Forbes Asia interviews Amer Hashmi

If Pakistan ever develops its own version of India's Wipro or Infosys, it may be thanks to a Karachi entrepreneur named Amer Hashmi. He launched his tech company, System Innovations, or Si3, merely two years ago, he expects revenue of just $20 million in the current fiscal year and he employs only 130 people. But starting with an open field in Pakistan, he's following the same path as Wipro's Azim Premji and Infosys' Narayana N.R. Murthy—bringing expatriates with tech expertise back to Pakistan and lining up consulting and outsourcing contracts with Western multinationals.

The 35-year-old Hashmi is thinking big. Before long he plans to add offices in Dubai, Europe and China to the ones he has in Dallas, Toronto and Kuala Lumpur. He wants to go public in two years. And his revenue goal is audacious: $1 billion a year by 2015, after making a slew of acquisitions. That's a lot to accomplish in a city where electricity service is spotty, street protests occur regularly and terrorism is always a threat. But Wipro and Infosys certainly faced many obstacles when they were building their businesses. "We don't see any issues," says Hashmi, who owns 25% of the company, with five private-equity investors owning the rest. "We see a bright future."
From an early age Hashmi seemed destined to become a tech pioneer. His mother was a computer programmer, his father an army officer, and other family members were in business. Part of his childhood was spent in Toronto and part within the confines of the secluded Lahore American School. He earned a business degree at Canada's York University, then spent the first ten years of his career at MCI Systemhouse and IBM Global Services, where he lined up clients and managed projects in the U.S. and Canada.

All the while, Hashmi obsessed about Pakistan. He'd rush home for every vacation. He held running dialogues with expat Pakistanis about developments back home. And he spent his spare time analyzing why progress in the West was so much faster than in Pakistan. "There was a constant comparison in my mind between Pakistan and the West about how IT can be used for effective development," he says.

By 2003 Hashmi couldn't resist the pull of Pakistan any longer. "What we needed in Pakistan was a huge IT integrator like Infosys or Wipro," he says. "This really got me excited." He knew he had the management skills, but he needed information technology and business talent. For that, he focused on the rich expat community in the U.S. and Canada and began persuading Pakistanis at Accenture, IBM, AT&T and elsewhere to return home with him.

And for financing he lined up Khalid Rafi, a former senior partner at PricewaterhouseCoopers in Pakistan and now Si3’s chairman. Other investors signed on as the venture gained momentum, including industrialist Hussain Dawood, one of the country's richest people.

He set up Si3 with three employees and went about pitching his services to Pakistani companies. His open nature and eager, persuasive style made him a natural salesman. His overflowing enthusiasm probably made every pitch seem like a not-to-be-missed opportunity. Hashmi struck gold early, winning a $2 million IT contract from a company owned by the Pakistani army, National Logistic Cell, the largest logistics company in the country, with a fleet of 1,100 trucks. Si3 beat out such global giants as Siemens and KPMG. "Everyone told us we were crazy and that no one in the domestic market would pay us," he says. "But 25% of our revenue has come from government projects, and I don't hear those skeptics anymore."

Then, in May of last year, Si3 snagged a $5 million, seven-year outsourcing deal with Mybank, a Karachi bank with 50 branches in 22 cities around the country that was still handling many of its operations by hand. Since then three other banks have asked Hashmi about turning over their computer operations to him. "The biggest benefit for us has been moving ahead with IT modernization without having to do it ourselves," says Mohammed Azimuddin, the bank's president and chief executive. "Just identifying the right people to hire would have taken us a whole year."

National Logistic Cell and Mybank quickly made Si3 one of the most prominent of the country's small band of tech-outsourcing firms. And the two projects now make good references for getting business from abroad. "Our strategy was to chase the untapped domestic IT spending," says Hashmi. "We did, and now we can tell the foreigners what we've done."

