This document provides an overview of Pakistan's IT industry and strategic framework. It discusses the global IT industry trends, the growth and success of Pakistan's economy, profiles the country's IT industry including key statistics on companies, exports and world-class products, and outlines a strategic framework to sustain industry growth based on international best practices.

1. PRESENTED BY PAKISTAN SOFTWARE EXPORT BOARD (PSEB) PAKISTAN’S IT INDUSTRY PROFILE & STRATEGY

2. PRESENTATION ROADMAP Global IT Industry Overview Pakistan Economic Success Story Pakistan IT Industry Profile Strategic Framework

3. GLOBAL IT INDUSTRY OVERVIEW “ Since the technology bubble burst in 2000 growth in IT Services, which picked back up in 2003, has remained robust with higher growth in the Offshore Outsourcing component“

4. GLOBAL IT SERVICES INDUSTRY OVERVIEW IT INDUSTRY GROWTH 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2004 2005 2006 2007 2008 2009 2010 Trillions Source: “IDC Press Release” 10 th Jan. 2007 6.3 1.481 2010 6.3 1.394 2009 6.3 1.312 2008 6.3 1.238 2007 5.6 1.165 2006 5.6 1.103 2005 5.6 1.045 2004 Rate Growth (US $ Tril.) Year IT INDUSTRY GROWTH

5. GLOBAL IT INDUSTRY OVERVIEW SERVICES GROWTH IT SW & Services ITES Source: “Worldwide and US BPO” 2004-08-IDC 2004 “Bearing Point Report” 2005 0 100 200 300 400 500 600 700 800 900 Billions 2004 2005 2006 2007 2008 2009 2010

6. GLOBAL IT INDUSTRY OVERVIEW GLOBAL IT OUTSOURCING 0 20 40 60 80 100 120 140 2004 2005 2006 2007 2008 2009 2010 Billions Source: “IDC-Global IT Economic Outlook” 2004

7. ITPS GLOBAL MARKET SIZE Total Global Spending Total Outsource able Actually being 0ffshored US $ 1.045 Trillion US$ 280 Billion US$ 40 Billion Source: “Strategy for Increasing Exports of BPO” Bearing Point Report 2005

8. GLOBAL IT INDUSTRY OVERVIEW US IT OUTSOURCING SPENDING Source: “Worldwide and US IT Outsourcing Services” IDC Report 2004 U.S. IS Outsourcing Spending Share by Vertical Industry 0 2 4 6 8 10 12 14 16 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 % age Construction 16 Industries 15 Education 14 Wholesale 13 Insurance 12 Transport 11 Healthcare 10 Utilities 9 Services 8 Retail 7 Media 6 Processes 5 Finance 4 Government 3 Banking 2 Manufacturing 1

9. BPO SERVICES SHARE GLOBAL IT INDUSTRY OVERVIEW Source: “IDC-Market Opportunities by Horizontal Business Functions” 2004 11 682 614 554 497 447 405 375 Total 39 10 8 7 5 3 22 837 Training 7 38 35 33 31 29 27 26 Facility Operations and Management 6 183 176 168 158 147 136 126 Sales & Marketing 37 37 30 24 19 12 7 6 Engineering 12 288 255 226 200 182 166 155 Logistics 12 72 64 57 50 45 40 37 Customer Care 10 22 20 18 16 15 14 13 Finance & Accounting 34 6 4 3 2 2 1 1 Procurement 20 22 19 16 13 11 9 8 Human Resources 2003-2008 CAGR (%) 2008 $(M) 2007 $(M) 2006 $(M) 2005 $(M) 2004 $(M) 2003 $(M) 2002 $(M) KEY HORIZONTAL BUSINESS FUNCTIONS

10. GLOBAL IT INDUSTRY OVERVIEW BPO MARKET SHARE Source: “Gartner- Press Release” 2006

11. GLOBAL IT INDUSTRY OVERVIEW IT OUTSOURCING SUPPLIERS (USD 40 BILLION) 0.9 0.5 1.8 1.9 4.7 12.6 17.2 India Canada China Eastern Europe Philippines Mexico Others Source: “Strategy for Increasing Exports of BPO” Bearing Point Report 2005

