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NetSol was the first multinational of Pakistan origin to emerge as a
CMMI certified company and is still one of the few CMMI Level 5
companies of Pakistan. After 15 years of hard work, competing
established software giants in the mercilessly competitive global
market, NetSol is moving across continents with its highly sought after
solution for Leasing & Finance Industry. It’s a matter of national pride
that NetSol software carries a US$1000,000 tag per license and is an
unchallenged monarch in some markets. It was the enduring vision and
motivating leadership of Salim Ghauri that steered a dedicated team
around obstacles and achieved a landmark success against heavy
odds. Salim Ghauri, Chairman & CEO NetSol Technologies, shares this
saga of success and future roadmap with TelecomPlus
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TelecomPlus: How is NetSol doing in such testing times?
Salim Ghauri: The years 2008 and 2009 had been very difficult for IT Industry
and also for global financial industry. We also went through a difficult period,
specially in late 2008. The new customers were not willing to sign contracts and
the old ones were not willing to spend money. As a result, we saw a serious
decline in our revenues. We took immediate steps to look at our costs and were
able to sustain ourselves reasonably well. Things were bad but NetSol was
fortunate that most of its business was in Asia. The major impact of economic
meltdown was in North America and Europe. Our business in these regions
declined but we got reasonable response from the Chinese market. We survived
because of our Asia strategy. Late 2009 things started gradually improving and
with the Grace of God, last year had been exceptionally good for our global
business. Unfortunately I cannot say that for our Pakistan business. For the last
three years, the opportunities for the Pakistan IT Industry have been declining.
Little happened for the betterment of the industry. We have been trying to get
local business from the public and the private sector but without any appreciable
success. Companies like NetSol survived because of their global business. But
companies totally dependent on the local IT market saw very difficult time. NetSol
is focusing on new markets and we are getting results. We are growing and our
growth has been great for the last two quarters and our shareholders and
customers are happy with us.
Didn’t the growth of Telecom Industry had a positive impact on the local
IT Industry?
Any advancement in the Telecom Industry helps and not just the IT Industry but
the whole economy. Pakistan is one of the few countries where
telecommunications have done well. Our telecom infrastructure is at par with the
world. Our mobile telephony tariff is one of the lowest in the world. Our quality of
bandwidth is like anywhere in the world. Connectivity is good and the WiFi
networks are quite successful. That is good for Pakistan as a whole. But it didn’t
do anything as comparably for the IT Industry. There are few companies in
Pakistan which are developing mobile telephony applications but the volume is
not as large that can sustain the industry. So the industry has to stay in the
mainstream for its survival. The telecom sector did help Pakistan economy but
not the IT Industry as such.
Why NetSol is not very active in the telecom area?
NetSol has worked very hard for the last 15 years on its own product for the
Leasing & Finance Industry. After 15 years of hard work, it is now that we are
seeing results. Our product is recognized around the world now. We got
recognition and appreciation. Our product is in demand. Should we now invest in
our product and reap the benefits of our long struggle, or invest in other areas?
The choice is very clear. We cannot dilute ourselves. We have enough financial
resources and enough people to run our business. But developing products for
telecom and other industries will put additional burden on our financial and
human resources. We like to go into telecom and other emerging technologies
and may be we would in the future. But not right now and not at the cost of our
core business. Our experience tells us that it takes a very long time to be really
good in a certain area. The market for our product is very huge and we have
captured only a small fraction of it. May be point zero zero one percent only. So
we cannot change our focus. We are very clear about it and we are doing what
we can do best. We need to go to countries we did not go earlier and invest
whatever the financial and human resources we have in new markets. We are
moving to more geographical regions and opening more offices. We have now
very good references. World renowned companies like Chrysler are our clients.
Our product is recognized and it carries over a million dollar per license. If you
look at our last year’s investment, we have invested very heavily in our China
office. We increased to 40 people in China last year. We have also invested very
heavily in our Thailand office. Thailand is a very good place for our product. So
almost all of our investment is going in expanding in to more geographical
regions. Our strategy is to be present locally to support our customers.
What is the limiting factor in expanding to new markets, finance or
human resource?
