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There is widespread
interest among Muslim entrepreneurs about the
possibility of moving into Information Technology
(IT) fields. The potential for IT to serve as
a driver for growth is widely recognized within
the top ranks of governments that are members
of the Organization of the Islamic Conference
(OIC). However, when it
comes to choosing IT strategies, uncertainty exists
about the extent to which Muslim businesses' IT
strategies should follow Western models.
Anwar Kazi, the CEO
of Karachi-based ALT Source Communications [http://alt-source.com/]
said that developing countries are now looking
to follow India in the IT field, rather than imitate
the U.S.
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We begin here by examining
lessons from India's experience, before
suggesting IT strategies for Muslim businesses
seeking to become software products firms
or IT outsourcing service providers. Practical
advice is also provided on how to enter
the IT field, the role of expatriates in
the West, and on the role of open source
software in a broader Muslim IT strategy.
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Market Entry
Indian software firms
gained large-scale entry into Western markets
through projects to repair Year 2000 (Y2K) date
issues, primarily for clients who could not recruit
enough people in the U.S. with skills in old software
languages. This Y2K work was handed out to Indian
firms that lacked marketing resources to garner
outsourcing business through traditional Western
business practices. Western clients were so desperate
for Y2K assistance that they overlooked the poor
communications and client liaison skills that
characterized many Indian IT firms at that time.
Y2K work enabled Indian
firms to accomplish the following:
- They learned about Western
business practices and how to work successfully
with Western clients;
- It provided these IT
firms with business contacts and a proven track
record of performance;
- Generated confidence
for new South Asian investors to enter the IT
sector, for new Western clients to begin working
with Indian firms, and for existing Western
clients to commission Indian IT firms to conduct
larger and more complex projects;
- It enabled Indian firms
to learn about clients' needs, which enabled
those firms to adapt their approach to meet
their clients' full range of IT outsourcing
needs once the Y2K boom subsided.
There is no new YK2
bubble on the horizon, or anything like it. No
longer will desperate Western clients seek out
offshore IT firms that would not normally measure
up to clients' standards for professionalism,
quality, client relations skills, and Western-style
project management approaches. Now different strategies
are needed for entry to international markets.
Following India's
Example?
Press reports on the
IT outsourcing boom have not provided an accurate
picture of the problems faced by Indian IT firms
in seeking to gain and maintain access to Western
markets. These problems have been most acute in
the call center outsourcing field, where only
ten percent of the original facilities that entered
the market in the period of 1999 through 2001
have survived under their original owners. From
the time the international call center outsourcing
industry began in India in 1999 up through 2003
there were widespread outsourcing project failures
from U.S. clients. Although Western clients were
quick to blame Indian staff for these failures,
actual responsibility often rests with clients
who are unwilling to invest in training, quality
control, management assistance, and who set unrealistic
ramp up schedules that were bound to fail.
There is a continuing
resistance by some Western clients to conduct
honest assessments of outsourcing facilities'
institutional and technical capabilities and then
jointly implement measures with facility managers
to upgrade those capabilities. Matters have not
been helped by the resistance of some old-style
Indian managers to accepting and responding appropriately
to criticism (whether well founded or otherwise)
and resistance to taking personal responsibility
for the outcome of work being conducted within
their organizations.
The legacy of colonial
mindsets, while rarely seen within highly-successful
export-oriented IT firms in India, still holds
sway among some managers and supervisors in old
line corporations.
One of the downsides
of the rough period in the Indian call center
industry up through 2003 was that some U.S. clients
of InternationalStaff.net set prices for work
going to India that were 15 to 20 percent less
than work sent anywhere else in the world.
Components for Success
The media's treatment
of the IT outsourcing boom has been to present
it as an easy way to make money, which has encouraged
many promoters to enter the field without important
components for success. These components, as listed
below, are relevant for Muslim IT businesses that
are seeking access to Western IT outsourcing markets:
- An understanding of
customer service methods and metrics is needed.
- Specialization and domain
expertise provide competitive advantages over
generalist facilities.
- Skills are needed for
recruiting, retaining, and supervising IT workers
as knowledge workers, rather than as manual
laborers. This is an issue in Dubai Internet
City now for promoters whose original backgrounds
are in construction and other non-IT fields.
