Locate Your Next IT Development Center In Pakistan

By G.N. Shah, Ronald Mueller

Macrosoft has a large and growing IT development center in Lahore Pakistan, called Mac Pak. Our experience with the center, with the people we have hired in the center and with the IT ecosystem around our center have all been very position. Our center has been part of Macrosoft for about 15 years now, so we have a lot of experience from this center on which to base our views.

The purpose of this short note is to delve more deeply into the IT ecosystem surrounding Mac Pak, as we see it and to discuss more broadly the IT ecosystem in Pakistan. We believe there is a lot to like about all the things happening in this country. And we say that not because of any bias, but because that is our strong fact-based conviction. We recommend companies considering an international development center to put Pakistan on their list for evaluation.

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We will be reviewing the following 5 major parts to Pakistan’s IT ecosystem:

IT Developer Pool  The large and growing developer community
Education of new IT DevelopersUniversities and academia educating in the IT- and STEM-sectors  
IT Business Sector Ecosystem  Other established companies in the IT sector
Start Up Culture  The start-up and venture capital sector
Government Policy    Government tax and other policy areas relevant to the IT sector

Our experience and understandings of the IT sector in Pakistan are broader than solely our management and oversight of the operation of Mac Pak. Among other considerations are the following:

  • Macrosoft has several senior managers, including one of the authors of this paper, who immigrated from Pakistan to the US over the last two decades and have kept very close ties to a large network of IT professionals throughout Pakistan, many of whom have now reached the CTO or higher levels within companies or divisions of global companies located in Pakistan.   
  • Both authors of this paper have tracked closely news and events relating to the IT sector in Pakistan including government pronouncements and actions, university actions relating to their increasing concentration on IT- and STEM- related educational programs, the growth of IT companies for export-related work and finally the overall swift growth of the start-up and venture capital sectors.

If we had to boil things down to a single point – it would be the superb quality and abundant quantity of human capital in the IT sector. In our view this fact is not well known or well appreciated in the US. There are three other issues that are also important: cost of operation; start-up culture; and connectivity infrastructure. We’ve seen a few different rankings of countries as to their potential for business expansion, and frankly we believe these four issues are not given enough weight especially for the potential of businesses setting up IT development centers in Pakistan. We will try to make that case more clearly and cogently in this paper.

IT Developer Pool

Let’s start with the developer community and consider two sides of that issue: 1. The current pool of mid- and senior-level talent across the major IT technology stacks and 2. The pace at which universities in Pakistan are graduating new IT, STEM and Engineering graduates each year.

Regarding the pool of the current IT developer community, it is now more than 25,000+ yearly engineer’s graduate. This is of course only a small fraction of the size of the pools in the US and in India, for example. But that fact misses the main point. Given the current size of the IT business sector, the developer pool in Pakistan is in fact much better balanced than in these two other countries. There is a general available of good talent to fill a company’s need to set up or grow an IT facility in Pakistan.

Moreover, there is a much greater percentage of top end highly skilled developers available. This shows itself in two ways.

At Mac Pak we have been able to assemble and operate highly skilled developer teams to take on high end enterprise grade software development, software product development, systems integration, and mobile apps.[1]

  • We have also found there is a considerable talent pool on emerging technologies, such as AI/ML, IOT, NLP, RPA, Edge Computing and Security with modern technology stacks Python, Java, AWS, Google Cloud, Azure and Open-Source. And again, this talent is available and will actually start and work at our company.

These are truly key advantages in our view and especially so during a ramp up phase when a company is scaling up its IT development facility or starting up a new development facility in Pakistan. Having access to an IT developer pool that is available, accessible, ready to start and work, and top tier talent are essential needs of a company.

Also highly important, the churn rate for well-established and reputable companies in Pakistan is a factor of 2-3 times lower than in other IT-centered countries. There is a culture where people stay in their current company rather than switch every year or so, as long as the company has a good total rewards package and career path for the employee.

Finally, Pakistan is the 3rd largest English speaking country, and we see it every day in our communications and interactions with our technical community in Pakistan.

Universities and Education of New IT Developers

At present, there are about 25,000+ new IT and engineering majors graduating each year from Pakistani universities.[2] This has been growing at a rate of ~20% per year. From a growth rate perspective Pakistan ranks in the top five among countries in growth of its IT technology pool. Universities and the government have jointly targeted this IT and STEM sector for high growth.

These graduating IT majors provide a superb pool of new talent available each year that companies can utilize to secure the entry level positions in their IT development center. This junior talent pool, along with those with 1-2 years of experience are ideal for us to train in specific new technology stacks that we work in today or intend to work in soon.

At Mac Pak we can access talent at the top-level universities in Pakistan in a number of ways.

  • We often team up with academic talent at these universities to do joint research and to utilize their talents on a consulting basis in specific top end development projects. Lately we have done quite a bit of this to include elements of AI enablement within our largest enterprise projects.
  • We have several students who work with us part- to full-time, while also pursuing their advanced degrees (MS, Ph.D. in IT, AI, etc.). We encourage this arrangement with the expectation that they will stay with us after graduation, and overall we have found this talent pool to be outstanding.
  • We recruit directly out of these top universities to fill entry level positions and to populate some of our new training program. Given the top-level contacts senior members at Macrosoft have with their counterparts in the University and IT business sectors in Pakistan, we are able to gain access to these top graduates and bring them into our company. We cannot so easily do that in the other countries we operate.

IT Business Sector Ecosystem

The chart below profiles some of the main characteristic of the IT business sector ecosystem in Pakistan. As shown, there are now over 300+ international companies operating facilities in Pakistan and most of them are IT-centered or have significant IT parts to their operation.

Pakistan now has 16 separate software technology buildings/campuses in safe and accessible primes areas of the major cities. These are set up to specifically cater to the needs of IT software companies, especially those that are export oriented.

