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Emerging Entrepreneurship in Pakistan

Posted on September 27, 2007
Filed Under >Babar Bhatti, Science and Technology
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Babar Bhatti

In the last few years the entrepreneurial class in Pakistan has been on the rise – for the very first time I’d argue. This trend has been recognized by the media both in Pakistan and abroad as well as by quite a few bloggers. The interesting thing is that the trend of rising enterpreneurship continues inspite of the growing political challenges and unstable business environment. Wall Street Journal recently wrote about it as well. Here we take a look at some of the successes, what is driving them and the existing support structure for these innovative group.

There was a time not too long ago when the only three successful career options used to be engineering, medical or civil service. The lure of ‘Sarkari Nokri’ (Government Jobs) and climbing the grade ladders was overwhelming. There were few multinational companies (MNCs) around. Those who wanted to do something different usually went abroad to try out their luck. Then in the 90s we witnessed soaring IT demand and the shift towards offshore outsourcing for services. Computer science became the new popular field of choice. The telecommunication boom of the recent years has provided many exciting opportunities.

Evidence:

Let’s talk about a few of the new breed of young entrepreneurs. Due to my own interests this is going to be limited to technology. I am not discounting other areas of active entrepreneurial activities. In fact the entertainment and fashion industries – and to some extent business about lifestyle – have gone through a tremendous transformation; but that is a topic which someone more qualified should write about.

Examples of successful new companies come from all over but I’ll categorize them based on geography. Some of these companies are based in US and may have operations in Pakistan [Scrybe, Pix Sense, Peanut Labs, Mobile complete, Techlogix, TRG, Cavium Networks] – they have successfully tapped the venture capital market of the US which is well-known to provide funding for promising new ideas and products. Other successful startups are local to Pakistan [NetSol, Rozee, Alchemy, Inov8, BrightSpyre]. Some Pakistani entrepreneurs have identified gaps in the Pakistani market space and are importing business models from abroad [Lootmaar, Naseeb.com] – its all about opportunities in the nascent booming market.

What are the drivers of this trend? For one thing the advances of the information age have encouraged innovation everywhere regardless of location. Technical Advances in communication (Internet, cheaper calls, blogging, online collaboration) allow companies and individuals to leverage resources around the globe. There is also an important factor of expat/diaspora involvement where the expats want to give something back and utilize their skills back home. All this is paving the way for the world to take a second look at Pakistan as a major market (Pakistan is the third largest growing country for mobile phone subscribers) and a viable outsourcing destination.

Support:

Do we have a venture capital system, Silicon valley style in Pakistan? Far from it. But VCs from US are accessible to those players who have the right setup, as I mentioned above. In particular expat Pakistanis have started paying attention to the opportunities back home, very much like their Indian and Chinese counterparts. The patent laws and intellectual property are not at par with the international standards/expectations. On the other hand there is plenty of activity in Pakistan to support and educate the upcoming entrepreneurs. Incubators such as Folio3 are playing an important role in nurturing and establishing startups. Events such as TIECon 2007 with the Business plan challenge (won by LUMS) serve as an important networking and learning resource. Organizations such as OPEN have also extended their network and support to startups in Pakistan. A good example is the Business Acceleration Program which is sponsored by OPEN and MIT EF Club of Pakistan. Hopefully our schools/universities will latch on to this trend and foster the innovative spirit of students.

I do not think (I could be wrong) that traditional media outlets in Pakistan have contributed as much as they should have in this area. However the social networking – whether its through the Internet or mobile phones – is making its impact felt. Even with a small number of active online users the blogger community in Pakistan has been doing quite well. The word of mouth referrals and viral marketing is very much relevant in Pakistan. As an example, a debate was recently triggered among bloggers with interest in entrepreneurship (see here, here and here) about choosing the traditional career path of working for a well-established company or going independent with one’s own ideas.

