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PROJECT PROPOSAL

Software House

Sector Outlook
Information technology (IT) with its revolutionary power as a critical
enabler of growth, development, and modernization is increasingly
moving to the core of national competitiveness strategies worldwide.
Recent economic history has shown that, as developed countries
approach the technological frontier, IT is crucial for them to continue
innovating in their processes and products and to maintain their
competitive advantage. Equally importantly, IT has proven instrumental
for enabling developing and middle-income economies to leapfrog to
higher stages of development and fostering economic and social
transformation.
From its nascent beginnings in the late 1980s, the industry has
successfully arrived to a point where its value proposition has been
validated over and over again. The largest members are grossing 15-25
million dollars in revenues, and receiving 100 million dollar valuations.
Most tech companies are growing in excess of 30% a year annually. The
industry as a whole is doing over 2 billion dollars a year in revenue, up
from less than a billion dollars a few years ago. Current growth rates
indicate that the industry will exceed the 11 Billion USD mark within the
next 5 years. What other sectors and countries have achieved in 15-20
years, Pakistans technology scene is poised to achieve in less than a
decade.
Competing in a worldwide scale, Pakistans IT industry has experienced
massive growth in IT exports. With the fast paced industry growth rate
and governments investor friendly policies, Pakistan has become a major
player in the IT industry, not just on the South Asian but on a global scale
as well. One of the biggest reasons to invest in IT is the fact that the
Government of Pakistan has allowed 100% ownership of equity and 100%
repatriation of profits for foreign investors. Major tax incentives for
companies have been allowed till 2016. Also, the Government has given
tax exemption on the income from export of computer software and
related services.

Statistics of Pakistans IT Industry


IT companies registered with PSEB

Substantial IT companies
Region-wise breakup

1306
445 Karachi
351 Islamabad/Rawalpindi
426 Lahore
84 Others

Foreign IT and Telecommunication


companies working in Pakistan
Total industry size
IT and IT-enabled services exports
Percent growth in exports
(over last year)
Number of IT graduates produced per
year
Export targets for fiscal year 2007-2008

60
US$ 2.8 billion (WTO-prescribed
formula)
US$ 1.4 billion (WTO-prescribed
formula)
61%

Approximately 20,000

US$ 162 million

IT professionals engaged in exportoriented activities (software

More than 15,000

development/call centers etc.)


IT professionals employed in Pakistan
Total IT spending in the fiscal year 20052006

110,000
US$ 1.4 billion

Project Overview
Foreign-based companies have entered a recovery phase and started
outsourcing their multiple services to the IT and IT-enabled companies of
various countries. Pakistan has potential to grab its share in IT-enabled
services market as well as contribute towards providing software
applications to various developed countries. The demand is expected to
flourish in the upcoming years. Many countries prefer outsourcing from
Pakistan because of the lower cost of manpower and advanced
technological infrastructure. This enables the IT sector to bring in good
investment opportunities in the country. This will also be helpful in making
more job opportunities in Pakistan.
United States of America is the largest buyer of Pakistan IT-enabled
services with the share of 58 percent in the overall countrys exports. It is
followed by UK, where the exports are hovering around 10 percent. The
pie of total exports shows 16 percent share to the other countries
including Australia, Canada, Thailand, UAE and others.
Companies such as IBM, Microsoft, Cisco Systems, Hewlett Packard, and
Novell choose to get services from sub-contractors in low cost countries
with strong IT capability, HR capital and infrastructure and low risk. These
companies are also moving many development and support jobs to such
locations.
This project entails opening up a Software House that will cater to both
local and export markets in the Middle East, USA and UK. The companys
corporate office will be opened in Lahore, Pakistan. The Software House
will provide automated and Information Technology (IT) enabled solutions
catering to businesses across various verticals in Pakistan, Middle East, UK
and USA.
The Software House will have IT specialists with vast industry experience
and knowledge. The company will offer a wide range of consulting
services and cost-effective development of customized application
software. In addition to this, the focus of the firm will be to become a
multi-dimensional technology company deriving revenue and customer
satisfaction from a variety of Information Technology services and custom
software offerings including Technology Outsourcing, Systems Integration,
Application Development, Processes Consulting, Business Intelligence
Consulting, and Information Security Consulting among others.

Process Flow of Services


The process flow of software house services mainly entails the following
sequence of activities:

Design of
Program by
Software
Architect

Design
Demonstration
to Developers

Developers
write the
Program

Support
Services to
Customer

Program
Handingover
and Installation

Test and Run of


Program by
Analyst

Market Demand
Pakistans market demand can be viewed by last years growth at around
37% in revenue and 27% in terms of technical and professional
employment. Another encouraging sign is the reverse brain drain caused
by returning Pakistani entrepreneurs who see the relatively less
competitive and virgin market at home as a tremendous opportunity for
setting up a Pakistan based company.
There are quite a few hundreds of software houses in Pakistan and the
count is increasing rapidly. These software houses are working to make
Pakistan a bright mark in the world of IT. They are producing many useful
products which have modernized the processes of traditional industries
and also increased their productivity. As we see, computer has become a
significant part of every walk of our lives and many processes have
become automatic now. All the big shopping malls have computerized
billing system now. Almost every organization keeps its data in
computerized form. Computer and internet awareness is also increasing
and the trend of e-commerce is emerging fast. People, whatever field they
belong to, consult internet for any queries which come into mind.

Most of the Pakistani companies are working for financial institution,


automobile, call centre and miscellaneous services sectors in different
countries. The demand in the market exists for the following solutions and
services:

Financial and Leasing Solutions

Banking, ATM Solutions

Inventory, Payroll and Marketing

Retail Store Systems

Mortgages, Portfolio Management

Call Center Automations

Health Care Solutions

VOIP Billing

Manufacturing and ERP Solutions

Traveling & Hotel Management

Project Management & Business

Human Resource Solutions

CRITICAL FACTORS
Following are the factors critical for the success of this business venture;

Background knowledge and technical qualification of the


entrepreneur and key staff.

Thorough understanding of international regulations related to


piracy and copyright protection.

Hiring and retention of competent and trained manpower

Higher return on investment and a steady growth of business is


closely associated with regular training and capacity building of the
entrepreneur and key staff.

Stringent supervision of the development process at every level.

Continuous flow of exports orders through aggressive marketing


(website & social media) and international networking.

Formulation and implementation of customer follow up and


feedback systems

Make effective use of facilitation agencies like P@SHA, PITB and


PESB etc.