‘We have to decouple service industry from manufacturing’
Asif Akram, the Chief Operating Officer at Systems Limited, is a seasoned global management leader and technology evangelist with 20+ years of experience across various geographies working with consulting giants IBM and PWC, leading sales and delivery of several complex consulting and system integration projects.
He’s passionate about helping enterprises navigate through the “new” transformation by focusing on people, processes and technology challenges. Following are the edited excerpts of a recent conversation BR Research had with him:
BR Research: How do you view the SBP’s policy of curtailing the exporters to remit money abroad and restrictions on foreign currency transactions?
Asif Akram: We need to first establish a few facts before we figure out what the services sector needs. Number one, there is no large technology services company in Pakistan that is of global scale. Systems Limited is trying to get into that league. We have currently 6000+ people in the company. For context, TATA, WIPRO and the likes are 300,000 to 500,000 people.
Secondly, only a few tech companies are listed on the stock exchange in Pakistan, and SYS is one of them and the largest in terms of market cap.
Third, it is extremely difficult to bring in new business in the country in the current situation.
And the fourth fact is that we do not have major problems with talent supply; we have the talent, and we just have to train people despite many leaving the country in the ongoing economic crisis. What is needed for the technology services sector is to create demand. It takes a lot of effort to bring even a million-dollar business into the country. We need to increase the size of the pie. This demand has to be created by our companies, the government, the diaspora and all the stakeholders so that the companies in the US and the UK/EU prefer to do business with Pakistan.
When we grow the pie, that’s when we will also be able to solve the problem of remitting money abroad. Should SBP revisit its policy? Absolutely! Is it doing it? Yes, it is. The money that an exporter like us can remit is limited. Should SBP increase this limit so the exported can make merger and acquisition deals? Absolutely yes.
BRR: Could you explain the growth pattern of IT exports over the last 10 years?
AA: During 2013-18, economic priorities were different; focus was on infrastructure development. We were an underperforming sector with exports hovering around $1 billion. Growth started coming in IT exports in 2018 when some focus was shifted to the services sector. And then the pandemic happened. Every sector needs a starting point, an event, or a push. COVID facilitated the tech sector globally as people had no option but to become tech savvy; it was not business-as-usual situation and everyone had to adopt technology in operations or the way they did business. Governments in the UK/EU and the US gave money to mid-sized tech companies, and countries like ours got a lot of demand and business.
What also benefitted Pakistan is its increasingly younger population that is tech savvy or willing to use technology – pushing companies like Amazon and Microsoft to consider Pakistan on serious grounds.
And thirdly, as remote work picked up globally due to COVID restrictions, freelancing, and outsourcing also gained momentum. Pakistan also benefitted greatly in this era.
The government also started talking about the IT sector and shifted the policy focus. This is the time when our country’s tech exports touched $3 billion. We got policy support from the central bank where the SBP made remittances easier and started considering IT as an industry. Smaller exporters benefitted from the tax breaks, the exports then tapered off as the pandemic ended and largely as the country entered into the volatility phase with socio-economic issues. Companies like SYS which have reached a critical mass are progressing and growing, but not all countries have been able to.
Another thing that happened during that period was the startup boom and venture capital investment picked up staggeringly specifically in Pakistan.
BRR: Where do you see IT exports going for FY24?
AA: We will most likely be at the same level as the country has been engulfed in political and economic uncertainty immensely. The demand started to wane, and quality talent started to leave the country. And then, because of the economic crunch, the sector was subject to higher taxation and moreover, world events like the Ukraine-Russia war resulted in high global inflation and lowering demands.
BRR: Have the exports at Systems Limited come down too?
AA: Our exports at Systems Limited have been increasing and it is because it’s our mission that we grow from 6,000 workforce to 10,000 to 25,000. Currently, 80-85 percent of our revenue comes from the export market while 15-20 percent comes from within Pakistan. Our biggest clients are banks, financial services, retail and e-commerce, public sector, and telecommunications. Every month 500+ people work for Pakistani projects. We are getting a lot of opportunities in Pakistan and several organizations are going through digital transformation.
We are blueprinting ourselves like a global systems integrator with consulting and industry verticals. We have been to the Middle East and Africa. We are now in UAE, Qatar, Saudi Arabia, Egypt, and South Africa. We have recently opened in Asia Pacific: Singapore, Malaysia Indonesia, and Australia. And then we have a group company in the USA and the UK/EU market.
BRR: The worst thing about the current crisis in the country is the loss of hope. How can a business like yourself revive hope and confidence in the country?
AA: The current crisis obliges us to re-plan our journey, to set ourselves new rules and to discover new forms of commitment, to build positive future. At System’s Limited, we have three key missions: one is to bring dollars into the country. We bring around $100 million exports in a year. The second is to create a knowledge economy in Pakistan. We train people and give them good exposure to work. So even if they leave us, they can contribute to the knowledge economy. The third is to focus on innovation and exposing people to innovation not just for customers in Pakistan but for customers from the West. These three things instill hope and encouragement in the people. We are still attracting the diaspora. That’s the half-glass full hope that we are providing.
BRR: How do you view the skills set in the country, especially on the tech side?
AA: As I mentioned earlier, we are a country where we don’t have a supply shortage as such. We have the talent and big companies like Systems Limited must nurture and train this talent to bring it to use. the scale we are at, supply is an important factor but not a deterrent. We actively conduct training and upskilling programs in Pakistan (ITM, Techlift) to help students gain in-demand skills and prepare a future-ready workforce. We do lack specialized skills, that we can develop and train here, develop abroad, or bring some talent home from abroad.
BRR: What advice do you have for SBP about the issue of remitting or bringing in money into the country?
AA: I have a couple of advice for the central bank. One, they should increase the ease of doing business for tech companies in Pakistan. Big companies can survive, but this is critical for small tech companies as they can’t remit money outside the country or don’t bring back money into the country and park it abroad. You cannot solve this money problem by bringing in PayPal, Stripe, etc. Yes, these should be brought to the country but to promote and adopt technology. The money problem is economic.
And we have to decouple the service industry from manufacturing. At the policy level, somebody has to start saying that these two are completely different industries with different dynamics. Only then businessmen will start investing in the services sector, which will also help in growing the pie of technology services.