12. PAKISTAN ECONOMIC SUCCESS STORY “ Pakistan’s economic resurgence is based on strong fundamentals and is receiving international acclaim… ”

13. ECONOMIC SUCCESS STORY One of the fastest growing economies in the world Doubling of GDP between 1999 and 2006 Graduation to Middle Income Country 8.4% growth in 2005 was 2nd highest in the world 7% growth in 2006 Over 1000% growth in Foreign Direct Investment from USD 300 mil in 1999 to USD 3 billion in 2006 Multi-billion dollar real estate investments by leading international developers like Emaar, Al Ghurair, and Tamimi in hotel and residential projects Tremendous investments and growth in Telecom, IT, Real Estate, Electronic Media, Oil & Gas, Automobiles, Manufacturing and Finance Over 400% growth in remittances from expatriates abroad from USD 1 billion in 1999 to USD 4 billion in 2005

14. ECONOMIC SUCCESS STORY Over 40 time increase in foreign exchange reserves between 1999 and 2006 to USD 12.5 billion Doubling of exports in same period to USD 17 billion in 2006 A two and a half time reduction in external debt and liabilities ratio to total foreign exchange earnings to a healthy 137% Increase in Government revenue collection of 130% in same period to USD 11.7 billion with broadening of tax base Debt to GDP ratio of healthy 59% with a legal limit set at 60%

15. ECONOMIC SUCCESS STORY Moody’s B+ rating and Standard and Poor BB rating. Over 1000% increase in stock index over same period making it one of the best performing exchanges in the world Over-subscribed international offerings of dollar, euro and Islamic Bonds at only 2% above US Government rates Free market rupee exchange rate hovering at PKR 60 for USD 1 for last four years

16. ECONOMIC SUCCESS STORY One of the largest educated, English-speaking workforces in the World with overall population of 160 million A supportive, forward-looking Government Proximity to Middle Eastern, Central and South Asian markets UBS Warburg, 2006 “Pakistan has arrived” Lehman Brothers, 2006 “Best IT outsourcing fundamentals” IDC, 2006 “Surprising new home of offshore outsourcing”

17. PAKISTAN IT INDUSTRY PROFILE “ Starting from a relatively low base in 2003, the Pakistan IT Industry has experienced rapid growth over the last three years … ”

18. PAKISTAN IT INDUSTRY PROFILE OVERVIEW Fifty percent annual growth reported by SBP Over 950 active IT companies Over 125 ISO & CMM certified companies – a world leader Seven MNC Development Centers and many more projects Three Public Companies; Several World Class Product Companies Two billion dollar industry, including one billion dollars of exports IDC: “Surprising new home of offshore outsourcing in South Asia.”Lehman Brothers: “Best IT fundamentals of any offshore outsourcing country.” PSEB re-engineered website ( www.pseb.org.pk ) receiving 1 million hits a month, 70% from overseas

19. INTERNET CONNECTIVITY MAP Transworld Associates, 2006

20. IT COMPANIES BY LOCATION PAKISTAN IT INDUSTRY PROFILE Source: “PSEB National Census of IT Companies”, 2006 33% 954 TOTAL 1 13 Others 4 38 344 Karachi 3 28 290 Lahore 2 33 307 Islamabad/Rawalpindi 1 Percentage (%) Figure City S.No. Karachi 38% Other Cities 1% Lahore 28% Islamabad/Rawalpindi

21. CALL CENTERS STATISTICS PAKISTAN IT INDUSTRY PROFILE PSEB Registered Call Centers by city Call Centers Share in Total Revenue Source: “PSEB National Census 2006” “ Bearing Point Strategy for Increasing Exports of BPO” September 20, 2005 Call Center 26% IT and Software 60% Other ITeS 14% Islamabad/Rawalpindi “ 79” Karachi “ 131” Lahore “ 112” Other Cities “ 8”

