The making of Pakistan’s Silicon Valley

Published: October 4, 2015
Email
The writer is a former caretaker finance minister and served as vice-president at the World Bank

The writer is a former caretaker finance minister and served as vice-president at the World Bank

Cutting-edge technology work gets done in the developed world — in particular in the United States — in four places: government departments and agencies, corporate headquarters and their affiliates, universities, and special-purpose enterprises mostly run by the private sector. Each of the four have made important contributions to technological development. The internet was developed by the United States Department of Defense to facilitate communications among its many parts, some separated by long distances. Much of the earlier advances in communication technologies came from the research arms of large corporations that had the financial means to finance such operations. The fixed-line telephone system was developed largely by the Bell Laboratories attached with the US firm, American Telephone and Telegraph, AT&T. The Silicon Valley was founded by graduates of Stanford University who were later joined by those who attended (but did not graduate) from east coast universities, such as Harvard and MIT. The Genome came from a relatively small research outfit located near Washington that received funding from the National Institute of Health.

The place in the emerging world that comes closest to the Silicon Valley is Bangalore in south India. But the Indian city has gained prominence not because of a close association with academia, the finance sector, or established industries. It owes its existence and reputation to the clustering together of a number of large IT companies in the area. Most of these firms built lucrative businesses based on outsourcing. India has many world class institutes of technology, but most of the better known ones are in places some distance from Bangalore. Hyderabad, again in a southern Indian state, has turned the Bangalore model upside down. It now houses a world class institute of management, whose funding and development was largely financed by the rich Indian diaspora in the United States. The institute has begun to attract private enterprise to the city as was done by towns such as San Jose in Silicon Valley.

Could the Hyderabad model be replicated in Pakistan? The answer is most certainly ‘yes’. There are three cities in the country that have the makings of vibrant centres of technology. Lahore and Islamabad have several universities and learning centres, many of which specialise in science and technology. Two of these are in the private sector — Lahore University of Management Sciences — known by its acronym, LUMS. The second, Lahore School of Economics while still focused on social sciences, has the capacity and business model to develop beyond that and move into science and engineering. Lahore already has a cluster of privately-owned and managed IT businesses. The landscape has been dominated by one large company, Netsol. It is located prominently on the Lahore Ring Road and employs more than 1,000 engineers, many of them women. Islamabad also has a cluster of universities that are already feeding the city’s fledgling IT industry. Most of the Islamabad-based enterprises are small with less than 100 employees. The National University of Science and Technology, NUST, was founded by the military when it decided to bunch into one entity its many science and technology institutions. The Ghulam Ishaq Khan Institute on the banks of Tarbela Lake has a strong faculty and a fairly large student body. Islamabad has one advantage over Lahore; it is only a stone’s throw away from the three military headquarters, two of which are in the capital city while the third is in Rawalpindi. At some stage, the military is likely to increase its use of technology for its command and control operations. Karachi, a city much larger than either Lahore or Islamabad, could also develop into a centre of technology. It is already the centre of the country’s finance and commerce operations and has the headquarters of several large private firms. It is lack of security that is holding back the city.

It is worth noting that no one from amongst Pakistan’s senior leaders has visited Silicon Valley in California, which has risen into a centre, not only of American but also of global economic power and is a well-recognised hotbed of technology. That world leaders realise its importance is one reason why a wave of foreign dignitaries have added the Valley to their traditional tours of the United States. Heads of state from Japan and Brazil visited in early 2015 following earlier trips by the leaders of Ireland, Russia and Malaysia. A report in The New York Times focused on the visit by the Indian Prime Minister Narendra Modi in mid-October and dwelt on prominence of the Indian diaspora in several types of IT operations. It quoted Venky Ganisan, the head of a venture capital firm as follows: “Silicon Valley is, in some ways, more important than New York and the financial sector, or Washington D.C’s political world. World leaders see clearly that when it comes to just about any sector, Silicon Valley is eating them up.” It’s not just world leaders who are interested in the Valley. In March 2015, ambassadors from 35 countries — including Kazakhstan, Gabon and Paraguay “toured the region to soak up lessons on how technology might contribute to their economies.” Why has the Pakistani leadership stayed away?

