InfoTech: A Lone Wolf In Pakistan’s Struggling IT Industry

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Akhtar brought InfoTech to profitability and continues to build on that success with double digit year-on-year growth. He is a sought-after speaker, technology mentor and served as the Chairman of Pakistan’s IT industry association [email protected] in 2013. Akhtar has also been honored with numerous industry awards and accolades.

At InfoTech, Akhtar sets the corporate direction and strategy for all lines of business; he focuses on customers, strategy and innovation and has been responsible for multimillion dollar revenue generating product roadmaps that have disrupted major industries including Capital Markets, G2C and Smart Grids.

The company empowers businesses by providing information technology solutions to achieve optimal results and return-on-investment. Other than Pakistan, they have offices in UAE, Singapore, and Ghana. InfoTech has worked with various local and international companies such as the  Ghana Stock Exchange, Dhaka Stock Exchange, ECO Bank, Renaissance Group, PIA, Crescent Bahuman, NADRA,  as well as leading Pakistani banks. The company has also successfully installed smart meters in Karachi for K-Electric, formerly KESC.

Graphic 1InfoTech has also won another project, following a competitive bidding process – based on its experience with similar solutions within and outside Pakistan, including CIS, Billing and Smart Grid initiatives at SSGC (Sui Southern Gas Company) and KE (K-Electric) – to implement resource planning and customer information systems at Peshawar Electric Supply Company (PESCO). The project is funded by USAID under PDAP (Power Distribution Automation Program) and administered by International Resources Group (IRG-USA). InfoTech is also working on another project with Dubai Customs and successfully implemented ERP in PIA.

Profit: How and when was the idea of launching InfoTech born?

Naseer Akhtar (NA): The first time I thought of it was perhaps in 1984 or ’85. When you work for somebody else and you’re not satisfied with how things are being done, there comes a time when you have to call it a day because it’s their company and they decide what to do. It’s like: my way or the highway. So I resigned and launched my own company.

Profit: Which company were you working for?

NA: I was working at BCCI (Bank of Credit and Commerce International – defunct in 1991) as their Territory Executive for developing non-banking businesses such as technology, logistics etc. I left them in 1987 started a company by the name of South Technology and Services – it was renamed InfoTech in 1995.

Profit: Why is the company headquartered in Singapore?

NA: Singapore serves as our global headquarter but InfoTech is incorporated in Pakistan and owns all the offices abroad. All our global offices in the U.K, UAE and Africa report to Singapore, which in turn is reporting to us here, in Lahore.

Profit: What is the ownership structure of the company?

NA: It’ a private limited company with family members as the shareholders. Our core business is system integration and we provide IT solutions to five different sectors which include: financial markets (banks, stock exchanges etc.); energy distribution; public sector e-government (citizen services like computerized ID cards); retail distribution (supply chain) and lastly, innovative technologies like IoT (Internet of Things) and Blockchain; research-oriented technologies that can be applied to any industry. These technologies are evolving.

Profit: Which sector among these five contributes the most revenue?

NA: Financial sector contributes the most revenue because it’s well established. And within the financial sector, banks contribute the most.

Profit: What’s the percentage share of revenue-contribution from local and international banks?

NA: It’s 70:30. Local banks contribute more revenue.

Profit: Which regions do the international banks belong to?

NA: Mostly Middle East, Africa, and Asia Pacific.

Profit: Please name your major competitors both in the local and international arena.

NA: We don’t have a competitor here in Pakistan, no other player in the country can match our scale or diversity of products offered. Globally, we compete with the likes of Tata, Infosys, Tech Mahindra etc.

Profit: So we’re lacking behind in the international market?

NA: Of course we are. And it’s not just one thing that we lack in, we lack in every field.

Profit: How many employees do you have and what is your major expense?

NA: We have about 350 employees. And human resource costs us the most since our work is labour-intensive. HR constitutes sixty per cent of our total cost.

Profit: How much do you spend on research and development?

NA: Around 15-20 per cent of our net profit is spent on R&D.

Profit: What are your future plans?

NA: We are jumping into new areas, like: ecommerce and IoT (Internet of Things) etc. We are expanding our footprint in these upcoming industries and obviously, we need to grow globally. That’s essentially because the local market is not expanding as much as the international market. The international market offers us more leverage, room to expand, and profitability as well.

Profit: How so? Aren’t the margins smaller in the international market since the market already has a lot of competition?