22. PAKISTAN IT INDUSTRY PROFILE IT EXPORTS BY REGIONS Source: “SBP” Jul-Dec 2006 USA UK THAILAND UAE CANADA CHINA JAPAN HONGKONG GERMANY AUSTRALIA SINGAPORE OTHER USA 58% UK 9% Others 16% Thailand 4% UAE 3% Canada 2% China 2% Japan 2% Hong Kong 1% Germany 1% Australia 1% Singapore 1%

23. PAKISTAN IT INDUSTRY PROFILE GROWTH OF KEY COMPANIES Between 2003-06 these seven sample IT companies grew by over 400 % Source: “PSEB Survey” 2005

24. PAKISTAN IT INDUSTRY PROFILE TOP 10 EXPORTERS FY 05-06 Xavor Pakistan Pvt Ltd 10 Enterprise DB 9 Geopaq Tech. (Pvt.) 8 Trivor Software 7 Descon IT24 Pvt Ltd 6 Elixir Technologies 5 System Pvt Ltd 4 TRG Pvt Ltd 3 Ovex Technologies 2 Netsol Technologies 1 Rank Companies Pakistan (State Bank Figures) Source: “SBP”, “PSEB”, “Bearing Point Study” September 20, 2005

25. PAKISTAN IT INDUSTRY PROFILE MULTINATIONAL DEVELOPMENT CENTERS & PROJECTS

26. PAKISTAN IT INDUSTRY PROFILE MULTINATIONAL DEVELOPMENT CENTERS & PROJECTS

27. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES TELECOM Wavetech : Large display systems in public places Inov8 : Leading mobile transaction management platform Mobile complete: mobile testing suite Pixsense: Mobile Photos JOB PORTALS Rozee.com.pk : Online recruitment solutions DOCUMENT MANAGEMENT eDox : Superior document management and office automation solution with over 150 international customers

28. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES PERSONAL PRODUCTIVITY Scrybe : Leading Web based email and calendaring solution RETAIL ITIM : Fast growing retail solution with over 50 UK customers SOCIAL NETWORKING Naseeb.com : Muslim social networking portal

29. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES FINANCE Mixit : Stock Market Order Management, NYSE, USD 0.5 Bil per year NetSol : Car Leasing and Services. Daimler Chrysler, Toyota, BMW Systems Limited: Mortgage Lien processing software has leading share of the US market) Autosoft: Retail banking Solution running in three countries Metalbid.com : world leading metal exchange TPS : e-payment and e-banking (Customers: Al Bilad KSA, CBK, BoK, ESB, UBL Kuwait, 1Link, Allied Bank)

30. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES HEALTHCARE TSG: Leading medium size hospital data warehouse; 200 customers in USA Cure MD : Leading web based HIPAA complaint healthcare system

31. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES ENTERPRISE COMPUTING Ultimus : Business Process Management. 160 international customers including Microsoft & White House Five Rivers Technologies : Clear Cube Partner and world leader in fast growing field of centralized computing.

32. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES SOFTWARE SERVICES Cube XS: Level 4 Data Center for AT&T Visualsoft : Hardware and software system integration Kalsoft : Advanced infrastructure design and implementation Averox : Enterprise client/server based solution Si3 : System Integration solution providers Techlogix : Business process improvement solutions Techaccess : Enterprise management solutions Systems Ltd : IT and BPO services Pi Sigma Group : Consulting and software development Comcept: Innovative telecom solution provider

33. PAKISTAN IT INDUSTRY PROFILE WORLD CLASS COMPANIES IT ENABLED SERVICES Post Amazers : Animation. “Son of Mask” and “Exorcist : The Sequel” LMKR : Seismological and Geological Data Management. BP, CALTEX, TEXACO. iEngineering : Platform Management. Most comprehensive database in the world Touchstone BPO, Ovex, Infospan, TRG, IT24 : IT enabled services/Call Centers

