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New breed of tech entrepreneurs

April 18, 2016

Email

A little more than a year ago, Azan Malik partnered with his friends to found a tech firm to provide periodic maintenance services to the car owners in Lahore through online appointments at their doorsteps: at home or at office.

The company — Auto Genie — has now expanded its operations to the twin cities of Rawalpindi and Islamabad, and is planning to start its services in Karachi.

Auto Genie is just one of numerous tech companies that have sprung up in Lahore over the last few years, especially after the launch of the 3G/4G services.

Many insist that Lahore is experiencing a startup boom for some time now as a new breed of tech entrepreneurs try to provide Internet-based services and build e-commerce solutions around social media for a growing urban middle class in Punjab’s cities.

“There are several reasons as to why we see more tech startups springing up in Lahore than in Karachi, which is considered Pakistan’s trade and investment hub,” said Azan Malik.

“One of the important factors driving startup growth in Lahore is the existence of proper infrastructure — incubators and accelerators, an enabling environment being created by universities and software companies for supporting new tech entrepreneurs and firms. Once you are established in this city, you can easily expand to other parts of the province and country.

Others list rapid urbanisation across Punjab, growth in average disposable income of middle class households, expansion in the use of smartphones, improved literacy rate, relatively better security conditions, and heavy public investment in large infrastructure projects as major factors pushing ‘tech revolution’, as some prefer to call it, in Lahore and other cities of the province.


The younger generation of entrepreneurs in Punjab is turning away from conventional industries


Punjab targeted in the budget for the ongoing year to spend Rs400bn (including foreign assistance component of Rs30.87bn and non-core development allocation of Rs67bn) on development, mainly on infrastructure, transport and energy sectors. It had spent a total of Rs210bn on development during the last fiscal year.

“The younger generation of entrepreneurs in Punjab is turning away from conventional industries. Lahore in particular and Punjab in general offers great opportunities to tech companies providing online services and e-commerce solutions. The use of Internet is increasing and consumers cherish convenience provided by online shopping. Who would want to get out of the comfort of his home, drive to an auto workshop and queue up for an hour to just get car engine oil changed if the service can be had at home by clicking a button?,” asked Ali Khizar, an analyst. He is of the view that Punjab’s middle class and youth will lead the development of e-commerce in the country, adding the size of online shopping market was estimated to multiply manifold in the next few years from the present size of $30m.

Some reports suggest that Pakistani startups had attracted between $30m and $35m in funds from venture capitalists in 2015.

A major chunk of this funding is said to have come to Lahore-based tech firms as only a fraction of this money was invested in startups operating out of Karachi.

Many are optimistic of Lahore developing into the next Silicon Valley or IT (Information Technology) hub in the region. “Hubs are built when a concentration of IT companies, talent and business need collide. Lahore, with its relative geo-political stability, numerous quality universities and job opportunities has all of the ingredients to become a regional IT hub similar to Bangalore,” said Monis Rahman, chief executive officer (CEO) of ROZEE.PK, Pakistan’s largest job portal.

According to him, the IT industry continues to show impressive growth with salaries of software and mobile developers continuing to rise to meet the supply and demand gap. “(With foreign companies hiring Pakistani software programmers and App designers) Pakistan has already become the third largest IT freelance destination globally,” Monis, who returned to Pakistan in early 2000s from the US to start his own job portal, pointed out.

According to industry estimates, the freelance Pakistani IT programmers and App designers are fetching about a third of the country’s total IT related export revenues of just less than $3bn, with Punjab’s share of 70pc in it.The recent $100m deal clinched by Netsol Technologies, one of the largest software houses in the country, shows growing confidence of the foreign markets in Pakistani companies and their ability to deliver on their commitments.

“Indeed, the IT industry is Pakistan’s fastest growing segment,” said Naseer Akhtar, president and chief executive of Infotech, one of the top IT solution provider for power, banking and other sectors having presence in the Middle East and Africa. “If given a little support, it can expand at an exponential pace.”

Some feel that foreign companies realise Pakistan’s potential of as their next destination as India becomes more expensive. A few even insist that Pakistan’s IT industry may overtake Indian rivals very soon. Naseer Akhtar does not agree even if he finds the startup/entrepreneurship environment in the country quite vibrant.

“Our industry size — including domestic market of $500m — is just above $3bn. India is exporting IT products and services to the tune of $100bnn.

Published in Dawn, Business & Finance weekly, April 18th, 2016