“PAKISTAN IS NOW A HOT SPOT FOR IT OUTRSOURCING“

The biggest boost to Pakistan's efforts to break into the global IT marketplace came on September 28, when India's finance ministry announced an income tax of more than 36 percent on foreign firms with software, R&D and customer service operations in India. This tax proposal had been under consideration since the beginning of the year and is expected to prompt U.S. firms to follow GE's lead in selling off assets in India.
Why is Pakistan the hot new offshore information technology (IT) destination?
This is because of a combination of favorable economic circumstances. Just when many Western managers are finally becoming comfortable with the idea of working closely with Indian IT firms, along comes Pakistan. Pakistan is shaking off decades of "also ran" status. Funds invested into building educational institutions in Pakistan (when there were not enough jobs to absorb all the graduates from those institutions) are paying off as Pakistan begins to field a modern, highly productive labor force that is the envy of more prosperous but less tech savvy nations elsewhere in the region.
Why Care? Why should the average Western IT professional, businessperson
or IT consumer care?
Because we are all going to be buying and using more IT outputs from Pakistan. To be a smarter buyer and user of IT products calls for a familiarity with Pakistan, even for those who do not initially intend to do business with Pakistani firms. We are all part of a global economy and Pakistan is an increasingly important part of that global economy.
Gears up for the global high-tech marketplace
The issues that Pakistan faces as it gears up for the global high-tech marketplace are many of the same issues that both advanced and developing economies face elsewhere in the world. Pakistan is making no effort to gloss over its challenges, which makes those challenges easier to address. Any Western business manager who initiated or approved the establishment of an IT production or R&D subsidiary in India in 2004 could find that decision to be a career-ending move unless they have built in financial reserves to accommodate both the tax scheme of September 28 and upcoming taxes still on the drawing board.
New Delhi news on tax activities:
A proposal is under consideration in New Delhi to tax activities conducted over International Private Leased Connections (IPLCs) that carry most of India's voice and data traffic to and from the outside world. There is also a proposal to replace state-to state customs duties with a national value added tax. Both those tax proposals could be combined into a single scheme.
Impact of Indian tax scheme:
U.S. IT brokerage firms, their U.S. customers and domestic Indian IT operations will be largely untouched by the September 28 tax scheme. But the traditional offshore migration path of outsourcing to an offshore location first -- before setting up captive operations there -- has been disrupted in India until economic reforms reduce the role of the Indian government in the economy and consequently reduce the nation's revenue requirements.
For Westerners with long-standing personal ties to India, after country's September 28 tax scheme could have both personal and financial consequences. For new Indian workers who hoped for a position with a Western firm based in India, that country's revenue policy will alter careers, lifestyles and futures.
(Extracts from PSEB)