How big is Pakistan’s internet start-up industry?

Published: April 28, 2013
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A veteran internet marketer’s insight into Pakistan’s undercover internet industry. DESIGN: ESSA MALIK

A veteran internet marketer’s insight into Pakistan’s undercover internet industry. DESIGN: ESSA MALIK

KARACHI: 

Here is some perspective for you: Pakistan’s GDP equals merely the size of the loss Apple Computers has faced since the launch of the iPhone 5. What do you think really keeps this country’s economy ticking, despite the unconvincing numbers released in black and white?

The answer: remittances. Pakistan receives $13-14 billion annually from external sources. Compare that to the total it collects in taxes, which is around $10 billion. You can see for yourself what accounts for more in the economy.

Payments from abroad usually take two channels: they either come from Pakistanis working overseas, or they come through our relatively small, yet gigantic-in-effect, web start-up industry. This industry comprises businesses and freelancers that globally outsource their services, and includes names such as Sofizar Constellations, Naseeb Networks (Rozee.pk), TradeKey and others. Sofizar alone makes around $15 million per year, and TradeKey.com is the second biggest business-to-business sales portal in the world, following alibaba.com. One of the world’s best online affiliate marketer, Faisalabad’s Pasban IT Group, is doing so well, it owns the only Lamborghini Aventador and Ferrari F430 in Pakistan.

How are these companies doing so well, and how big are these Pakistani startups on the international scene? If the ownership of one of the world’s most expensive cars doesn’t sound impressive enough, let me take you back a few years. Back in the day, when Digg.com was alive, one of the world’s greatest Digg-ers, Waseem, was from Pakistan. He, along with a group of fellow marketers, was hitting the front page of Digg.com on a daily basis, which meant looping in hundreds of thousands of visitors in no time. That is equal to popping your article on Reddit.com’s front page these days. One of the clients of these champion Digg-ers was the Chicago Tribune. You can figure the rest yourself.

This is how the online marketing industry works. Most of what goes viral online is not what people naturally promote and share, but a result of gaming that system to perfection and with skill. This is what good internet marketers do: you can only judge on the basis of what content channel it comes to you from. What if I told you that T-Series, one of India’s biggest music record labels, has a prime internet marketing affiliate based in Karachi? They are just a bunch of boys who do it underground! The bidders for tenders for this job span the entire Earth. It shouldn’t come as a surprise to you, then, that a company based in Karachi makes apps for the National Aeronautics and Space Administration (that’s NASA, mind you), for the space giant’s mobile platform.

Ever wondered how musicians and other celebrities get hundreds of thousands of views and likes in on their YouTube videos, status updates or Instagram shots almost instantly? The game sometimes gets dirty, when low esteem drives some marketers to trade outgoing traffic from adult websites on to their own. From Twitter followers and retweets to StumbleUpon traffic bursts, everything is all paid for and gamed, all courtesy of underground internet marketing gurus. You may be disturbed to find that this is the reason why the Daily Mail serves much more traffic than the New York Times, BBC or The Guardian.

50% of what the product is, and 50% of the product’s marketing accounts for the success or failure of a product. Taking these less costly underground routes is often the cheapest way to battle your competitor and see them in the eye. This is the reason why the top ten international blogs based in Pakistan earn more than the top ten TV anchors of the country : the top 3 make $60,000 per month, each. They like to stay underground because of various reasons, so I might not be able to take their names, but consider that Pakistan possesses the world’s number one iPhone jail-breaking blog, one of the world’s biggest B2B sales website, some of the world’s biggest humour networks, a top-notch survey reporting website and many more corporate blogs that are serving the global village like a local resource at the grandest levels.

These are tales that never get told.

The writer is a techpreneur who runs a software company in Dubai and also runs a healthcare startup in New York

Published in The Express Tribune, April 29th, 2013.

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Correction: An earlier version of the article mistakenly referred to NASA as National Aerospace and Space Administration. The error is regretted. 

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Reader Comments (26)

  • Logic
    Apr 28, 2013 - 9:15PM

    Comparing taxes with remittances is silly. Remittances do not go to the government. Also how much of this start up industry is paying taxes?