Related Excerpts:

1. From Wall St Journal: In Turbulent Pakistan, Start-Ups Drive a Boom
Many critics also contend that substantial amounts of U.S. assistance — estimated at more than $1 billion a year — may be the biggest underlying reason why Pakistan’s economy is doing well. But the economy is also sprouting from the bottom, thanks to seed capital from abroad and more credit-friendly banks. Last fiscal year, Pakistan received a record $5.1 billion in foreign direct investment, the government says. Overseas remittances, which are what Pakistanis are returning from bank accounts overseas, hit $5.5 billion in the same period, also a record.

2. Issues and Challenges: lack of skilled resources, political situation in the country. From the BBC Article ‘Pakistan raring to go in IT sector’. Pasha’s Ashraf Kapadia on IT skill shortage.

“At the moment, we just have adequate number of people to meet the industry’s demands. If we continue with our current rate of growth, we would need another 25,000 people over the coming year. We can get about 2,000 from Tier-1 universities like Lahore, Karachi and Islamabad, and another 10,000-15,000 from other universities. But more needs to be done to ensure that skilled people are available to meet the demand of new work.”

Links and References:

(1) BBC South Asia
(2) Telecompk.net
(3) Wall Street Journal [Registration Required]
(4) jehanara
(5) Venturebeat.com
(6) NED to NADAQ
(7) Ravi.LUMS.edu.pk
(8) Greenwhite.org

Photo Credits: kauonetwo and !!sahrizvi!! at Flickr.com

34 Comments on “Emerging Entrepreneurship in Pakistan”

  1. A says:
    September 28th, 2007 12:09 am

    We covered this article on Islambad Metroblog just recently featuring Scrybe :-)

    Interesting post and hoping to see many other entrepreneurs rising within !!!

  2. Tee Emm says:
    September 28th, 2007 12:23 am

    Great roundup Babar. To me it looks like it would be criminal for the government, the industry and the society in general to fail to catch the moment and ensure the nurturing of these green buds we have started to see around.

    The government needs to get out of the way and unless it has a support agenda, we are better off without them.

    The industry needs to do (in Dr Steven R Covey’s words) the Quadrant II activities – stuff that is important but not urgent – to ensure the platform for such innovation remains strong and available.

    The local networked society in general needs to embrace a change where such achievements are celebrated and made to cause a chain reaction. We need a change of role models and here is where media (heck, 55+ TV channels around!) can provide an invaluable contribution. I

    I dream a time when the guys (and girls!) of the middle and upper middle class in Pakistan shift their ideals (at least temporarily) from pop singers to web 2.0 entrepreneurs who grew up in the same streets and went to similar schools as they did.

  3. September 28th, 2007 12:52 am

    I believe that until and unless Internet doesnt flow like water in our streets, and the youth doesnt get easy, cheap and goal-oriented access to net, dreams will remain dreams.

  4. September 28th, 2007 12:52 am

    I believe that until and unless Internet doesnt flow like water in our streets, and the youth doesnt get easy, cheap and goal-oriented access to net, dreams will remain dreams.

    The Pakistani Spectator
    http://pakspectator.blogspot.com

  5. dawa-i-dil says:
    September 28th, 2007 2:55 am

    plus..we also need many skilled professionas like engineers and doctors ..who have left pakistan just for money….

    they should serve thier own country ..if higher studies needed ..then they must return ..to pakistan…to pay back the debt of soil and helped for ummah or pakistan..as both are same….

    and we dont want ” cyber patriots” …bust dancing thier fingers on keyboards….we need skilled people..to build up pakistan….

  6. Ali Shafique says:
    September 28th, 2007 3:04 am

    Nice One :)

  7. September 28th, 2007 4:09 am

    I am glad this article was written, progress of nations depends largely on the efficiency of business contacts and the infrastructure it creates.

    Naseeb Networks is a great success story for Pakistan and out of the many dot coms under it, http://www.rozee.pk has evolved in only 2.5 years, from zero-market share to hosting Pakistan’s leading employers from Multinationals to national giants in especially the sectors of banking, telecom, media and IT.