Very pertinent question. The limitation is in two areas, primarily in human
resource area. When you sell a million dollar software, you need people to
implement the solution. Gradually, we are building capacity to deliver more. We
sold 10 licenses last year and delivered to the satisfaction of our customers
During next year, we would like to deliver 15 licenses. So we are looking at a 50
percent increase which would mean training more people. And training people in
this expertise take one to three years so that they are able to go to the
customers, understand their needs, deliver and implement. We are now at the
stage where we can increase from selling 10 to 20 or even 30 licenses. Or major
effort is now on training people. That’s one aspect. The second is to go to new
regions. As I said, last year we went to Asia: China, Thailand, Japan, Korea,
Australia. Last year we sent a team from Lahore to San Francisco to establish an
office and expand in to North America. We believe that in the next two years we
will have customers in North America and Europe and we have established an
office in London as well. We are training locals there to sell our product. In the
next three years we will have new customers in new countries. USA, Canada,
Mexico, UK, Germany and France are our main target areas now. Although we
are doing good business in Asia, but every country and every region has a
saturation point. We want to be ready for that situation. When China gets
saturated, we will have America ready to take our products. This is the plan for
the next three years. We will continue to sell in Asia and at the same time move
in to other countries I just mentioned.
Does you China office cater to other Asian regions or it is just China-specific?
China is such a huge market that you cannot bracket it with other countries of
the region. Our China office takes care of only Chinese customers and I don’t
think we can operate out of China to other Asian countries for the next five years
at least.
How is the competition from the Chinese IT market?
There is competition from the Chinese IT Industry. It is a very big industry. But
luckily for us, our domain is very complex and we have an edge now. But we are
aware that in the next few years, Chinese vendors will bridge that gap and we
are getting ready to compete with them. We are expecting a very tough
competition from them and are preparing to be as Chinese as the local Chinese
are. Right now, we do enjoy a level of comfort because of our proven excellence
in our field.
Are you satisfied with the pace of automation in the public sector of
Pakistan?
Definitely not. They are going backward. In the last three years there has not
been any significant progress in the automation of the public sector at all,
especially at the Federal level. We don’t have a minister for IT & Telecom even.
There is no focus. The Electronic Governance Directorate is not effective any
more. There is no initiative at the Federal level for automation at all. There no
sign of seriousness regarding automation. The recommendations of the Federal
Task Force on ICT are collecting dusk somewhere. If you look today at IT
Ministry, IT Secretariat, PSEB, EGD, etc, you will see very little activity. It is so
sad that IT, otherwise such a vibrant sector for any economy, is passing through
its worst neglect in Pakistan.
What lead to such a bleak scenario?
I think that the political issues are so complex that there is little scope for things
like automation of public sector, to catch the attention of relevant quarters. The
leadership is involved in some very serious and sensitive affairs which consume
too much of their time. The lack of IT minister further compounds the problem.
The PM is obviously so busy that it is very hard for him to take attention away
from more pressing matters and look into the affairs of ICT ministry.
How about the Private sector?
The private sector is very active and busy. There is no unemployment in the IT
sector. IT people are in demand because the private sector is automating and it
has created lots of jobs which is a good sign. The local IT companies are selling
their products, solutions and services to the private sector companies. However,
our banks and other large organizations still prefer to go for the overseas IT
solutions. That issue remains and to some extent, the lack of automation in the
public sector is also one of the reasons behind it. If the government goes for
automation, the local IT companies gain experience and get references to quote.
That could give confidence to banks and other organizations about the integrity
of local IT software and solutions. But I am confident that the IT Industry is a
survivor. It is a self sustaining industry and would continue to develop though not
at the desired pace under the prevailing situation. They are getting international
business also which is a good sign. The IT Industry is the key to the future of
Pakistan and sooner the government realizes this, the better.
Is our education system compatible with the market demand?