- Outsourcing facilities,
particularly call centers, must have sufficient
numbers of customer liaison managers and trainers
with enough Western business experience to enable
the outsourcing facility to meet or exceed customer
expectations. One successful call center in
Islamabad, Touchstone Communications [http://www.ecommercetimes.com/story/41818.html]
uses one Western trainer for every 50 to 60
customer service agents. Western women expatriates
have been found to be particularly effective
as trainers and managers on projects for Western
clients.
- Enthusiasm is needed
for instilling a sense of personal responsibility
for quality, integrity, and customer responsiveness
at absolutely every level of an organization.
Quality is not a 'program' that can be assigned
to someone else in an IT organization. Quality
means taking the initiative to ensure that problems
are solved with each and every customer phone
call and email, rather than merely making referrals
to others. This has not always been an easy
lesson for those of us (this author included)
who grew up under British colonialism.
- Adequate marketing
resources and working capital have to be committed
in order to sustain an IT business until it
can achieve consistent profitability. The awkward
pre-profitability period may be considerably
longer and more difficult than the period required
to achieve profitability with other types of
investments, such as real estate. Unless promoters
are prepared to provide continuing financial
support, particularly for marketing and training,
then their entire investment could be put in
jeopardy. Successful U.S. high-tech startups
often commit at least 35%-40% of their initial
capital to be spent on sales and marketing campaigns.
For non-U.S. firms seeking to break into the
North American market, even greater resource
commitments are needed.
In India, as in many
parts of the world where the IT outsourcing craze
is becoming popular, many investors have jumped
into the IT field without the components listed
above. Their failure was predictable and inevitable.
The lessons of India's
entry into Western IT markets have not always
been taken seriously in countries seeking to compete
with India. Nor have they been adequately considered
by many new entrants into the IT outsourcing field
in India itself. This explains the high failure
rate for call center outsourcing firms in India.
The Ability to Sustain
Failure
The difference between
India's global outsourcing position and the positions
of OIC countries is that India has the scale to
fail. According to Rohit Shukla, "India can afford
to fail 15 million times." He compares the Indian
economy to the Chinese Army, which is so big that
it can afford to expend tremendous resources in
order to gain ground.
Rohit Shukla is the
founder of the Larta Institute [http://www.larta.org]
in Los Angeles, which from 1993 to 2004 served
as the official commercialization agent for the
State of California and now provides outsourced
go-to-market services for clients worldwide, including
the U.S. National Institutes of Health. Rohit
and I have been in discussions with the Government
of Pakistan on how to jump start Pakistan's IT
industry in global markets.
"India has the scale
to afford to fail," Shukla said, "Pakistan and
other countries competing with India do not."
If several firms from the same country rush headlong
into the Western IT market and initially fail
to deliver properly, then it will give that entire
country's IT industry a bad name and make it harder
for anyone from that location to receive fair
consideration in the global marketplace. This
phenomenon is now being played out in Mauritius.
India no longer faces
such a risk, Shukla said. "India has not only
become a superpower, it has integrated itself
into the firmament of the world economy, of the
world mindset," Shukla said. Other recent entrants
to international IT markets have not.
India's vibrant, diversified
domestic economy also serves to lure Western IT
companies to set up both export-oriented operations
and business units focusing on the domestic Indian
market. IBM, for example, in addition to having
export-oriented operations in India, is also winning
domestic IT contracts in India-at U.S. labor rates.
In the language of Silicon
Valley venture capitalists, India has achieved
critical momentum, escape velocity. In U.S. boardrooms,
a common question now being asked is: "What is
our Bangalore strategy?"
Strategies for Muslim
Software Firms
Jordan provides an example
of an OIC country committing itself to rapid growth
of its information technology industries and that
is not following India's example. Jordan's software
exports have grown from zero in the year 2000
to US$85 million in 2004, according to Mr. Maher
Matalka, Director, Economic & Commerce Bureau
of the Jordanian Embassy in Washington DC.
Export-oriented IT firms
in Jordan have focused on the U.A.E. and Saudi
Arabia, which are its two major software export
markets. The United States is Jordan's third biggest
IT export market. Once Jordanian IT firms have
established a strong market presence in other
OIC countries, they will be in a stronger position
to enter Western markets successfully than if
they had attempted to enter Western markets directly.
