On the night of November 1, stretching into early next morning, close to half the workforce at the Noida office of a US-based IT service provider was informed that their services were no longer needed. A former employee says salaries for the staff at the Noida office were declared delayed by a day on October 31. The official explanation was that the servers were not working. “They weren’t clear about how many people were going to be laid off,” he says. The next night, they “axed 125 people in half-an-hour.” They all got a severance package—a cheque for October and another two months of salary—and a termination letter. Rumours of layoffs had started doing the rounds four to five months ago. The talk was that the company was opening offices in a neighbouring country.
Curiously, the day the workforce in Noida was sacked, almost the same number of employees for the same low-level IT-enabled jobs logged into their systems, 676 kilometres away, in Islamabad, Pakistan.
Job cuts have plagued the Indian IT sector for about two years now and have begun to get pretty serious from the start of this year. “Bloodbath in Bangalore” has been the recurring headline. But the trend of these jobs going to techies in Pakistan is more recent. Away from all the noise of ceasefire violations and surgical strikes, where Pakistan could really hurt India is in taking away low-end IT jobs. The neighbour has a budding IT industry, growing in its own space, looking to emulate the Indian IT success story where right now data operators and BPO callers come much cheaper.
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In August 2015 The New York Times asked: “Pakistan, the Next Software Hub?” In the same year, Upwork.com, a freelancing website, said that the country has the fifth largest number of software freelancers by number. This year, Freelancer.com, which has over 26 million registered users and is probably the largest website of its kind, has Pakistan on the third spot in its list. In mid-May, e-commerce giant Alibaba signed an MoU with the Pakistan government and will reportedly invest $400 million in the country’s e-commerce sector. Telecommunication bigwig Telenor is said to have invested $3.5 billion over the last twelve years in a country which is now up to speed with 3G and 4G services. Over a decade ago, China Mobile had acquired Paktel, then a pioneer in the telecom sector in Pakistan, in a reported deal worth $284 million.
Telecommunications, a sector which largely feeds IT with basic infrastructure, is an area where China has been investing heavily. In March this year, Pakistan Telecommunication Company Limited (PTCL) and China Telecom Global (CTG) signed an agreement to boost the growth of optical fibre networks in Pakistan. Their influence rising in the background of other CPEC investments, the State Bank of Pakistan reportedly revealed that Chinese FDI in the telecom sector was close to $92.5 million for July and August this year, the aim being to boost 3G and 4G coverage. Could China be doing to Pakistan what the United States did for the Indian IT sector two decades ago—when Y2K brought the Indian IT sector to the world stage, thanks to numerous US companies outsourcing the more menial work to Indians?
10Pearls, based in Karachi, has been serving customers from the US since 2015. So, how far has Pakistan travelled on the IT gravy train? How grave is the threat of its IT experts stealing jobs from India? Shehryar Hydri, the Secretary General at Pakistan Software Houses Association (PASHA), an industry trade body equivalent to India’s NASSCOM, tells Outlook that close to 10,000 IT graduates enter Pakistan’s job-market each year, in an industry which is worth about $3 billion, which is not much when compared to the Indian IT industry. But what is to come next should worry the Indian IT sector. “We have about 1,50,000 mainstream techies and between 1,50,000 and 2,00,000 freelancers but the number is expected to almost double if you take the non-tech freelancers into account,” says Hydri. These numbers may be minuscule compared to what India churns out —anywhere between 3 to 4 lakh engineering graduates enter the job market every year—but the fact is that in Pakistan they are rising exponentially while in India they have tapered off.
The other plus that Pakistan has is the English language, particularly for IT firms from the US. Arshad Ali, executive director of the higher Education Commission, Pakistan, believes all graduates in Pakistan are proficient in English and that the number of institutes offering technical education has doubled over the past ten years. “Now there are 188 universities offering IT programs,” says Ali. Language database Ethnologue claims 17 crore Pakistanis can speak English. Most of them may not get past a Wren and Martin grammar book but would have the requisite skill for data entry or other low-end IT jobs. Similar to India, Pakistan has a large pool of youngsters. A United Nations Population Fund report says that 58.5 million out of the total 200 million Pakistanis are between 20 and 24 years with 69 million under 15. Current trends indicate that more and more from this pool of youngsters will be inclined to join the IT industry.
So, should India be looking over its shoulder, wary of a Rawalpindi Express zipping past it in the IT race? It may be too far-fetched, say experts. The sheer numbers are in India’s favour and it may be some time before Pakistan becomes a threat in the job market. “The job losses in India are because of automation,” says Kris Lakshmikanth, chairman and managing director at Head Hunters India, an executive search firm. “It is an exercise in cost reduction and telling clients to automate, not a question of jobs going to Pakistan,” he says. Lakshmikanth cites HCL centres in Madurai and Coimbatore, saying that “jobs from the main metros are going to rural and semi-urban areas.” He says companies based out of India are moving to low rental—cheaper land and labour as compared to the metros. Ambika S., a senior HR person at Shiras HR, a recruitment consultancy based in Bangalore, agrees. She says the Indian BPO industry does not have much to worry about as the entry-level jobs are still there. “The problem arises at the middle management levels for candidates with five to ten years of experience,” she says.
Debojyoti Das, a US-based consultant, says Pakistan’s ‘political instability’ is a reason why companies from abroad would shy away from investing in the country. Das adds that a lot of in-sourcing has started happening in the US following a backlash from consumers who realised they were speaking to executives in faraway India and Pakistan. “I think it’s obvious, given that we love to hate each other, even 125 jobs going from India to Pakistan is seen as a threat,” says Hydri. He says it’s actually “a back-handed compliment to your own industry. Your guys have moved out of BPO outsourcing and up the food chain. In terms of IT maturity, we are five to ten years behind India.” But that precisely could be Pakistan’s advantage, as it was India’s two decades ago. It is true that India has ‘outpriced’ itself and BPO jobs have gone to places like the Phillipines, Bangladesh and Malaysia in the past. Now Pakistan is aggressively trying to corner a part of that pie.