It could be for one of two reasons. The leaders have yet to realise the significance of technology for the rapid economic development and social improvement of their country. Or, they believe that this task is better left to private enterprise. They are wrong on both scores. They must recognise that technological development requires the active involvement of the state.                    

Published in The Express Tribune, October 5th, 2015.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.

Facebook Conversations

Reader Comments (27)

  • Anonymous
    Oct 5, 2015 - 1:52AM

    In Pakistan technological development comes after infrastructure development. Leaders with former background of earning kick backs from civil works are much more interested in carrying out these instead of any other human resource development initiative. Sadly so. Recommend

  • Faizal
    Oct 5, 2015 - 2:55AM

    Lahore, Islamabad, Karachi all have great potential. It takes lot of hard work, patience and commitment to build brand name and reputation. Unfortunately the brand name Pakistan is mostly associated with terrorism and Malala who is against terrorists. Recommend

  • Agent
    Oct 5, 2015 - 3:01AM

    Who cares about Silicon Valley, Paksitan is more concerned about Kashmir Valley.Recommend

  • RT
    Oct 5, 2015 - 3:11AM

    Bangalore and Hyderabad are both saturated and over crowded. The new silicon valley is being developed in newly formed state of Andhra Pradesh which will also be it’s capital known as Amaravathi on the lines of Singapore. Prime minister Modi is going to lay the foundation stone later this month. And also Mumbai will lose it’s importance as financial center once GIFT city in Gujarat comes up by around 2025. Recommend

  • wb
    Oct 5, 2015 - 3:26AM

    “Could the Hyderabad model be replicated in Pakistan? The answer is most certainly ‘yes’. There are three cities in the country that have the makings of vibrant centres of technology.”

    I don’t see how this makes sense. You don’t build IT industry by developing cities.

    You build IT industry by developing people.

    Management institutions don’t produce engineers. Engineering institutions do.

    The better advice would be to forget Afghanistan, forget Kashmir and invest in education. Probably, you’ll find some development in the next 30 years at least.wRecommend

  • mahakaalchakra
    Oct 5, 2015 - 3:42AM

    Muridke is Pakistani giant IT (International Terrorism) Hub. Madaris its world famous management institutes churning out its IT (International Taliban) forces in thousands serving international community. It is all about priorities.Recommend

  • information t
    Oct 5, 2015 - 5:10AM

    Pakistan is way ahead than silicone valley and bangluru in IT industry.
    Unfortunately that IT Industry is different.Recommend

  • Vikram
    Oct 5, 2015 - 6:40AM

    Mr Burki,
    Appreciate your article. However you are wrong in saying that Bangalore does not boast of high quality academia. It certainly does. Some very good engineering colleges in Banglalore, however Bangalore is most famous for Indian Institute of Science(IISc) established by funding from the Tatas, which is India’s best research university and ranks among the best in the world. Bangalore also boasts of the Raman Research Institure(RRI) which was founded by the Nobel Laureate Sir C.V Raman and is also a university of excellence in science. There is also the Indian Institute of Manage(IIMB) in Bangalore which is India’s third best management university. India’s number one law college NLSUI is also located in Bangalore. India’s top Mental health institute(NIMHANS) is also located in the city. These are only some of the prominent academic institutions.
    So an important part of the Bangalore story is in fact, it’s strong academia apart from all the Indian IT companies headquartered there.Recommend

  • Intrepid
    Oct 5, 2015 - 9:16AM

    The author is wrong on so many levels.

    Firstly he suggests that there are no high quality institutes of learning in Bangalore and instead mentions ISB in Hyderabad which is rated lower than IIM-B. @Vikram already mentions other prestigious institutes, notably IISc whose only equivalent in India may be TIFR. There is also the Indian Institute of Astrophysics.

    Then the author states that Hyderabad has turned the Bangalore model upside down. All this without explaining what the Bangalore model or the Hyderabad model is. He doesn’t seem to know that Chennai, Pune, Trivandrum, Kochi and Gurgaon also make significant contributions to Indian IT exports and each have their core specialties.