    A fast growing economy needs an employment marketplace/marketspace to match it. About 200 jobs are posted on average in one day on ROZEE.PK and there are 22,000 unique visitors on the site according to Google analytics. As the 2nd most trafficked domestic site, we can assume employers and employees want to have more choices now.

    I speak, of course as the Marketing and Business Dev. Manager for ROZEE.PK and have been with the company for 4 years now. Though success inshallah will continue, what is truly exciting about this is the interaction with hundreds of small and medium sized companies that have so much potential for growth. Working in this sector gives one the best indicators of real development in the country. It is over-all very positive.

  8. September 28th, 2007 6:51 am

    At this time, I think with education we also need knowledge, awarness, innovation, creativity and talent to achieve the goals.

  9. Babar says:
    September 28th, 2007 8:03 am

    Thanks for the insightful comments and views. Tee Emm, great points. I share your dream and I think together we can – at the very least – raise awareness, motivate readers and provide information.

    A – nice article, I went through it a few days ago. These stories need maximum exposure.

    The points about brain drain are very important. Our neighbor countries have successfully reversed this trend. If we had a little more political stability and less uncertainty, there are many who want to return home. Regardless of physical location, it is important that all Pakistanis are engaged at the grass-roots level in Pakistan.

  10. Adnan says:
    September 28th, 2007 11:00 am

    naseeb.com? babar bhai are you kiddinh?

    Naseeb was launched for a specific agenda to promote a twisted version of religion. what it has to do with entrepreneurship in Pakistan?

  11. YLH says:
    September 28th, 2007 12:46 pm

    Adnan,

    Not every one is a conspirator with an agenda like you imagine them to be.

    Instead of making baseless allegations, which amount to libel, you ought to try and follow the essentials of Islam like not making unsubstantiated allegations…

  12. DB9 says:
    September 28th, 2007 2:59 pm

    Thank God a positive post after some time – verna to legta tha ke hamare sahafiyoN ko apne uper mazakh urane ke siwa or apni hi buraee kerne ke ilava kuch nahi ata…

    There are a lot of GREAT things happening in our country too, people…

  13. Raza Rumi says:
    September 28th, 2007 3:02 pm

    Babar: many thanks for this informative analysis..we are missing out on so many ‘potentials’

    On Naseeb – why do comments lose their focus. I think Naseeb is a commendable effort and Internet is [relatively] a free space – let us allow for opinions that may not necessarily adhere to our world-view…

  14. asheikh says:
    September 28th, 2007 3:14 pm

    Hmmm…and how does this apparently “new” entrepreneurial class contribute to a meaningful socio-political discourse? In the spirit of reversing the critique on Islamists onto this new class…

    Innovative entrepreneurship is direly needed to expand an economy and to expand a people’s power in international politics – I’m not sure we’re there yet.

  15. ayesha sajid says:
    September 28th, 2007 3:40 pm

    So there is hope yet !!
    How wonderfull to read that at least some good has come out of the past few tumultous years in our history.
    this is cause for celebration , calling a spade a spade but what of those that throw spanners in a smooth running machinery, may it be enterprenurship or an intersting , enlightening post.

  16. Farhan says:
    September 28th, 2007 5:55 pm

    Nice one! Infact this was the first time i came across this site and its not bad at all. Its refreshing, optimistic and above all every thing is so Pakistani which is heartening in todays gloomy Pakistani scene.How interesting, that i read about this site while reading an Indian newspaper.

    Keep it up guys and gals. I have marked it as one of my favourites. However i wanted to ask that is there any way that we can send any articles as well?

  17. Azaad says:
    September 28th, 2007 10:47 pm

    An absolutely fantastic post. Thanks from the depth of my heart. Identifying business and investment opportunities is something completely missing from our media at home. It

  18. September 29th, 2007 9:02 am

    oh how romantic….

