Friday, July 24, 2009

Pakistan Threatens Indian Grip On Offshore Outsourcing

Pakistan sat quietly as it watched it's Indian neighbors quickly ascended to become the IT outsourcing capitol of the world, however, they were paying attention. Using the same Indian business model, the Pakistani business and economic development community has achieved major successes in carving out their own piece of the lucrative offshore IT outsourcing business. In the global outsourcing market, dominance is hard to achieve for the long haul. As lower wage employees develop highly sought after skills, the cost of retaining these employees leaves companies at an economic disadvantage.

Based on the pure economics of the two countries, it is evident that Pakistani IT companies will outpace Indian companies in the coming years, based on several factors:

India has a developed IT sourcing infrastructure, with established professionals demanding increased salaries. Increased labor expenses for outsourcing solutions makes companies less competitive, unless the output is exceedingly exceptional.

Pakistan has a huge community of émigrés with experience in technology. And like India, it has a culture that values education and hard work. Pakistan, like India, has a large number of English speaking residents.

Pakistan predicts a 45% annual growth in coming years. Although Pakistan IT exports represent only 11% of what India exports, Pakistan is quickly closing the gaps on the lucrative software application development market.

Gartner, in its recent report 'Analysis of Pakistan as an Offshore Service Location' said the major factor behind the progressing status of Pakistan is the lower salaries and better infrastructure advantages than other offshore destinations. "The salaries of IT professionals in Pakistan are approximately 30% lower than those in India, while telecommunication costs are also lower as compared to any other offshore locations, which make Pakistan an attractive outsourcing destination."

The Pakistan government is fully committed to the Pakistani IT initiatives..."According to Gartner research report, government of Pakistan has devised a comprehensive national IT policy, designed to encourage the private sector. In order to drive development, Pakistan Software Export Board (PSEB) plans to construct new IT parks in major cities while 750,000 square feet of space in PSEB-designated parks has already been leased to IT companies."


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