34. PAKISTAN IT INDUSTRY PROFILE EXPORT OF IT SERVICES Source: “Pakistan’s IT Revenue grossly understated” V1.4, PSEB, 31/08/2006 USD 1,050 million Grand Total USD 250 million (At least 5000 workers earning at least USD 50,000 per year on average) 4. Temporary Movement USD 450 million 3. Commercial Presence Abroad USD 200 million (Average USD 250,000 expenditure by over 800 entities) 2. Consumption Abroad USD 150 million 1. Cross Border IT Exports Mode

35. PAKISTAN IT INDUSTRY PROFILE LOCAL INDUSTRY REVENUE Source: “PSEB” and “Bearing Point” 2005-2006 USD 200 million IT Services Software and services, IT enabled services, (Other than sales to Multinationals, Multilaterals, and Foreign Missions) USD 150 million International Software Vendors USD 1,150 million Total Domestic IT Revenue USD 200 million Peripherals – 1/3 of Computer Sales USD 600 million PC/Laptops/Servers 1,000,000 new and used CPU@ USD 600 per CPU Revenue FY 05-06 Area

36. TOTAL INDUSTRY SIZE PAKISTAN IT INDUSTRY PROFILE Source: “Pakistan’s IT Revenue grossly understated” V1.4, PSEB, 31/08/2006 USD 2.2 Billion USD 1,150 Million USD 1,050 Million Total Industry Size Local IT Industry Revenue Export of IT Services

37. PAKISTAN IT INDUSTRY PROFILE COMPARISON WITH INDIA, 30 th June 2005 Source: 1. PSEB Study “Assessment of IT Professionals in Pakistan” – 2005 2. “PSEB Domestic Business Department” 3. “NASSCOM” 2006 4. “NASSCOM 2006” 5. “NASSCOM Strategic Review”, 2004, p 207 1:10.35 1:12.87 1:18 Ratio 6.21 GBS 5 965,250 4 USD 36 billion 3 India 600 MBS 2 75,000 1 USD 2 billion Pakistan Internet Bandwidth Usage IT Personnel Estimated Global IT Revenue Country

38. Pakistani labor is cheaper than India. Total Price in Market 0% 100-200% 100-200% 58,598 23,708 to 35,562 18,000 to 27,000 Source: The Buying Triangle, LLC, 2006 OPERATING COSTS IN US, INDIA & PAKISTAN US$ Cost per FTE (Full Time Employee) 42,927 6,179 4,500 8,571 1,000 800 1,500 2,328 2,000 2,600 847 700 3,000 1,500 1,000 58,598 11,854 9,000 Personnel G&A Expense Telecom Property Rentals Depreciation Total Expenses Markup USA India Pakistan

39. STRATEGIC FRAMEWORK “ While the Pakistan IT Industry has made impressive strides over the last three years, sustaining the growth will require sustained measures that are part of an integrated strategic framework …”

40. STRATEGIC FRAMEWORK INTERNATIONAL BEST PRACTICES & LESSONS LEARNT 1950 MANPOWER MARKETING 1990 DEVELOPMENT AND COMMUNICATION COSTS FALL BY SEVERAL ORDERS OF MAGNITUDE MAKING LARGE SCALE OFFSHORE IT ECONOMICALLY FEASABLE AND CAUSING DEMAND TO SURGE 1980 FUNDING MANAGEMENT 2000 MANPOWER 2003 MANAGEMENT 2000 SIZE, DOMAIN, TECHNOLOGY, COUNTRY IMAGE

41. IT & TELECOM INDUSTRY COMPARISON Intellectual Property Protection, Convergence, and Taxes & Tariff equal challenge Deregulation policy major challenge and success Public Policy Only VC Multiple sources Finance Quality major problem. Cost also problem n.a. Telecom Bandwidth High rents not affordable High rents affordable Office Space Small, Manpower intensive companies that cannot afford high priced manpower High Margin, Capital intensive business that can afford expensive manpower Human Capital International, Highly Competitive Under the Radar Screen Controlled, Domestic, Oligopolistic High Profile Market IT industry Telecom Industry Area

