kasbtv.com

Investing inPakistan's IT Businesses:

Opportunities & Challenges

Altaf H. Khan

kasbtv.com

Overview

• IT is hot!

• Investing in IT is hot!

• The investment selection framework

• An objective selection procedure

• Brief intro of selected IT sectors

• Selection procedure in action

• Wrap-up

kasbtv.com

Why IT is Hot?

• Internet has catalyzed a huge, world-wide demand for IT products & services

• Stories of individuals making immense wealth quickly, has caught the imagination of the masses

• Limited-supply, huge-demand for IT pros has made it the hottest profession

• Underdeveloped countries see it as a quick fix for their decades-old miseries

kasbtv.com

Why Investing in IT is Hot?

• Fabulous fables of Si Valley VCs, entrepreneurs

• Possibility of early, huge returns

• A large IT market, getting larger:– All businesses now require IT products & services to

improve profitability

– Internet makes it easier to address the global market

kasbtv.com

Investment Selection Framework

• A vocabulary, describing objectives and constraints of investment opportunities

• Elements of this vocabulary act as a committee of critics, each member trying to influence the outcome in an individualistic & selfish manner

• An opportunity is selected if it satisfies most of the critics in the investor’s committee to a reasonable degree, without overly upsetting the remaining ones

kasbtv.com

The Sixteen CriticsMarketing

– Market size– Competitive advantage

Human Resource– Leadership– Availability of:

• Experienced pros• Junior pros

– Training

Infrastructure– Telecom– Distribution channels– Buildings

Finances– Initial investment– Returns– Payback period– Ease of exit

Growth– Scalability– Diversification

opportunities– Sustainability

kasbtv.com

Which IT Sector is Right for You?

1. Determine the investment selection profile for yourself

2. Determine the selection profile for various IT sectors

3. Invest in the sector that matches best with your own profile

kasbtv.com

Selected IT Sectors

1. Professional Training

2. IT-enabled remote services

3. Custom software development

4. New technology, product, or business model development

kasbtv.com

Selected IT Sectors

1. Professional Training

2. IT-enabled remote services

3. Custom software development

4. New technology, product, or business model development

• Training for working IT professionals

• Generally tool/ skill oriented

• Example:Training on Microsoft, Oracle, Cisco products

kasbtv.com

Selected IT Sectors

1. Professional Training

2. IT-enabled remote services

3. Custom software development

4. New technology, product, or business model development

Examples:• Transcription• Call center• Online advice• Accounting• Insurance claims

kasbtv.com

Selected IT Sectors

1. Professional Training

2. IT-enabled remote services

3. Custom software development

4. New technology, product, or business model development

• Focus of the current IT frenzy in Pakistan

kasbtv.com

Selected IT Sectors

1. Professional Training

2. IT-enabled remote services

3. Custom software development

4. New technology, product, or business model development

• Cause of the recent NASDAQ boom & bust

• Few success stories in Pakistan

kasbtv.com

The Rating Scale

■ ■ ■ ■ ■Very

UnattractiveUnattractive Moderate Attractive Highly

Attractive

kasbtv.com

The Rating Scale

■ ■ ■ ■ ■Very

UnattractiveUnattractive Moderate Attractive Highly

Attractive

kasbtv.com

The Rating Scale

■ ■ ■ ■ ■Very

UnattractiveUnattractive Moderate Attractive Highly

Attractive

kasbtv.com

The Rating Scale

■ ■ ■ ■ ■Very

UnattractiveUnattractive Moderate Attractive Highly

Attractive

kasbtv.com

The Rating Scale

■ ■ ■ ■ ■Very

UnattractiveUnattractive Moderate Attractive Highly

Attractive

kasbtv.com

Professional TrainingDimension RatingMarket size ■ ■ ■ ■ ■Competitive advantage ■ ■ ■LeadershipExperienced professionals ■Junior professionals ■ ■ ■TrainingTelecom ■ ■ ■ ■ ■Distribution channels ■ ■ ■ ■ ■Buildings ■ ■ ■ ■ ■Initial investment ■ ■ ■Returns ■ ■ ■Payback period ■ ■ ■ ■ ■Ease of exit ■ ■ ■ ■ ■Scalability ■ ■ ■Diversification opportunities ■ ■ ■ ■ ■Sustainability ■ ■ ■ ■ ■

kasbtv.com

IT-Enabled Remote ServicesDimension Training RemoteMarket size ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Competitive advantage ■ ■ ■ ■ ■ ■LeadershipExperienced professionals ■Junior professionals ■ ■ ■ ■ ■ ■ ■ ■Training ■ ■ ■ ■Telecom ■ ■ ■ ■ ■ ■ ■Distribution channels ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Buildings ■ ■ ■ ■ ■ ■ ■Initial investment ■ ■ ■ ■ ■ Returns ■ ■ ■ ■ ■ ■ ■Payback period ■ ■ ■ ■ ■ ■ ■ ■Ease of exit ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Scalability ■ ■ ■ ■ ■ ■ ■ ■Diversification opportunities ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Sustainability ■ ■ ■ ■ ■ ■ ■ ■

kasbtv.com

Custom Software DevelopmentDimension Training Remote CustomMarket size ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Competitive advantage ■ ■ ■ ■ ■ ■ ■ ■ ■LeadershipExperienced professionals ■ ■Junior professionals ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Training ■ ■ ■ ■ ■ ■Telecom ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Distribution channels ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Buildings ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Initial investment ■ ■ ■ ■ ■ ■ ■ ■ ■Returns ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Payback period ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Ease of exit ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Scalability ■ ■ ■ ■ ■ ■ ■ ■Diversification opportunities ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Sustainability ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

kasbtv.com

New Product, Technology, BMDimension Training Remote Custom ProductsMarket size ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Competitive advantage ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Leadership ■Experienced professionals ■ ■Junior professionals ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Training ■ ■ ■ ■ ■ ■Telecom ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Distribution channels ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Buildings ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Initial investment ■ ■ ■ ■ ■ ■ ■ ■ ■Returns ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Payback period ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Ease of exit ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Scalability ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Diversification opportunities ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Sustainability ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

kasbtv.com

Which IT Sector is Right for You?

1. Determine the investment selection profile for yourself

2. Determine the selection profile for various IT sectors

3. Invest in the sector that matches best with your own profile

kasbtv.com

Which Sector is Right for You?Dimension Training Remote Custom ProductsMarket size ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Competitive advantage ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Leadership ■Experienced professionals ■ ■Junior professionals ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Training ■ ■ ■ ■ ■ ■Telecom ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Distribution channels ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Buildings ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Initial investment ■ ■ ■ ■ ■ ■ ■ ■ ■Returns ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Payback period ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Ease of exit ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Scalability ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Diversification opportunities ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■Sustainability ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

kasbtv.com

Summary

• Selecting among competing investment opportunities can be made more objective by formulating them in terms of the framework suggested here

• This framework is useful, forcing us to consider early in the investment life-cycle the issues that we will face during the entry, monitoring, and exit phases