The foreigners are buying the story. Hashmi's company is automating the baggage-claims system for a major airline in the Middle East and upgrading the computer system for a supermarket chain in the U.S. (Hashmi says neither client wants to be named.) The Pakistani expats—some 30 so far—that he's lured back are bringing connections that will mean more overseas business. By 2008, he estimates, 20% to 25% of his revenue will come from outside Pakistan.

And with its name catching on abroad, Si3's revenues promise to grow quickly. The company did $7.5 million worth of business with 50 clients in its first full operating year, which ended last June 30. By the end of its second fiscal year this month, Hashmi expects to reach $20 million in revenue and break even as well. "We want to create the first billion-dollar IT services company of Pakistan," he boasts. "The business is there and the [corporate] budgets are there."

To get to $1 billion, Hashmi is counting on the growing Pakistan economy, which is spurring companies to boost their IT spending, and acquisitions. By 2009 the domestic IT market will top $5 billion, Hashmi expects, and he aims to grab a chunk of that. And over the next year he plans to start buying small Pakistani and overseas tech firms. With the foreign firms, he's counting on moving many of the operations to Pakistan to cut costs and on using their offices in the U.S., Canada and Europe to get business.

To accomplish that, Si3 needs a big new investor—Hashmi says he'll get one soon—and needs to hire in droves, which may be unrealistic. Tech entrepreneurs in Pakistan say staffing up is their hardest task because the quality of local graduates is poor, outside of a couple of schools. Hashmi acknowledges that a big road block is hiring people fast enough. He plans to add more than 100 employees over the next year, while moving his company from its nondescript headquarters to a new glass tower overlooking the beach. Meanwhile, Si3 is learning from Wipro and Infosys while teaming up with them on several projects. Eventually, Hashmi wants their help in building research and development centers in Pakistan. "We are finding a good relationship working with the Indians and hope to build stronger ties, an overall very positive effect for Pakistan and India," he says. But Hashmi is thinking beyond the Indian model. Rather, he says, "We want to become the Accenture of Pakistan. The biggest challenge is putting it all together and managing this kind of growth."

While doing that, Hashmi tries to keep up his squash game and stay abreast of his favorite ice hockey teams. But it's a lost cause, given his hectic travel schedule, seven-day week at the office and his family life with his wife, Zainab, and 18-month-old daughter, Hasina. "Amer is above all a workaholic," says Zainab, who also attended school abroad and now works as the operations director for an engineering firm. "But when he can, he loves to play ball with his daughter."

For Hashmi, his dream for Pakistan is finally being fulfilled. "This is payback to my country' he says. "IT is what will catapult us from the Third World, and that's the passion that drives me." And if Si3 is someday called the Wipro or Infosys or even the Accenture of Pakistan, so much the better.

Pakistan: Better Late than Never In Outsourcing

Pakistan: Better Late Than Never In Outsourcing Pakistan is trying to copy India's success in luring IT work, but it's slow going By Naween A. Mangi

Think software and services outsourcing, and places like Bangalore, Manila, and perhaps Budapest spring to mind. But Lahore or Karachi? The Pakistani cities might not be on the outsourcing map yet, but the country's software shops are out to change that. "As a natural course, American companies would not look at Pakistan," acknowledges Jehan Ara, president of the 250-member Pakistan Software Houses Assn. "So we have to get them to look at us, and once they do business with us and credibility is established, they come back for more."

It makes sense for Pakistan to follow in India's footsteps and try to boost its outsourcing business. The country, after all, shares India's British colonial history and has some 17 million English speakers. It has a huge community of émigrés with experience in technology. And like India, it has a culture that values education and hard work. Wages, meanwhile, stand at about the same level as in India, with call center workers earning about $12 per day and starting software engineers pulling in $5,000 or so annually.

