative processes. In many instances, these predictions have also been validated by initial experiences in some developing countries. Most notable of these are India, Ireland and Israel, famously known as the three Is of the global IT revolution and the new entrants in the tier‐1 of software exporting nations that already includes relatively more developed, mostly, OECD countries and, and to a lesser degree, China and Russia (tier‐2 countries). Following the examples of these tier‐1 and 2 nations, are a host of other developing countries, namely, Brazil, Mexico, Malaysia, Sri Lanka, Pakistan, Ukraine, Bulgaria, Hungary, Poland and the Philippines (tier‐3 countries) and Cuba, Iran, Jordan, Egypt, Indonesia and Bangladesh (tier‐4 countries) and many others (Carmel, 2003). While the boundaries between the countries in this 4‐tiered taxonomy are quite fuzzy, primarily by‐design but also due to lack of credible data on each, Carmel (2003) attempts to differentiate tier‐1 countries as having hundreds of companies, more than a billion‐dollars of export revenues, and the industry maturity of more than 15 years; tier‐2 countries as having at least a hundred companies, exports revenues of more than $200 million, and greater than 10 years of industry maturity; and tier‐3 countries as having tens of companies, more than $25 million in export revenues, and over 5 years of industry maturity. All other “aspirants” that do not make the cut fall in the tier‐4 of the taxonomy. The overall picture that emerges from various models and frameworks is a complex one. It underscores the importance of understanding a large number of policy, environmental, and organizational factors, and how they interact with each other, as well as the individualistic features of each of the countries and their target markets before a policy or an industry‐wide prescription can be made. Country (e.g. India, China, Japan, Ireland, Israel etc.) is different from every other country and understanding these unique features is important before any lessons can be drawn and applied from other contexts. The Pakistan is one of the new player in ICT secors as compared to India, Russia and US and it woul take some more time to get Pakistan listed in the top ranking of the world, from the standpoint of technical and process quality, we find a lot of variation within the Pakistani software industry, a fact that may or may not auger well for the industry’s maturity. That firms maybe acquiring quality certifications (e.g. ISO 9000) for reasons that may not have a lot to do with the actual quality of their processes. There are number of differential propensities to seek a quality certification (e.g. hybrids seem to have a greater propensity to seek a quality certification than either the export‐focused or the domestic‐focused software operation). This is in contrast with the actual expenditure on quality assurance where the export‐focused software operations tend to do better than the rest. Similarly, there are no clear patterns in terms of the type of software engineering methodologies or technical best practices (drawn partially from the CMM methodology) preferred by various sub‐categories of software operations. Q3:Write a short note on Technological potential of the ICT sector. Pakistan today, unlike past years, is fast turning into a happening place for IT. The decade of the 1990s and the DotCom Bubble burst have brought considerable maturation and reality check to industry players. Ten years is a very short time for the development of an entire industry and there are signs that Pakistan’s software industry, having laid the foundations for a tomorrow, maybe in for better times ahead. Last year alone, the industry has grown at around 37% in revenues and 27% in terms of technical and professional employment. Many of the professionals and analysts expect a better‐than‐last‐year performance in 20010. Another sign of the industry’s maturity and coming of age facilitated by the global geopolitical environment and off shoring trends is the fact that an increasing number of Pakistani‐owned foreign companies are setting up development center operations in Pakistan. While many of these choose to operate under the radar screen, they are definitely going to bring about considerable transfer of know‐how and ideas from western software markets to Pakistan and result in the generation of local entrepreneurial activity. Also, another unmistakable sign is the trend of reverse brain‐drain of quality Pakistani professionals from abroad who, given significantly less competition for ideas and talent and a relatively virgin market at home, see a tremendous opportunity in setting up a Pakistan‐based company. Systems Integration, Innovation and Intelligence (SI3) and The Resource Group (TRG) are the poster children of this undeniable trend. None of these would have been possible a decade ago. On the domestic‐front as well, there is a growing likelihood of considerable opening up and modernization of traditionally conservative segments of the economy. If deregulation in the financial sector is any credible sign of things to come, we are likely to see massive changes in the shape of the local manufacturing and service industries by virtue of telecom sector deregulation and the enhanced competition under the now‐effective WTO trade regime. The former has already begun to show tremendous promise with around a billion dollars of promised investment in last year alone. Most of the entrepreneurs see the situation as the fading away of the Old Pakistan and the Emergence of the New Pakistan that is effectively linked to and a significant player of the global economic system. The New Pakistan presents considerable promise and opportunity to those willing to bite at it. There are live examples of companies—TRG, SI3, LMKR, Netsol, Techlogix, Etilize, TPS and many more, that have capitalized on this new set of opportunities and positioned themselves to reap the rewards.