  19. Usman says:
    September 29th, 2007 9:09 am

    To dawa-i-dil,
    Sir, you said “we also need many skilled professionas like engineers and doctors ..who have left pakistan just for money

  20. Kadir Khan says:
    September 29th, 2007 4:23 pm

    I think my experience is very different. Indeed the successes are quite isolated in IT industry. In others, the situation is quite dismal for a country sixth largest in the world. The institutional support is literally absent in the private sector. Capital, both credit and equity, is very hard to get and the partnerships are a nightmare. Culture is very stupid…people think they are born businessmen and don’t want to pay for professional services. Besides, there is a dire absence of ethics and value-consciousness, even in the most professionals of professionals. Most people want to have a business that is visible and can get them power. Almost none wants to have a proper management structure. Most would like it to be a family enterprise, with many thinking it as the only viable option in Pakistan. No wonder, typical life-cycle of a successful start-up is 15 years. The list is very long. At best we can see some growth in small retail enterprises in the last four years, or some inevitable growth on supply side crowded by the people we don’t want to see around. SME

  21. Babar says:
    September 30th, 2007 7:40 am

    Kadir, I acknoweldg the problems in Pakistan. But for a change I chose to focus on some success stories. It does not mean that things are fine for entrepreneurs and professionals in Pakistan. Actually some of these may be exceptions. However I wanted to encourage the trend of trying out new ideas, which is taking hold among the (relatively) young generation.

  22. September 30th, 2007 2:14 pm

    Dear Kadir Sahib

    I have run small businesses in New York, Southern California, London and Karachi. I would just like to add four points:

    a) In my humble opinion it has been far easier and profitable to run and grow a business in Karachi than in NYC or California. You can call it the home ground advantage.

    b) There are certainly problems and issues but when you compare them with the returns successful ventures earn in our markets, one is adequately compensated. As they say in urdu, Isi kay to paisay hain (that is what the money is for)

    c) Please don’t get offended, but there are times one cannot blame the operating environment for failure. Sometimes it is the business model, at times it is timing or luck, and yet again on occassions it is some esoteric combination of factors that leads to success or failure.

    d) As far as networks, wastas’, waseela’s, references and linkages are concerned, they are as much part of business development in the US or Europe as they are a part of growing a business in Pakistan. The process is more formal and structured in the US then it is in Pakistan, but the underlying principles are the same.

    What we have here is a lot more than what others have. And it is not just limited to technology. There are many examples outside of IT that point to the profitability potential of running a well thought out and executed business in Pakistan.

    Our primary problem is our fatalistic point of view or the Hamlet syndrome. I lost more than a full life time’s worth of earning of my parents in one short year in southern California. That doesn’t give me the right to bad mouth California, give up on the dream, or even start another venture down south a few years later. Why should the rules be any different for Pakistan?

  23. September 30th, 2007 2:47 pm

    Dear Azaad

    If you break down the economy, the primary drivers are still agricultur, textiles, large scale manufacturing, construction to some extent and services.

    On the capital creation front, just the banking system alone creates more than 1.6 billion dollars (100 billion PKR) in profits that have formed the basis for creating bank owned mutual funds, insurance companies and payment networks. It is instructive to note that as recently as 2000, the same group of institutions was responsible for a fairly significant strain on the national economy on account of capital losses.

    To be fair things are still not balanced. Both Telco and Financial services have created significant job opportunities in larger cities for individuals with the right educational background. But if you are a kid out of small government school in the interior regions, it is still a fairly difficult upward drive.

    The securities and exchange commission now processes close to 2000 new applications for private limited companies every year. The existing base of registered private limited companies is just above 50,000. Please note that these are private limited companies, not govt. owned entities. Some of them are dormant, some are dying or aleady dead, but the one’s that are around and the new one’s that get formed are the primary drivers of job creation in the cities. I run a small shop that employees 40 people directly and supports another 12 vendors on a monthly basis. That is 40 jobs that didn’t exist 5 years ago.

    The phenomenon that Babar is pointing out is not just 2 companies in Lahore or Karachi. It represents a 1000 companies just within the technology sector that are pushing innovation and technology to make a living. At an average of 20 employees that is 20,000 jobs and its not just programmers and developers. 10 of the 40 jobs we have are support staff. An accountant from Rahim Yar Khan, a typist from Hazara and 6 poens from interior Sindh and Baluchistan.