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  • Salman
    Apr 28, 2013 - 9:33PM

    Well done guys. You make Pakistan proud. This shows how much potential nation has if given them the right platform and training to contribute on world stage.

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  • Mustafa Kamal
    Apr 28, 2013 - 9:57PM

    Pls correct NASA abbreviationRecommend

  • Apr 28, 2013 - 10:22PM

    I highly doubt all the BIG-underground people in Pak, whom you mentioned and NOT mentioned pay any taxes or stuff like that…

    and here I am, trying to START-up and the first thing coming to my mind was to get advise from CA’s and Legal-people about taxes, registering company etc… no doubt why I am not making $60k a month

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  • Apr 28, 2013 - 10:25PM

    God job Farrukh for bringing in this. You should have mentioned your Gagism story as well. That was also an inspiration for many like me. Thanks again..

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  • Apr 28, 2013 - 10:31PM

    @Zaid Pirwani: You might be right to some extent. But still I know many who are paying taxes and besides that they are earning a lot..

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  • Hamad Dar
    Apr 28, 2013 - 10:45PM

    For all asking the tax-related questions, here is how it works. As long you’re generating foreign remittance through providing IT-related services, you are legally not supposed to be any taxes. The govt. makes you give up your dollars (even if you have an FYC account) and automatically converts the funds in PKR. This generally cause the loss to be between 4% (the USD-PKR rate could be 99.5 but you’ll get paid 95.5). This is where both the govt. and banks make money. The govt. also gets to keep all the foreign currency because it is in dire need of it.

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  • Shaukat Brohi
    Apr 28, 2013 - 10:52PM

    Thanks ET and the writer for such a nice cover up, i have been associated with internet marketing since a good time and have seen small companies growing rapidly and earning big money, the big road block that a internet start up faces in Pakistan is that worlds largest online transactions processor PayPal, is not including Pakistan in its services otherwise the figures would have been much more than this, despite all such hurdles Pakistani internet marketers (also called SEOs)are highest in number after USA and India….:)

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  • Ali S
    Apr 28, 2013 - 11:22PM

    @Logic:

    There we go again. Thank God the remittances aren’t going to the government or else they’d be probably be flushed down the toilet too. Seems like a lot of Pakistanis have a chip on their shoulder when it comes to those who have settled abroad – we should be thankful for whatever contribution they’ve made back home. Internet start-ups have made billionaires out of 20-somethings in the US, Pakistani youth should also try their hand at it.

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  • Malik
    Apr 28, 2013 - 11:36PM

    You are doing everything wrong. Company registration, tax anomalies should be the last thing on your mind. Build a product or a service first. Reach profitability and then worry about such matters. Till then do business as. 90% of the entrepreneurs in the IT sector fail because their focus in on the structural semantics and not the product itself. @Zaid Pirwani:

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  • antanu
    Apr 28, 2013 - 11:49PM

    “……These are tales that never get told…”

    This is the reason Pakistan has been getting bad name. Positive news are not reported and negatives are splashed across through media. .

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  • Jazib
    Apr 28, 2013 - 11:50PM

    Nicely written. However one fact you mentioned, I’m having difficulty digesting. A company from Karachi making mobile Apps for NASA? Can you link me to any authentic source for this? I’m just curious!

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  • Usman
    Apr 29, 2013 - 12:14AM

    That’s the real problem, most of the any industry is underground. Compared to India this is just drops in the ocean. We need people who can make corporations out of these startups.

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  • Shakeel Tariq
    Apr 29, 2013 - 1:05AM

    @Logic: FYI, Software Industry in Pakistan has a tax holiday till 2018

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  • Imran Ali Agha
    Apr 29, 2013 - 1:28AM

    Why cover these people up when they have made themselves public.

    Worlds top Iphone/jailbreaking blog – redmondpie.com by Asad Taimoor
    Worlds 2nd largest b2b network – Tradekey.com as you mentioned.
    Worlds top humour websites – No Gagism is just one of the small-medium sized websites and cannot be ruled out as a top humour based website. Tiptoptens.com cannot be termed as such eithr n
    Survey reporting website – PEanutLabs.com this is an old one.