Yes, our education system is mature now. Our graduates are capable of taking
over responsibilities in the IT market. We have good institutions which are
producing very good stuff. We have enough people coming out from institutions
and there is no panic in the IT Industry regarding the availability of quality human
resource. NetSol hires 100 people after one year and we have now over 700
people. There is lots of movement and people are coming in and going out of
NetSol. We are now an institution which is serving as a reservoir of HR for the IT
country. Normally they stay for three years with NetSol and learn a lot from us
and take our quality standards to the market. NetSol is a CMMI company and has
a lot to give to the IT professionals. Out of 100 people that we hire, 30 will stay
longer than 3 years while 70 would move on which is not bad at all. The IT
industry gets 70 people who have 3-year experience working with NetSol which
has very mature standards. So we are helping the industry by way of providing
quality human resource. Some of these people come back to us after a few
years which is good for us. There is lots of movement in the industry and it is
very healthy. We tried training people for the market in our institute a few years
ago but that was distracting us from our core business so we temporarily
stopped it. But a few years from now, NetSol will come in the training field in a big
way in IT education and at a higher level. We will make a major investment to
establish some very good schools. We have a roadmap for that.
Do you think broadband is plying the role it was expected to?
Definitely, no doubt about it. Pakistanis are now mature users of IT. Wherever we
go now, computers are available. The students have computers at home or at
their place of learning. Every business is connected and broadband is changing
Pakistan and it is a different country compared to five years ago. We are a much
advanced country now. We just need a stable political environment and an
enabling government. Given that, we can move quickly because we have the
infrastructure and capable people. I believe that despite our present woes, we
have tremendous opportunities in the future.
How is NetSol doing as a responsible corporate citizen?
Being a responsible and caring corporate, we play our social role. NetSol is very
active in flood hit areas. We are working for the uplift of remote and neglected
areas. We are working with schools. Presently we are putting up a computer lab
in a school. Our team is there right now. We make sure we are accessible in the
hour of need. Especially when there is an emergency, NetSol is at the forefront
of relief and rehabilitation activities. Our young people went to the earthquake hit
areas. We collected lots of money and goods for the victims. We are very much
aware of our responsibilities and whenever there is any exigency, we act
accordingly.
To what extent terrorism is a hurdle in the growth of IT Industry?
We are facing this situation for the last 10 years now and somehow have got
used to it. Fortunately we have seen a decline in the acts of terrorism which is a
god sign. Our customers are not as concerned now as they used to be a few
years ago. They don’t anymore ask safety and security related questions. In fact
now it is not terrorism but the political situation that is seen as a disturbing
element and which needs to change. As soon things get better on the political
front, Pakistan will move very very fast.
Despite facing this situation for such a long time, why our IT Industry has
not come up with hi-tech tools to fight terrorism?
Again a very pertinent question. Fighting terrorism with the tools of technology is
a very sophisticated discipline and it requires very heavy investment to develop
such tools. Our IT industry cannot venture into this very hi-tech and very
expensive area on its own. Not that there are any technical hurdles. If NetSol is
asked to develop such tools, we can. We have the competence and knowhow.
But since it is such an expensive proposition, we cannot take that initiative and
develop products on our own. The government has to make up its mind as to
what is required and the IT Industry can certainly develop the desired products.
But the industry does not have the resources to develop such products without a
customer. The ownership must come from the government.
Any Message?
The year 2010 is ending. All in all, this has been a good year for the IT Industry,
specially coming out of 2009 when the Industry faced immense difficulties. Now
that is behind us and 2010 can serve as a good launching pad for the year
2011. Companies that have performed well in 2010, will be going into 2011 with a
lot more positive approach and enthusiasm. My message for the IT Industry is
that they should explore new possibilities and new countries. Spread out in
different technology areas. There is lot of business to be taken. Our IT Industry
is recognized globally. We are also very competitive than many other countries
price wise and can offer cost effective solutions. We are almost 30% cheaper
than India. That puts us in a very advantageous position and our IT Industry will
definitely take advantage of it.
How do you see the cooperation between India & Pakistan in the field of
IT?
Cooperation between India and Pakistan on IT front is very crucial for the
development of this region. It would benefit both neighborly states and more
efforts and energies are needed to be deployed from either side. It is important
to note that NetSol is the only IT company in the region exporting a full-fledge
software i.e. NetSol Financial Suite (NFS) to the world. Majority of the companies
in both the countries are busy with IT services. Therefore, the role of NetSol is
entirely different from the rest of the lot so far as the IT scene of the South Asia
is concerned. But still, the NetSol is fully supportive of the idea of cooperation
and collaboration between two Asian IT giants in the larger interest of the
population on both sides of the border.
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