Pakistan Now a Hot Spot for IT Outsourcing !

The biggest boost to Pakistan's efforts to break into the global IT marketplace came on September 28, when India's finance ministry announced an income tax of more than 36 percent on foreign firms with software, R&D and customer service operations in India. This tax proposal had been in the works since the beginning of the year and is expected to prompt U.S. firms to follow GE's lead in selling off assets in India.

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Why is Pakistan the hot new offshore information technology (IT) destination? This is because of a combination of favorable economic circumstances. Just when many Western managers are finally becoming comfortable with the idea of working closely with Indian offshore outsourcing firm, along comes Pakistan outsourcing services- The most favorable place for offshore IT outsourcing.

Until recently, the majority of UK and USA companies outsourcing their customer contact services tended to look to outsourcing companies in India, since operational costs are lower than in the US, UK and the rest of Europe. However, continually interrupted power supply issues, accent issues and a lower productivity rate, are encouraging organizations to consider Pakistan as the offshore outsourcing service provider.

Companies who have done outsourcing to India have found that many sales have been lost and customers dissatisfied, since they are unable to understand the Indian operators English.

Pakistan is shaking off decades of "also ran" status. Funds invested into building educational institutions in Pakistan (when there were not enough jobs to absorb all the graduates from those institutions) are paying off as Pakistan begins to field a modern, highly productive labor force that is the envy of more prosperous but less tech savvy nations elsewhere in the region.

Why IT Outsourcing experts should Care?
Why should the average Western IT professional, businessperson or IT consumer care? Because we are all going to be buying and using more IT outputs from Pakistan. To be a smarter buyer and user of IT products calls for a familiarity with Pakistan, even for those who do not initially intend to do business with Pakistani firms. We are all part of a global economy and IT industry of Pakistan is an increasingly important part of that global economy.

The issues that Pakistan IT outsourcing faces as it gears up for the global high-tech marketplace are many of the same issues that both advanced and developing economies face elsewhere in the world, as both service providers and service consumers. Pakistan IT industry is making no effort to gloss over its challenges, which makes those challenges easier to address.

With a population of 160 million and a land area almost twice the size of California, Pakistan is a smaller and more unified country than most of its neighbors, which increases that nation's chances of solving its own problems and avoiding the mistakes that have plagued neighboring economies.

Any Western business manager who initiated or approved the establishment of an IT production or R&D subsidiary in India in 2004 could find that decision to be a career-ending move unless they have built in financial reserves to accommodate both the tax scheme of September 28 and upcoming taxes still on the drawing board.

A proposal is under consideration in New Delhi to tax activities conducted over international private leased connections (IPLCs) that carry most of India's voice and data traffic to and from the outside world. There is also a proposal to replace state-to-state customs duties (octroi) with a national value added tax. Both those tax proposals could be combined into a single scheme.

U.S. IT brokerage firms, their U.S. clients and domestic Indian IT companies will be largely untouched by the September 28 tax scheme. But the traditional offshore migration path of outsourcing Latest News about Outsourcing to an offshore location first -- before setting up captive operations there -- has been disrupted in India until economic reforms reduce the role of the Indian government in the economy and consequently reduce that nation's revenue requirements.

For Westerners with long-standing personal ties to Indian offshore outsourcing India, that country's September 28 tax scheme could have both personal and financial consequences. For new Indian workers who hoped for a position with a Western firm based in India, that country's revenue policy will alter careers, lifestyles and futures. Westerners can pack up and look for other another country to set up operations. However, what country?
Pakistan's Advantages

IT solutions in Pakistan is the primary beneficiary of India's decision to tax foreign firms with captive IT solutions in India. No other economy can match Pakistan's labor pool of educated English-speaking workers. No other economy can match Pakistan's salability Relevant Products/Services from Inter Land Business Hosting Services, reliability and low-cost environment.

5 Advantages of IT outsourcing to Pakistan, over outsourcing to India:

1. Western experience: Executives at IT firms in Pakistan often have worked and gone to school in the U.S., which is Pakistan's largest export market. Indian IT firms whose managers have worked in the West are generally more expensive than similarly positioned Indian IT firms, without always providing noticeable differences in program implementation capabilities. The willingness of Pakistanis to return home from the West stands in marked contrast to most Indians who arrive for school or work in the West and never look back.