As shown in the chart, Pakistani companies are exporting IT products and services to over 120 countries in the world, and the products and services include some of the largest global companies.

Pakistan IT and ITES Sector
Images from : Pakistan’s IT Industry Overview, Pakistan Software Export Board – Ministry of Information Technology & Telecommunication

[3] Image sourced from: Pakistan Software Export Board, Ministry of Information Technology & Telecommunication

One key point on the right-hand side of the chart that we will discuss in detail below: Pakistan is rated very high as a financially attractive country. Cost savings on operating an IT center in Pakistan can approach 70% over US and European costs. While that fact may not in itself be reason to set up an IT facility in Pakistan it certainly is a very positive factor to consider, especially when it is combined with all the other positive factors we present in this paper.

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Startup Culture

One of the interesting and compelling factors at play in Pakistan today is the very active IT start-up community and culture. There are tremendous numbers of small startup IT companies in cities like Lahore, led up by entrepreneurs, who are pursuing a specific mission of building a new product or service and are receiving funding from global investors. In this paper we are not concentrating on this startup community, although we will be happy to provide a lot of government and global companies reports on the topic. Suffice it to say here that this startup and venture capital ecosystem is growing tremendously in Pakistan.

There are also huge and growing numbers of smaller IT companies that are trying to scale up and expand their client base, offering services in the more traditional IT technology stacks. Recent reports put Pakistan in the top 3 for the size and diversity of its freelancing and gig economy. Many of these smaller IT companies are led by highly technical leaders. It is companies like this that we feel can play a very positive role in for US companies trying to set up a new IT center in Pakistan.

These small companies can provide top level resources under a range of arrangements that can be used to supplement the scale up of a new IT center. We currently have such arrangements with three such companies, and our relationships with them are working out extremely well. They provide high level talent that supplements our internal talent, and thereby allow us to scale up much more quickly that we would otherwise, and this arrangement also diversifies the risk of large scaleups.

Government Policies

Paksitan Govt Policies on Software

[3] Image sourced from: Pakistan Software Export Board, Ministry of Information Technology & Telecommunication

In our view government policies play a tremendously positive factor in successfully setting up and operating an IT center in Pakistan. The chart above shows the many different facets of government policies that have greatly stimulated the growth of the IT industry. As you can see, there are many tax and financial incentives that companies can take advantage of as they set up and operate an IT development center in Pakistan.

Below is a chart we extracted from a recent presentation we made to a large company about assisting them in setting up a new large IT center in Pakistan under a BOT engagement. We believe this chart on the ‘Digital Pakistan Vision’ is really the bedrock of all the many positive factors we have outlined in this report.

As noted, the government has assigned top priority to the IT sector and continues to follow that up with strong incentives to propel forward the growth of the IT industry in Pakistan.

Digital Pakistan

Final Comments

So that completes our paper laying out all the reasons we think it makes good sense for companies to consider Pakistan as their next international location for an IT development center. The chart below summarizes these major reasons.

Given our experience with Mac Pak and our connections to numerous Pakistani technology leaders both in the US and in Pakistan, we feel we are well qualified to work with US companies interested in evaluating Pakistan as the site of an IT development center. Moreover, as noted earlier, Mac Pak is now in the midst of a very significant scale up (from 175 to 500 individuals by 2024). For companies interested in smaller IT development teams in the range of less than ~40 technical staff we would be happy to talk to you about joining up with our Mac Pak growth plans. We are interested to work with several clients on integrating our BOT engagement with them into our Mac Pak growth plans.

Pakistan IT Industry Ecosystem

Overall, the chart presents a diversified, vibrant and growing IT business sector taking hold and growing rapidly in Pakistan.

[1] There are other areas where developers in Pakistan excel including gaming, animation, consulting and BPO services. However we do not have experience in these areas at Mac Pak.

[2] There are over 173 major universities in Pakistan (HEC Recognized Universities).

[3] Images from : Pakistan’s IT Industry Overview, Pakistan Software Export Board – Ministry of Information Technology & Telecommunication http://www.moit.gov.pk/SiteImage/Misc/files/Pakistan%27s%20IT%20Industry%20Report-Printer.pdf www.pseb.org.pk, www.moitt.gov.pk, www.techdestination.com

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By G.N. Shah, Ronald Mueller | November 18th, 2021 | General

About the Author

G. N. Shah Chief Technology Officer of Macrosoft

G.N. Shah

Shah is a forward-thinking corporate leader with twenty years of experience delivering top-notch customer solutions in large scale and enterprise business environments. As a technology visionary and driver of strategic business systems development, allow Macrosoft to deliver best-in-class software solutions. Shah’s profound expertise includes business strategy, product development, enterprise-wide architecture, application migration, IT transformation, and international development management. Shah holds multiple professional and technical certifications, scholastic degrees, and an MBA.

Dr. Ronald Mueller Chairman and Founder of Macrosoft

Ronald Mueller

Ron is the Chairman and Founder of Macrosoft, Inc. He heads up all company strategic activities and directs day-to-day work of the Leadership Team at Macrosoft. As Macrosoft’s Chief Scientist, Ron defines and structures Macrosoft’s path forward. Ron's focus on new technologies and products, such as Cloud, Big Data, and AI/ML/WFP. Ron has a Ph.D. in Theoretical Physics from New York University and worked in physics for over a decade at Yale University, The Fusion Energy Institute in Princeton, New Jersey, and at Argonne National Laboratory.

Ron also worked at Bell Laboratories in Murray Hill, New Jersey., where he managed a group on Big Data. Ron's work focused around the early work on neural networks. Ron has a career-long passion in ultra-large-scale data processing and analysis including predictive analytics, data mining, machine learning and deep learning.

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