Facebook just did its first Indian investment, Meesho, an online marketplace that connects sellers with customers on social media platforms such as WhatsApp. Facebook invests in the company with a hope to monetize WhatsApp and Meesho already has a huge experience of doing this.
Similarly, last year, Alibaba, the Chinese tech giant, acquired Pakistan’s most popular eCommerce store Daraz for an estimated $150 to $200 million.
The big players in the industry keep a close eye on major players from the subcontinent. Many small investments are already done by Rocket Internet in startups and if you watch the startup investments closely, you will be surprised why the investors are turning in numbers to put their money in these two countries.
It all started with a wave of digital outsourcing in the late ’90s. Because of the low, yet competitive labour cost in these two countries, many US-based companies began to outsource their tasks to India and Pakistan, especially for digital tasks such as Software development, Data Entry, Cad/Cam engineering, Web development, so on and so forth and the list never stops.
When I was growing up as a wanna-be freelancer, I can still picture it as it happened yesterday, I celebrated the success of Synapse India and Islamabad Software Factor on Elance with my friends. because I knew they have laid the foundation of what to expect in the years to come. Both were doing over US$100k a year easily and it was a signal to the world, the Asian market is ready for outsourcing assignments and contractual hiring.
And then the world saw outsourcing to India and Pakistan stretching its wings to multiple facets. The world began to think, why not hire a contractor from these two countries rather than paying a full monthly salary to their local employment and also take care of their social security, insurance and other expenses.
Because of the growing popularity of outsourcing, the trend took to digital products too, Today, all major mobile phone manufacturers have Chinese brick and mortar presence.
When President Obama took office in 2008, his first priority was to bring back the manufacturing in the US and give Tax rebates to the US companies so the money stays in the country and more job opportunities are created. Clearly, it was an alarming situation for the country that was quickly losing jobs and manufacturing opportunities.
He tried hard but could not stop the jobs moving out of the US simply because of low labour cost. Let’s take a simple example. An entry-level web developer in the US typically costs around $48k a year whereas companies can leverage a lot by outsourcing these jobs to India and Pakistan and cut the cost to half and save a dime out of it too, yes, sometimes even more than half and guess what, the quality is as good as any US contractor living in the country.
The reason why India has become a tech hub, a benchmark is because of its huge IT population, investments coming in the country. After all, there must be some extraordinary talent that Microsoft and Google have an Indian born CEO’s.
Pakistan, on the other hand, is not far behind, ranked as the 4th top country to produce freelancers, the country is picking up the digital pace quickly. With better political stability and peace situation, the country is destined to bracket herself right up there with any Asian country to take its fair share of the digital outsourcing pie.
For the players in these two countries, it’s pretty easy to set up an office. All you need is a few computers, a good internet connection, skill resource, ability to do business development and start offering your services online.