NA: No, we make more money by selling our products outside this country than we make from Pakistan.

Profit: What is the reason for that?

NA: It’s because Pakistan is a low price market, and is saturated. Companies do not have the power to invest, not enough spending power. For example, a service that we in Middle East or Africa fetches us five times the money we make by the selling the service in Pakistan.

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Profit: Considering all that you just said, are you focusing more on international expansion rather than growing locally?

NA: No, you can’t call it ‘focus’. We are forced to have a decent mix in order to stay financially viable.

Profit: What is the ratio of your revenue is earned from the local and international market?

NA: It’s 50-50.

Profit: Do you think that the SMEs in Pakistan are shifting towards such solutions as ERP (Enterprise Resource Planning) programs etc?

NA: Yes, but not as much as they should be. Their purchasing power is not enough and they remain under pressure.

Profit: How have you maintained the firm’s competitiveness in the ERP market?

NA: By repeatedly doing the same job. We have achieved sharper skills and intellectual property in the sense that we can understand those problems better than the rest, and thus provide better solutions to it. For example, if we deploy an ERP solution for a particular industry or company, suppose we automate LESCO; we get to know their processes and the problems they are facing. Once we fix these problems, we can solve issues of similar nature in other such companies like FESCO and KEPCO. Then it becomes far more easier and economical to deploy a solution.

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Profit: What challenges are being faced by the Pakistani sector?

NA: The biggest challenge is that the market is not growing. Public sector spending on IT sector is not as much as it should be. It’s inadequate.

Profit: What’s your opinion about the Punjab Information Technology Board (PITB) and the work it is doing in the IT sector.

NA: The problem with PITB is that they want a job done (solution) at a cost of only Rupees one lakh, while the solution costs Rs1 crore in the international market. They are doing nothing but make-believing the entire thing.

Profit: Do you think all the progress that they’re showing is a facade?

NA: Why are you asking me? The whole world knows that it’s a facade.

Profit: Why have we not been able to produce a single company worth a valuation of $100m, let alone a billion-dollar startup? India has more than ten such companies.

NA: It’s because there are no opportunities here and we don’t have an IT ecosystem.

Profit: What do you mean by that, is it the government that does not support the industry?

NA: Firstly, the government doesn’t recognize us. I’ll explain it to you. Look at the textile industry, its exports are declining. Our government has given them a Rs 180 billion package to boost their exports. The industry will do what is has done since the last thirty years. They have taken almost Rs 30 billion in the form of rebates alone over the last three decades. The money was spent on setting up sugar and cement factories by these people.

They have taken rebates up to 24 per cent. It has reduced in the last few years and now it’s 8 per cent, because it’s a declining sector. It is a labour-intensive industry and I am not suggesting that the industry should not be promoted, it’s just that the IT sector has high-value and high yield export potential.

There is no value-addition being done in the textiles sector. IT exports are growing at 15-17 per cent year-on-year. This can jump up to 50 per cent YoY. If they give even half the amount of the package given to the textile industry to the IT industry, it will have a much greater impact in terms of increase in value of exports. Take a look at the government’s Vision 2025, it clearly says that we wish to create a knowledge economy, which includes: IT industry, engineering industry; pharmaceuticals industry etc. Words won’t make it real; the government needs to invest in it.

Profit: When can we expect Pakistan to have a $100 million tech company?

NA: We can’t say for sure, the pace is really slow.

Profit: What’s your opinion about Tech Incubators like Plan9 and likes of it, are they producing good startups?

NA: This is because what they’re doing is unnatural. It’s like they’re teaching you entrepreneurship, which is not true. Entrepreneurship cannot be taught in classes, it’s an in-built capability. It comes from within. Universities offer knowledge and what Pakistanis are trying to copy (West) is not possible because that place has an entirely different and much advanced ecosystem present. In Silicon Valley, you can access investors and win their trust. All of that is missing from the domestic scene. Planning is something else and actually executing it is something completely different. A powerpoint presentation and an excel sheet does not make a business.

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Profit: So you don’t see any IPOs from tech companies?

NA: There will be a few. One or two each year.

Profit: So where is the problem coming from?

NA: Scalability is the issue. My team has been asking me to make the company public since the last five years. But where would I spend the funds raised by the IPO? How would I increase value for my investors and myself? All because we lack a robust ecosystem.