42. 0 10 20 30 40 50 60 70 80 90 Telecom Bandwidth IT enabled Office Space Human Capital Marketing/Country Image Availability of Finance Company Capability Development Public Policy Facilitation Strategy & Research Other IT INDUSTRY FEEDBACK IT Industry feedback was conducted with the collaboration of Top IT Companies in Islamabad, Lahore & Karachi. The scale of 0-90 shows the importance of the area of concern. The colored bars represent the areas of concern. Areas of Concern No. of Companies

43. STRATEGIC FRAMEWORK Direct Drivers: Office Space HR Marketing Telecommunications Bandwidth Indirect Drivers: Provide Reliable bandwidth of sufficient capacity in quick time Provide Quality IT-Oriented Office Space at affordable rates in sufficient quantities and in quick time Provide adequate quality manpower in sufficient quantities with acceptable attrition, in quick time Sustained dominance of niches; Bring development house or call centre of large technology or other MNC to Pakistan Research on the IT Industry Strategy & Research Strategy, Systems, Culture Internal Grease the wheels of private enterprise Facilitation Legislation that promotes and protects the IT industry Policy Employ certifications as a “rite of passage” Company Capability Development Promote innovation, rapid growth and support the Strategy Finance

44. STRATEGIC FRAMEWORK STRATEGY & RESEARCH Current Profile Pakistan IT Industry Size Study, National Census of IT Companies, Strategic Framework for IT Industry Development, Others Committee formed (SBP, MoIT, Statistics, EAD, PSEB) to gather statistics Next Steps Gartner Study Target – 2010 Accurate and current industry data, clear strategy, effective implementation

45. STRATEGIC FRAMEWORK Current Profile PSEB has developed methodology for launch of VC Fund based on interaction with several international VC, domestic financiers, and Grant Thornton study VENTURE CAPITAL FUND & ENTREPRENEURSHIP DEVELOPMENT Next Steps Meeting of PM with Limited Partners Center for screening business plans and forwarding to financiers, creating entrepreneurial culture, and supporting M&A and IPO

46. STRATEGIC FRAMEWORK IT PARKS Current Profile PSEB operates 750,000 square feet in 11 STP Proposed IT Parks Transparency through Inclusivity , Publicity and Objectivity BOT (Nationwide Census of IT Companies, National Assessment of Public Land, Three City Survey of IT Company Location Preferences) - Due Diligence ( International Parks & Domestic Projects) - Market Teasers - Retention of top consultants Next Steps CAA land in Karachi and Lahore

47. STRATEGIC FRAMEWORK Current Profile Reengineered Website now receiving one million hits monthly Monthly bulletins with subscription of 5000 MARKETING & PR PR, Sales Pipeline, Matchmaking Sales Pipeline for GLOBAL 2000/MNC Development Centers Joint Action Plans (JAC)/MOU : Malaysia, China, and Turkey. Singapore and Mauritius in pipeline . Over one hundred and fifty PR Events and Artifacts Tradeshows : Last year PSEB sponsored fifty one companies in nine international tradeshows and delegations and four domestic events. Customer Events & Leads Passing

48. STRATEGIC FRAMEWORK PUBLIC POLICY Taxes & Tariffs, Convergence, IPR Next Steps MoIT/PSEB to be consulted on all proposed legislation impacting IT including that tabled by organizations like CBR . Current Profile Removal of GST on computers (Malaysia MMSC 100% Corporate Tax Free and duty free, Turkey Technoparks Corporate and Personal Tax Free, India STP Duty Free Imports and reimbursement of sales Tax, Vietnam Tech parks no import tax, no VAT and 10% Corporate Tax Convergence: Facilitation of Cogilent CEO release Working with PTA and PTCL to reduce BW cost and improve quality. Data Confidentiality Act

49. STRATEGIC FRAMEWORK HUMAN RESOURCE DEVELOPMENT Current Profile Currently 90,000 IT graduates . Need 230,000 by 2010 . Strategy to increase Tier One institution output, improve Tier Two institution quality, and expand professional training Academic Programs >> Internship >> Apprenticeship >> Professional Training

50. STRATEGIC FRAMEWORK Current Profile Visa processing, Software NOC Open Source : 11 migrations saving PKR 35 million;700 trainees; translation of instruction kit into Bhasa ERP : Launching with BSF Industry associations (PASHA, OPEN, APSENA, TIE, ACCO, CSP, PCA, and ISPAK) FACILITATION Regulatory Facilitation & Targeted Interventions Establishment of a Visa Handling Desk in MoFA for expediency in handling IT company visas; similar expediency for issuance of work permits by BOI.