    The best part is that most of us have nothing to do with the government sector. We may still do some contracting work as vendors and suppliers for state owned institutions, but a large part of our capital is generated from within the private sector and deployed within the private sector.

    As far as the media is concerned. Bad news sells better. It was true in NYC and California, it is true all the way back home in Karachi. Just my two cents worth.

  24. September 30th, 2007 8:11 pm

    Rants of a start-up – http://www.shophive.com

    - Majority of the business back in ’05 refused to acknowledge internet as a viable platform for conducting business.
    - Complete dismissal about providing pricing & inventory data
    - Banks would ask you question for opening accounts
    - It took us 1 complete year to fight for our account with Citibank to accept Credit Cards (ain’t worth it though)

    By Grace of God! its a successful venture with everyday surpassing the previous. We’ve learnt a zillion things on the way, but there was no Text book to read. Its a reverse of international, applied and successful models but we are proud of it being 100% Pakistani and made for Pakistan. :)

  25. October 18th, 2007 6:10 am

    Hi Babar,

    Thanks for the post. I am a co-founder of Peanut Labs, and you have certainly identified an emerging trend: Pakistanis are waking up to entrepreneurship. I hope this continues and we continue to see more young, promising companies get started.

    If anyone would like to contact me about entrepreneurship in Pakistan, feel free to email me at ali [at.] peanutlabs.com

  26. Saim Baig says:
    December 26th, 2007 12:44 pm

    This is just the beginning.
    Pakistan has to cover a long distance.But still we need quality professionals in Medical & Engineering.

  27. Sameera Khan says:
    January 31st, 2008 5:42 am

    interesting article, tells us about the high potential that Pakistan holds for entrepreneurs.The writer needs to make one correction though. the TIE entreprenership compitition was won by a group from CBM Karachi. The LUMS team came in second. Misinformation like this kind of raises doubts about the credibility of other figures that the writer stated aswell.

  28. haris bin riaz says:
    April 8th, 2008 6:48 pm

    Hi,

    i am a student of MBA at Riphah International University Islamabad.it is a very good article and an imerging issue now the days.i was looking fot this article because there is a forum at chamber of commerce regarding “the difficulties faced by young enterpreneurs in Pakistan”….and this article is of great help for us.
    hope you’ll be writting on that too

  29. June 23rd, 2008 2:00 am

    Good Post…!

  30. abi says:
    October 29th, 2008 7:46 am

    A.O.A

    i want some article about technology entereneurship. if any body have kindly let me know.
    thanks

  31. Muhammad Gillani says:
    December 24th, 2008 5:23 am

    AOA;
    i am a student of computer science in NU-FAST Islamabad.
    I do not want to do a job what i want is to be an entrepreneur, but do not know how to be. So please guide me from where should i start and what should i do. (I do not want my future in coding fiedl :). . .)

  32. January 3rd, 2009 6:41 am

    I agree with Imran Niaz. UMT (previously known as ILM) has shown significant improvements in terms of its campus, extra-curricular activities, number of programs introduced and of course, the faculty which is considered the best faculty of business schools. Plus, it is directly competing with LUMS; in fact, many of our faculty members used were in LUMS before they joined UMT. And being an HR professional, I know that majority of UMT graduates are placed in top-notch companies. So I believe it should come in the top ten ranking.

  33. Aziz Khan says:
    June 30th, 2009 11:13 pm

    Thanks for the post, Babar. I strongly believe that the way out for Pakistanis is to have more entrepneuers than “employees”. I would love to partner with anyone for my Future Entrepneurs of Pakistan project. You can learn more about visiting http://groups.google.com/group/FEofPakistan or my linkedin at http://www.linkedin.com/in/khanaziz.
    Thanks,

  34. Muhammad Azam says:
    March 8th, 2011 12:21 pm

    thanx 4 ur accomodation……….!

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