2. Professionalism and integrity: The personal integrity of Pakistani IT professionals and managers is easy to identify and appreciate, especially by Westerners with business experience elsewhere in the region. However, the relatively open and trusting nature of Pakistani professionals working in IT firms, has made them easy prey for Indian IT business brokers who have managed to cheat several Pakistani IT firms by offering to provide them with outsourcing contracts in exchange for up-front fees. The Pakistanis assumed that these Indian IT professionals and business owners were open minded and charitable for coming to help less experienced IT companies in Pakistan gain access to international contracts, until the Indians took their money and disappeared.

3. Higher labor availability: Fewer holidays in Pakistan means less slippage in staff availability compared to Indian companies. Compared to Pakistani IT companies, IT firms in India are advised to hire a diverse workforce so that members of one community can enjoy important festivals while members of other communities cover the phones and keep production going.

4. Good accents: Pakistan's official language is English. Only Kolkata (formerly Calcutta) and the Punjabi areas of India can come close to competing with accents in Pakistan, where many families speak English at home and where accent neutralization for non-native speakers of English is substantially easier than in India. Language skills and accents provide Pakistan with a major advantage over all other Asian outsourcing destinations.

5. Low cost talent pool: India's top-tier labor force for IT work has been stretched thin in many areas, especially Bangalore, where escalating wage rates, turnover and higher outsourcing prices are reaching critical mass at the same time that the urban infrastructure Relevant Products/Services from Sybase ASE Linux Express Edition – FREE has exceeded its carrying capacity. Annual turnover rates reported to InternationalStaff.net for most merchant call center Latest News about call center facilities in India at the beginning of November are approaching 100 percent. High turnover rates are causing a shift to second tier Indian cities and to Kolkata. Escalating turnover rates are one of the Indian outsourcing industry's dirty secrets. In comparison, outsourcing services of Pakistan's top-tier talent pool is largely untapped and turnover rates are less than 20 percent.

More reasons to outsource IT services in Pakistan:

Safety and Security:
IT solutions of Pakistan is not without challenges, some of which are real (improving the telecommunications infrastructure) and some are exaggerated, especially in terms of the security Relevant Products/Services from AT&T Network Security Solutions situation. Once you have lived through a few riots in India, once you have taught yourself how to quickly turn the lights out and lay down on the floor because you are afraid of what might come through the window, then Pakistan doesn't seem so scary anymore.

The biggest danger that Westerners face in South Asia is from automobile accidents, particularly at night. India has over 8 times the number of highway fatalities per passenger mile than the U.S.

Shared Roles in IT outsourcing to Pakistan:
Pakistan and the U.S. have similar roles when it comes to human rights. Both countries are a beacon of safety and a haven for refugees. The government of Pakistan has not been advertising this fact. The people who have fled to Pakistan from surrounding countries in the region have, on a one-to-one personal basis. They are Pakistan's best ambassadors.

Before making up your mind about IT outsourcing to Pakistan, talk to people who have left there or have passed through there. Their origins might be different but their stories are often tragically similar. Too often, it seems as if they are all reading from the same script: family members (or themselves) in neighboring countries who have been victimized, jailed, possibly tortured, relatives killed, and all survivors traumatized and dispossessed. Pakistan IT companies welcomes them and serves as a place of safety and security.

From Iran, Afghanistan, India and elsewhere they come, seeking the same things that immigrants to the U.S. have always sought: opportunity, liberty, freedom of religion and respect for personal beliefs.

Americans naturally identify with the underdogs, the runners up, the people who are trying harder than anyone else to succeed. This is why many Americans find it easy to identify with Pakistanis.

Increased trade and joint projects between It solutions of Pakistan and outsourcing companies in India will pull those two countries together and create incentives for peace. American firms doing business in one or both countries can contribute to peace through responsible business practices and the moderating effects that employment and prosperity provide. This can and should be accomplished when American firms are allowed to operate on an equal footing with local firms, which for now only appears possible in Pakistan IT industry.

By Anthony Mitchell
E-Commerce Times
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