    Yet Bangalore still remains the gold standard for IT. The vast majority of startups are founded from this city. One aspect that is attractive about Bangalore is its availability of even the most obscure IT talent. But what sets Bangalore apart is its liberal attitude and its willingness to accept those who take risk and this makes it conducive to startups. Bangaloreans do not look down upon those who have fallen on tough times and generally let people be. In addition, Bangalore provides a relatively easy transition for those who move from the US. I moved here from the US 10 years ago and have been living here ever since.Recommend

  • Dubya
    Oct 5, 2015 - 9:18AM

    Incomplete homework !!!Recommend

  • Srinath
    Oct 5, 2015 - 9:32AM

    Can’t understand why author is trying to draw a distinction between the evolution of B’lore and Hyderabad as IT centres. The factors that favoured both the cities are similar: cluster of the big Public Sector Units, science and technology institutions, R&D institutions of Council of Scientific and Industrial Reasearch, Indian Council of Medical Research and Indian Council of Agricultural Research, besides a number of Defence R &D units. Now Pune, Chennai, Trivandrum are fast catching up.Jaipur, Gurgaon & Chandigarh are also rising. Recommend

  • Srinath
    Oct 5, 2015 - 9:39AM

    While the factors fuelling IT growth in Hyderabad is similar to Bangalore, the former has a marginal advantage due to a better eco-system largely because of physical infrastructure. The global IT industry identified Hyderabad as the most ideal centre for IT development. The Union Cabinet approved the plan for Information Technology Investment Region with a 20-year perspective plan. Recommend

  • someone
    Oct 5, 2015 - 10:17AM

    Pakistan already made name in IT, remember Axact???Recommend

  • Feroz
    Oct 5, 2015 - 10:20AM

    To develop centers of innovation like in Silicon Valley, needs a supportive enabling environment. You need easy financing through Venture Capital financing, ability to network and reward individuals coming up with great ideas. The mind needs to be able to question every premise, demolish unproven theories and cultivate the ability for lateral thinking. Not very easy to cultivate such an environment anywhere.Recommend

  • Malatesh
    Oct 5, 2015 - 10:31AM

    One of the oldest and probably the first civilization is in Pakistan.. But unfortunately its is now a battleground for ‘unfinished agendas’ … Recommend

  • jayant
    Oct 5, 2015 - 12:59PM

    Pakistan can harp about Srinagar valley or Silicon valley u will never be part of either. Period. Recommend

  • Komal S
    Oct 5, 2015 - 1:19PM

    @Vikram:

    Bangalore always had good education, in addition to some strong research in defence industry. But the biggest reason for Bangalore to succeed is the relatively moderate weather, very open society where all newcomers felt at home(a telugu, tamil, malayalee, bengali, punjabi, Bihari etc…) will all passionately vouch for Bangalore. From an international perspective it is probably the most vibrant and western culture friendly place in India. Recommend

  • From_Bangalore
    Oct 5, 2015 - 2:02PM

    Outsourcing is only one segment of Bangalore’s IT industry. The second segment, probably bigger, is the product development companies – most of them are US or Europe based multinationals (Like HP, IBM, Google, Microsoft etc etc). The third segment, and the newest one, is early to few yr old startups. Many of the Silicon valley start-up simultaneously start their development center in Bangalore too (like Nutanix, Arista, FireEye etc). Another thing that has boosted this third segment is reverse brain drain and availability of funding. With all these, Bangalore makes about US$ 70 billion a year (almost half of total IT revenue that India gets). BTW, FireEye’s founder is of Pakistani origin, but the major software development facility they have outside US is in Bangalore.Recommend

  • pnpuri
    Oct 5, 2015 - 2:52PM

    amen, it is positive thinking, Hopefully it will also be good for peace and. two countriesRecommend

  • Raja
    Oct 5, 2015 - 4:27PM

    We too in India would like Pakistan to focus on and develop in the areas of science and technology and wish you the best. But a few additional points.