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In the U.A.E. and Saudi
Arabia, according to Bilal Abuzeid, CEO
of the Information Technology Association
of Jordan [http://www.intaj.net], Jordanian
firms have competitive advantages because
of a common language and because of the
large numbers of Jordanian IT specialists
and IT managers working in those countries,
particularly in the U.A.E.
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The capabilities that
Muslim IT firms bring when they enter markets
in OIC countries can provide competitive advantages
over IT firms with little or no background in
OIC countries. Western firms are drawing on this
lesson and are establishing bridgeheads in one
or more OIC countries in order to aid their subsequent
market expansion efforts elsewhere. Jordan, Dubai,
Malaysia, and Pakistan have all demonstrated success
with their IT exports and have all created favorable
business environments that are attracting multinational
firms, which use those countries as a base for
business activities in surrounding regions.
To fully appreciate
the benefits for multinational firms of using
one OIC country as a base to begin to sell and
provide customer services in the surrounding region,
Matalka said that multinationals should see OIC
countries as part of a larger market of 300 million
consumers, many of whom have unmet needs for goods
and services. According to Matalka, Jordan's advantage
for outside investors and as an outsourcing destination
is that Jordan is the most stable country in the
Middle East. Matalka points out that rising labor
costs in India have helped Jordan into the unexpected
position of being increasingly cost-competitive
with India on many fronts.
Dubai has the advantage
of a highly developed infrastructure and sophisticated
domain expertise in areas such as banking and
network administration. Malaysia has been and
will continue to be a leader in attracting hardware
manufacturing to Cyber Jaya, the free trade zone
south of the capital Kuala Lumpur. Pakistan offers
costs that are 20-30% lower than India's and English-language
skills that U.S. clients often find superior to
India's.
Market Visions
The marketing questions
facing Muslim IT firms can be seen, in part, as
questions of vision. Malaysian firms, for example,
often look towards other countries in the Association
of Southeast Asian Nations (ASEAN) for market
expansion opportunities. IT firms in the Middle
East often look towards countries in the Arab
League of States. Pakistan's IT firms are increasingly
looking towards India for marketing and partnership
opportunities (and vice versa).
China will be seen as
the subject of increased marketing and partnership
efforts in the future. Muslim IT firms throughout
the world often look optimistically towards markets
in the U.S. and also to the U.K. However, the
vision of Muslim IT firms of OIC-wide markets
has not been well articulated in many of the discussions
that I have had to date, with the notable exception
of Dinar Standard [http://dinarstandard.com/],
a business publication for the Muslim business
world.
According to Rafi-uddin
Shikoh, Editor of Dinar Standard, in 2002
only about 12% of the total trade by OIC member
countries was done amongst each other. Drawing
on figures provided by the Islamic Chamber of
Commerce and Industry [http://www.icci-oic.org/]
(ICCI), Rafi-uddin Shikoh highlights Saudi Arabia,
Turkey, and Indonesia for their role as exporters,
but urges an increased focus on importing from
OIC countries.
The vision of IT as
a driver for growth within OIC countries and the
significance of IT trade between OIC countries
have not been fully articulated. With an appreciation
of current benefits provided by inter-OIC IT trade,
and with a vision of the benefits that could be
provided if that trade was expanded-even modestly-it
would be possible to work backwards from those
visions to help Muslim businesses and governments
decide on strategies to be undertaken now.
The vision of a Muslim
IT strategy, as applied on a global basis, is
being taken up by a new, energetic generation
of business analysts, exemplified by Athar Osama
[http://paksoftwarestudy.vttp.org/Curriculumvitae_AtharOsama.htm],
a Doctoral Fellow at the Rand Graduate School
of Policy Studies in California. Athar Osama combines
sophisticated statistical analysis with sound
business knowledge to not only envision a Muslim
IT strategy, but to participate in its creation.
What Can Expatriates
Do?
One advantage that all
OIC countries share is a vibrant expatriate population,
consisting of highly talented and globally-savvy
individuals with professional skills and other
resources that can make a difference in the development
and prosperity of their home countries. Expatriates
have a special duty to help their mother countries,
according to Jordan's Maher Matalka. Matalka said
that expatriates can invest money, provide technical
resources and advice, and keep themselves updated
on developments in their home countries even though
they may have lived away for many years.
