Pakistani startups have raised $300 million in venture funding in 2021 so far, which is more than the previous six years combined. The flood of overseas capital is due to an improving political and security climate, growing internet penetration, and progressive startup regulations. People who balked at investing in Pakistan before are now queuing up to bet big on the 220-million-strong South Asian nation. But just as the tides turn, Pakistan startups are faced with their biggest challenge yet: talent.
Venture capitalists who Rest of World spoke to said startups are facing a crunch in hiring quality talent, especially mid-level coders, business managers, and senior-level executives.
“Literally every local and international tech employer in Pakistan has been struggling to find good talent at scale,” Arzish Azam, chief executive of Pakistani startup accelerator Ejad Labs, wrote on Twitter. Investor Misbah Naqvi of i2i Ventures, who led multiple funding rounds this year, told Rest of World that “getting access to the CTO level, or even level two, after the C-suite is becoming increasingly challenging.”
Unlike the Philippines or India, Pakistan failed to capitalize on the technology outsourcing boom of the 1990s. Niche software houses, led by Systems Limited and Netsol, make up the $2 billion tech export industry in Pakistan and recruit most of the country’s tech talent. This year’s tech boom has allowed a small cohort of engineers working at these tech shops to demand premium salaries — in some cases, four times their current pay, according to Naqvi. As Pakistan Today’s Profit magazine notes, the lack of professional tech talent has forced traditional software houses and new age startups to lock horns, distorting existing pay parities.
But for the Pakistani ecosystem to thrive, the overall engineering pool needs to expand beyond top schools, such as NUST and GIKI. The majority of the 20,000 engineering graduates entering the job market annually aren’t qualified enough to quench the appetite of new age startups. “In the short term, the talent crunch is a bottleneck for growth, but it’s forcing startups to invest in recruiting and training,” said Aatif Awan, founder of Indus Valley Capital.
Pakistan needs a wholesale rethinking of its technology training program. The state is aware of the shortcomings and is creating tech zones that plan to double the size of its IT industry to $6 billion in the next two years. Naqvi of i2i says that the near-term solution for increasing the supply of high-quality engineers is to set up three- to -month training boot camps for coders to hit the ground running. Another solution, she says, is to attract smart freelancing talent working for companies outside Pakistan, through expanding stock options.