Still, Pakistan remains far behind India. Last year the country's software and IT services business hit just $300 million, and exports made up only about 11% of that. India, by contrast, booked $12.8 billion in software and services exports in 2004. But the Pakistan Software Export Board, a federal body set up to promote outsourcing, forecasts that the business will grow by at least 45% annually in coming years. "Pakistan started late but now is catching up very fast in software development," says Prime Minister Shaukat Aziz.

Lower-level operations such as call centers are expected to grow even faster: Some 120 centers have opened in Pakistan in the past two years. Today they employ 3,500 people, and that number is expected to grow by 60% a year. Arwen Tech, a Karachi company that runs a 600-seat center, saw its sales double last year, to $10 million, serving clients such as Pakistan International Airlines and the local franchisee for KFC Corp. (YUM! ). Now the company is building a 1,500-seat facility and hopes to boost revenues tenfold, to $100 million, in the next five years as it attracts more international clients.

Pakistan could use the boost that outsourcing provides. Unemployment is officially pegged at 8%, although in reality it's far higher than that, and the government is looking for ways to fuel economic growth. Pakistan needs technology to increase efficiency and productivity. And software exports will help the country move away from its reliance on textiles, which make up 65% of total exports.

YOUNG TECHIES 
Still, Pakistan faces major hurdles. First, there's the question of security: Few Western execs are willing to entrust sensitive data to such a troubled country. And despite its 55 tech institutes, Pakistan may face a shortage of IT workers. About 75,000 people work in the sector today, and the government believes a further 7,000 will be needed each year to keep the industry growing at current rates. But the country's tech schools produce just 5,500 graduates a year -- and only about a fifth of those are competitive and well trained, the Software Export Board says.

The country is working to fix those problems. A new government commission aims to beef up education standards. Since 2001, Parliament has scrapped corporate taxes on software exports and simplified the investment process. In the next three years, the government also plans to open IT parks in Islamabad, Karachi, and Lahore. And the Pakistan Software Houses Assn. last year sent two delegations to India, then in February invited a group from Bangalore to Karachi and Lahore in an effort to learn from the Indian experience.

Outsourcing companies have developed their own strategies for beefing up their business. One is to look for customers in places other than the U.S., where Pakistan's image problems are most acute. In 1996, Lahore's NetSol Technologies Inc. (NTWK ) won a contract from Mercedes-Benz Leasing Co. in Thailand to install a software program from Britain. Later the company developed its own package, which it went on to sell to DaimlerChrysler (DCX ) in nine Asian countries. The NASDAQ-listed company now has 270 employees and this year expects sales of $10 million. In April NetSol signed a $2.3 million deal with Toyota Motor Corp. (TM ) and hopes to expand into Europe.

Karachi IT services firm System Innovations looked for work even closer to home. The company was conceived five years ago by Amer Hashmi, a six-year veteran of IBM's (IBM ) Global Services division in Toronto. The 34-year-old Hashmi saw an opportunity supplying software to state-owned Pakistani companies, and today counts the electric monopoly, Citibank's (C ) Pakistan operations, and Habib Bank Ltd. -- the country's second-largest -- among his 50 clients. Now, with 100 employees and $10 million in sales this year, Hashmi hopes to triple the company's size in the next 12 months by boosting sales to U.S. corporations. He plans to open offices in Texas and Ontario this summer.

Others have set up front offices in the U.S. to win customers. Lahore's Techlogix Pakistan, one of the country's first software exporters, gets 95% of its business from the U.S. Most of that comes in from a four-member sales team in Boston, which funnels work to 90 software developers in Pakistan and a further 35 in Beijing. The company booked $8.2 million in revenues in 2004 serving 18 clients, including General Electric Co. (GE ) and Massachusetts Mutual Life Insurance Co. "Our U.S. office has to offer the same kind of relationship-management as top-notch U.S. companies," says Kewan Khawaja, co-CEO of Techlogix. It may be a while before Karachi or Lahore has the resonance of Bangalore or even Budapest. But plenty of ambitious Pakistanis are working to make it happen someday.

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