    Tc
    Imran

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  • Apr 29, 2013 - 1:30AM

    umm you need to be educated on what a start up means.
    internet marketers selling their services online is not a “startup”.
    Having a website or blog that makes money is not a “startup”.

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  • Emaad
    Apr 29, 2013 - 1:30AM

    Pasban IT group has a very shady website. To be honest , if they have ANYTHING to do with internet they should’ve had a better website. Seems like some other sorts of deals being handled by the Major Retd. uncle.

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  • Apr 29, 2013 - 1:44AM

    @Malik:
    This is a one big thing I have learnt… True that!

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  • elahi
    Apr 29, 2013 - 9:55AM

    @Emaad:

    LOL!!! I totally agree.

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  • enlighten moderate
    Apr 29, 2013 - 10:18AM

    I have been doing free-lancing and I dont pay taxes on my earnings because there is no tax on money earned abroad.

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  • Abdul
    Apr 29, 2013 - 11:41AM

    This is just lump-sump. While people talking about taxes. People who are working in these organizations are paying Income tax if they have 4 lacs+ Income annually. But yes these organizations just work for foreign buyers do not pay Income or sales tax but they pay property tax if they own office location.

    As per this article Pak Govt. getting $13-14 billion annually and Gov. + Banks keeping 1.5-2.5 Rupees per Dollar. Which shows Govt. and Banks collectively getting 20+ billion rupees annually. Out of which bank pays taxes, Employees pay income tax (As mentioned above) and all that..

    More important thing is 80% of this industry located in Karachi, Lahore, ISB and than come to FSD (not more than 10 companies- i think) same with Multan, GRW, Pindi, Peeshawar….. So, look at the potential if we can do this with very short Energy resources than what we could achieve if we get better broadband services, energy resources and all that.. Pakistan could reach $50+ billion annually within next 2-3 years…

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  • Apr 29, 2013 - 3:07PM

    I would just repeat it. There are tales that never get told.
    What you’ve based your entire research on is just the 5% of the over all internet.
    Thats the surface web. which contains everything from redditt to google etc.
    The rest 95% of the internet cannot be accessed by a normal user, the deep web.
    so yeah. there are tales that never get told, tdw contains all of that which you cannot search using google or any of these light search engines. neither can you access it with your basic internet connection. it’s a seperate cyber world and it contains stuff a normal user cannot even imagine about.

    I believe, it’s better if some secrets remain as secrets. For anyone who’s interested would surely google/wikipedia “the deep web”

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  • Bharat
    Apr 29, 2013 - 6:05PM

    No doubt there is a great chance for Pakistani entrepreneurs to make it big

    The biggest hurdle is the law and order situation which is worsening day by day.
    If the businessmen dont feel safe,how can foreign investors invest ?

    All these issues are resulting in the lack of growth of Pakistani companies and entrepreneurs.

    If the environment is created,the growth ,investment will come

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  • Naresh
    Apr 30, 2013 - 12:38AM

    @Author :
    .
    You stated “Sofizar alone makes around $15 million per year,”
    .
    This is fantastic news. Pakistan’s IT Industry has finaly arrived on the World Stage and is rubbing shoulders with the IT Leaders of the World.
    .
    Congratulations are in order and one looks forward to Pakistan’s IT Industry taking on the Giants of the World’s IT Industry
    .
    Cheers

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  • GS@Y
    Apr 30, 2013 - 5:06AM

    This article is so big on sweeping statements and eye-popping comparison, but woefully short on data and details. Reads like it was written by an internet enthusiast, and not someone who actually bothered to collect data and paint a comparative picture as the title suggested. I know a little bit more now, but I found the article lacking.Recommend

  • Water Bottle
    Apr 30, 2013 - 3:05PM

    “What do you think really keeps this country’s economy ticking, despite the unconvincing numbers released in black and white?

    The answer: remittances.”

    If this is an analysis, he has completely failed at analysing the situation.

    The answer is : Black money. Black trade is supposed to be bigger than the white trade in Pakistan. That’s what keeps this country going.

    Recommend

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