51. STRATEGIC FRAMEWORK COMPANY CAPACITY DEVELOPMENT Next Steps ISO 27001 Target – 2010 Over 300 ISO 9000, CMMi, Six Sigma, ITIL, OPM3, and ISO 27001 certified companies Current Profile Under PSEB sponsored program over 110 ISO certified companies , and over 20 CMMi certified companies (by 1H07) making Pakistan a world leader.

52. STRATEGIC FRAMEWORK INTERNAL Target – 2010 Best management practices, automated, ISO 9001 and ISO 27001 certified. Market competitive salaries and 45 Additional positions Current Profile Over 40% attrition rate owing to non-competitive salaries. Next Steps ISO Certification, ERP, ECM Have requested 280% Funding Increase amounting to USD 1.63 million

53. EXPERT ENDORESMENTS OF FRAMEWORK Professor Wong Poh Kam, Director of the Entrepreneurship Center National University of Singapore Dr. Robert Firth, Director Institute of Systems Sciences National University of Singapore Professor Ken Morse, Managing Director, MIT Entrepreneurship Center

54. PAKISTAN IT INDUSTRY PROFILE GROWTH PERCENTAGE 2003-2010

55. IT REVENUE GROWTH Source: “Strategy for Increasing Exports of BPO” Bearing Point Report 2005 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 USD in Millions 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Fiscal Year Domestic Revenue Global Export Sales Export Revenue (Estimated) Export Revenue (State Bank)

56. IT INDUSTRY PROJECTIONS 9,924 4,937 2,456 1,222 608 Bandwidth in Mbps 78,225 58,816 44,223 33,250 25,000 IT Graduates working in Domestic IT Firms 76,709 46,025 27,615 16,569 10,000 IT Graduates working in the Export IT Firms 250,000 177,262 127,756 74,729 52,500 Total HR working in IT industry 235,459 178,046 138,388 110,319 90,000 IT Graduates working in the Economy 8,781 5,934 4,060 3,112 2,000 Total IT Revenue in USD Millions 4,381 3,294 2,476 1,862 1,000 Domestic Revenue in USD Millions 4,400 2,640 1,584 1,250 1,000 Export Revenue Global in USD Millions 1,100 660 396 239 150 Export Revenue in USD Millions 550 330 198 120 75 Export Revenue (SBP) in USD Millions 09-10 08-09 07-08 06-07 05-06 Categories

57. STRATEGIC FRAMEWORK VISION 2010 Over ten billion dollars in annual turnover from several hundred million dollar services companies, leading product companies, and ten additional FORTUNE 500 and GLOBAL 2000 development centers. Internationally recognized as a leading IT destination 800 IT companies in the country 10 IT/Technology Parks nationwide providing 20 million square feet 230,000 IT graduates in the country 250,000 IT and non-IT graduates employed by the IT Industry USD 200 mil annual disbursement by VC Funds to the IT Industry 10 GBS International Internet Traffic with 99.99% uptime Over 300 ISO, CMM, ISO 27001, Six Sigma, OPM3, ITIL and certified companies Effective regulation for Convergence Facilitation, IPR protection, data protection, and prevention of electronic crimes and smooth regulatory approvals. Accurate, yearly updated industry data.

58. STRATEGIC FRAMEWORK Global economic downturn Country Branding Support of Other Government Agencies (CDA, CAA, PTA, PTCL, HEC, SBP, SECP, CBR, MOFA, MOF, Planning Commission) EXTERNAL RISK AREAS

59. THANK YOU