Ayub Khan, who lived
and worked in London for most of his life before
returning to Pakistan to help found the business
automation and ecommerce infrastructure firm InfiniLogic
[http://www.infinilogic.com/] suggests that expatriates
can help in four areas:
- Provide business intelligence
on Western IT markets and current IT and business
process outsourcing trends. Such information
is not readily available outside of the West,
Ayub said, adding that World Wide Web is useless
if you don't know where to look.
- Provide a 'cultural
bridge' relaying information like the correct
ways of opening and sustaining dialogue with
potential customers, as well as protocols for
customer support, etc.
- Expatriates who have
business contacts or some degree of business
acumen can be recruited as point-of-sale agents
working on a commission basis to win contracts
for firms in their home country.
- Looking at the bigger
picture, Muslims in the West have a role to
play in improving the image of their home countries
and Islam as a whole. Years of negative media
slant will take time and effort to overcome,
Ayub said.
Expatriates can provide
charity to schools and other institutions in order
to encourage economic development in their home
countries. Opportunities can also be undertaken
for providing training and mentoring for businesses
and individuals.
In seeking to provide
training and technical assistance to Muslim businesses,
however, expatriates need to ensure that there
is full support for their efforts from the top
managers of the firms they are intending to help.
Otherwise such well-intentioned efforts may ultimately
go to waste. Participation in politics in the
U.S. is one area that has not been fully explored
in the Muslim business press, but has the potential
to improve the business climate in the U.S. for
exports from OIC countries and the esteem with
which expatriates from OIC countries are held.
Participation can include
pooling campaign contributions to gain maximum
impact, meeting with candidates and elected officials
to establish a dialog, and communicating with
elected officials on a frequent basis so as to
not have one's voice drowned out by others. Writing
letters and articles for the media can also make
a difference, particularly where Muslim perspectives
are rarely heard.
Including Muslim
Businesses in Procurement Processes
Simply being able to
bid on IT projects and other outsourcing opportunities
can be a big step forward for Muslim businesses
that have traditionally been shut out of the procurement
processes of large international firms. If international
firms are keen to sell into Muslim markets, then
they also need to become more inclusive in encouraging
Muslim businesses to become preferred or short-listed
bidders and suppliers.
Muslim professionals
employed by large Western corporations have a
role to play in helping to open the procurement
process to Muslim businesses. In letting out IT
outsourcing contracts, Indian professionals employed
by major Western corporations have often played
an advocacy role to help steer contracts towards
Indian outsourcing firms, while excluding bids
from Muslim businesses.
In the interests of
fairness and encouraging better value for purchasing
firms, competition for IT outsourcing opportunities
in Western markets needs to be made available
to Muslim businesses and to bidders from newer
outsourcing destinations, particularly from OIC
countries.
Competition for IT contracts
is needed within OIC countries themselves. Muslim
IT firms often have superior products and services-including
specialized areas such as Internet security, as
exemplified by Arpatech [http://www.arpatech.com/].
This firm provides best-of-breed security solutions
in Western markets but has not received much attention
within OIC countries.
True to the classical
Muslim tradition that emphasizes the creation
of new knowledge, Arpatech is known primarily
in the West as a research firm. Locally in Karachi
Pakistan, Arpatech is making waves as a provider
of low-cost open-source computer systems (both
hardware and software).
Strategically, Arpatech
serves as an example of a Muslim IT firm that
is ready to team and cooperate with other businesses.
Arpatech provides critical technology transfer
and skill training to its partners, clients, and
the IT community at large.
Cooperation, Teaming,
and Product Interoperability
In order to compete
effectively in Western markets, Muslim businesses
need to cooperate and team up more often. Whereas
teaming is common among Western firms in fields
such as civil engineering, it is not always widely
practiced among Muslim businesses, especially
IT firms in South Asia.
Schools and universities
in the U.S. emphasize and encourage teaming skills
in class exercises and group projects. International
business environments encourage teaming as a means
to employ highly experienced professionals for
specialized tasks. Muslim businesses need to better
avail themselves of the advantages that teaming
provides.