    As some of the columnists say, India isn’t really all that different from Pakistan in terms of infrastructure. Remember you grew at a higher rate than India between 1947 and the 1980s until the focus shifted to religion and jihad of various types. Bangalore has 3 to 4 hours of power cuts during summers. But there are a few softer issues that don’t get discussed in brief articles on development in the media.

    1) Women’s education and participation in the economy. Bangladesh has a strong women involvement in the garment industry. Women constitute 35-45% of the workforce in the IT and BPO sectors
    2) A few good quality technical and management schools help enhance the brand, but a very large number of average to good institutes provide the scale and momentum. Hence Pak needs higher investment on education and lower in you-know-what
    3) Need to be a bit less touchy about religion. The BPO industry works 365 days/year – including festivals like Diwali, Christmas and Bakrid. It helps to have a mix of folks of different religions. Indonesia too is an emerging oursourcing destination. So don’t let people say that all these will not work with Islam
    4) Can’t emphasize English’s worth enough. I presume there wouldn’t be too much difference hereRecommend

  • Arka
    Oct 5, 2015 - 4:50PM

    I think Pune,Gurgaon is better model than hyderabad and bangalore.Recommend

  • Usman
    Oct 5, 2015 - 5:06PM

    Completely agree with the Author. The time is ripe to create Pakistan’s first Silicon Valley. We can keep trying though however, Pakistan will never move forward until extremists are given life sentences. Korea, India, Singapore, Japan, these are not countries on another planet, they are merely 500kms from Pakistan and yet we are stuck with extremism, instead our vast human potential should be utilised to create South Asia’s biggest and most successful Silicon Valley.
    .
    Tech start ups in Pakistan struggle for funding, imagine if billions used to fight terrorism could be used to foster such growth in Pakistan. But not before our Judges grow some and start handing out sentences.Recommend

  • mahakaalchakra
    Oct 5, 2015 - 8:43PM

    Pakistan has IT expertise but used only for destructive purposes such as johri command and control, remote armed UAV and many more types of cruise missiles. All was developed by Pakistani IT and engineers; who says China secretly allowed TOT for these technologies.Recommend

  • Shridhar
    Oct 5, 2015 - 11:27PM

    @RT Mumbai will lose it’s importance as financial center once GIFT city in Gujarat comes up by around 2025. Mumbai is always Mumbai, Ahmadabad in Gujarat can never match it in the foreseeable future.. A city is not just infrastructure but it involves also the people… Cities of Gujarat don’t have cosmopolitan atmosphere in them… Recommend

  • SNKN
    Oct 5, 2015 - 11:55PM

    @mahakaalchakra

    Don’t make sweeping generalizations…. The fact is that Pakistan’s IT sector has started to gain momentum… And successful venture capital from int’l investors has started to support IT companies in Pakistan including the likes of Microsoft, Sony etc who have their set ups in Pakistan and are gradually expanding their businesses. Bayut, Zameen, Netsol and a host of such local companies have successfully taken off meeting B2B, B2C and C2C needs in Pakistan and in international markets. It’s only a matter of time…momentum is on.Recommend

  • Sri Varahadev
    Oct 6, 2015 - 7:13AM

    No need to get carried away and make mountains out of a molehill. Netsol, the poster child of Pakistan IT, has a turnover of just over 50 Million dollars and is a loss maker. The other IT companies in Pakistan are even tinier.Recommend

  • Spaced Out
    Oct 7, 2015 - 3:16AM

    Interesting article but a bit scattered in its theory argument.

    Mr Burki makes makes a good point on the role of US govt, academic, private enterprise in innovaiton but misses the opportunity to show how it was the work of these stakeholders in California that createan ecosystem later recognized as Silicon Valley.

    You are also incorrect in your argument on Bangalore and Hyderabad. Some of the other commentators have talked about IISc etc and I would like to add another suggestion on why the IT and IT enabled services industry took off. Southern India is obsessed with engineering as a profession and affirmative action policies of the South (much in advance of the north) has produced a glut of low or medium level talent that has been tapped by IT companies. True innovation is only now coming to the fore with start-up taking off but this wide pool of talent was great for the relatively basic nature of the jobs in the outsourcing industry. Recommend

More in Opinion