In the IT sector, cooperation
is needed so that software products made by different
Muslim businesses can work together and complement
each other. Products that complement each other
and exchange information automatically are more
valuable and sought after than stand alone products
that work in isolation.
In the customer service
field, rather than spend the money to establish
their own in-house call centers, businesses can
lease space at existing call centers. Unused capacity
can be leased with call center agents provided,
or with clients providing their own staff. Outsourcing
saves time and money, and provides ready access
to specialized technologies and experienced managers.
Once a client has experience in a leased facility,
they will be better prepared to make decisions
on building their own facility.
A Long Range Vision
A longer term Muslim
IT strategy will include an increased emphasis
on interoperability and on complementary software
systems. Whereas an argument could be made in
favor of building software suites based on open
source software, the willingness of major proprietary
software firms such as Microsoft to offer deeply
discounted products and establishing local operations
centers in OIC countries such as Jordan is diluting
that argument, at least in Jordan.
The fact remains that
the rate and extent of business computerization
in OIC countries is relatively low. Even within
computerized firms, annual investments in IT are
often only made at one third the rate (as a percentage
of total revenue) of IT spending in U.S. companies.
The challenge facing Muslim businesses is that
full computerization and continuing investment
in proprietary software is simply too expensive
to be feasible in many cases.
There is a need for
businesses to become more efficient and better
managed through computerization, but the funds
for it often are not available, at least for high-cost
proprietary software products. Hence the attractiveness
of open source software.
The four most commonly
used open source software programs are collectively
referred to as LAMP, and which consist of:
- Linux operating systems
- Apache web servers
- MySQL databases
- PHP for creating web-based
applications with minimal programming
Open source enterprise
software is often put together for using LAMP.
At present, the major
strengths that software firms in countries such
as Pakistan and Jordan have to offer come in terms
of the development of software products, particularly
proprietary software products. However, if the
rate of computerization among businesses in OIC
countries is to begin to approach Western levels,
then revenue models for IT firms in those countries
will need to stress services such as customization,
installation, training, and support.
In other words, Muslim
IT firms will need to become more involved in
customizing, installing, and maintaining software
products developed by others. It will be cheaper
and more profitable for those firms if the products
they support are open source ones, thereby enabling
Muslim IT firms to charge less to their clients
while retaining a greater percentage of revenues
for themselves from each project.
Continuing price pressures
and the availability of open source software products
will accelerate the dissemination and utilization
of enterprise IT systems in OIC countries. IT
firms that can thrive on the open source model
and can gain widespread domain expertise within
OIC countries can build momentum and competitive
advantages that will serve them well once they
enter Western markets directly.
IT firms that focus
on providing high-quality software solutions at
low cost (i.e., largely through the provision
of open source products) in OIC countries will
be drawn into Western markets hungry for low-cost,
proven IT solutions. This is a less risky approach
to marketing and sales than attempting to enter
Western markets immediately and directly.
Who Decides?
The decision on whether
there is to be a Muslim IT strategy and whether
it is to be successful rests with the market,
i.e., the market for IT products and services
within OIC countries, their expatriate populations,
and Muslim businesses everywhere. You will influence
that decision by your own market behavior. Please
choose wisely.
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The author, Anthony
Mitchell, is the CEO of InternationalStaff.net
[http://www.internationalstaff.net], which manages
call center and software outsourcing projects
for U.S. clients.
Your Feedback
Excellent
global perspective for promoting I.T.based technology
in the muslim world.
Expatriates
should take heed of this divine call to our roots
in our Islamic civilization ,heritage ,traditions,
and inherent strengths and competencies developed
by interacting with western companies for the
last thirty years. This article truly epitomizes
and glorifies the views expressed by formal C.E.O.of
H.P. on the oldest Islamic civilization which
heralded the basic sciences of the world ages
way before the advent of modern western civilization
An eye opener for muslim expatriates who have
the guts to branch out and take the challenge
and catch the bull by the horn
S.
Shaikh
I
found your article very informative and interesting.....BUT
the branding of muslim IT although well meaning
can have immediate concerns in the west and should
be carefully thought about. There is nothing muslim
about IT and it should be kept neutral. Cheers,
H Bashir, Pakistan
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