Despite a late start, Pakistan's information technology entrepreneurs and the government are hoping to make it big in the global marketplace for outsourcing of IT-enabled services. How have other countries succeeded and where does Pakistan stand?

Naween A. Mangi spoke from New York to Ron Hira, professor of public policy at the Rochester Institute of Technology, and Rafiq Dossani, senior research scholar at the Walter H. Shorenstein Asia-Pacific Research Center at Stanford University.

Software exports, call centres and medical transcription firms have become all the rage over the last three years. Young entrepreneurs are returning after years spent working at major tech firms in the US to start up their own ventures and the government is forecasting that IT will be the next big thing in Pakistan's economy.

So far, the numbers tell a less-than-compelling story. In 2004, although the software and IT enabled services business was worth $300 million, (including hardware the figure is $600 million), exports and outsourcing made up for just $33 million of that. By comparison, India logged $12.8 billion in software and services exports in 2004.

Still, the Pakistan Software Export Board, a federal body set up to promote outsourcing, forecasts that the business will grow by at least 45 per cent annually for the next five years. A lot of that growth will come from call centres and business process outsourcing which last year made up one-fourth of total exports. In the next ten years, the PSEB aims to be at the top of the class of tier two global IT companies.

But as experts and practitioners agree, Pakistan will need more than ambitious aims to meet that goal. Prof Ron Hira, whose new book Outsourcing America assesses the impact on the US job market, says the outsourcing industry is set for rapid growth in the next few years and if done right, developing countries like Pakistan could benefit from the boom.

Hira is an expert who has testified before the US Congress on the implications of outsourcing. "Pakistan isn't on the map yet," he says. "India dominates what most people think about [when it comes to outsourcing]."

Rafiq Dossani, an expert on outsourcing and a senior research scholar at Stanford University says there are several reasons for that. First, is the poor quality of infrastructure.

"When the Internet tanked recently, that created a really bad perception that the country has not thought through even the most rudimentary aspects," Dossani says. "Deregulation in this area is too limited." He says that while voice services have benefited from the deregulation, data services are still uncompetitive.

He says there are too many stumbling blocks since bandwidth is more expensive than in other countries. "The costs are outrageous at four or five times what they should be," he says.

Dossani identifies the thin segment of English speakers as a second hurdle in the way of a flourishing outsourcing industry in Pakistan. "Of the 30 per cent of the population that lives in urban Pakistan, one tenth speak English that's good enough to work at a call centre," he says. "And of those five million or so, only about one million are available to come into this field as the rest are working elsewhere."

Then, he says poor marketing also holds the industry back. "You just don't see the trade body [in Pakistan] working like India's Nasscom to project a positive image," he says. "The Pakistani diaspora has done well and there is a great need to better use that network."

He forecasts that the outsourcing business in Pakistan can be at least $1 billion in size but says this is only possible if alliances are formed with countries like India and China.

"The Philippines has done well by understanding that it cannot reach critical mass on its own and therefore forming alliances and pitching themselves as a second location to offset country risk," he says. Dossani also says Pakistan has the advantage of a highly skilled group of entrepreneurs which "is the reason why the tiny industry does exist."

Hira adds that since Pakistan entered into the industry late, playing catch up is an inevitable need. However, the sector can take advantage of the circumstances in other countries. "India has done a lot of things right," he says. "They have been successful at not just attracting foreign investment but also building their own companies and leveraging the large Indian diaspora," Hira says.

"India is also so talked about that people are comfortable doing business there. But since wages are rising, Pakistan can use that as an entry point." He says that while countries like India have accumulated critical mass and scale, others are distinguishing themselves in different ways.

Eastern European wages are slightly higher than Pakistan and companies in that region have specialized in near-shoring by targeting the European market. Russia, meantime, is aiming at the U.S. market in both services and manufacturing while the Philippines and Malaysia are targeting services.

"The question really is how you separate yourself from the pack," Hira says. "You can compete on price to a certain extent but you have to offer something more to distinguish yourself."

He says U.S. companies are now moving from pilot stage outsourcing to full deployment which indicates both the success of the pilot projects and the rapid growth that is likely to come in the outsourcing market for the next few years. "There will continue to be a backlash from U.S. workers, but by and large there has not been any real policy movement to restrict outsourcing so there is still a large opportunity," he says.

Hira admits that the extent to which a growing outsourcing industry ties into the broader economy in terms of job creation remains unclear but he says, other advantages emerge. "In India, for example, it remains unclear that they've been able to link the benefits [from outsourcing] back in, but the big benefit is that they have created world class management which can then move into other sectors."

Therefore, Hira recommends that Pakistan take a long-term vision not for the next three or five years but for the next two decades. "Right now you can try to pick up the low hanging fruit and absorb the excess demand but don't just think about attracting the individual company to come [to Pakistan]," he says. "Think about how this will fit into the larger set of skills for your country so that you can differentiate yourself much later down the road."

Fifty years ago, in April 1955 in Bandung, Indonesia, the country's then-president Sukarno hosted a meeting that became a global icon of anti-colonial solidarity. The 29 African and Asian states represented at that first Bandung Conference swore their support for sovereignty and self-determination. Their priority was on national not individual freedom. The final declaration mentioned human rights. But it ignored the danger that foreign colonialists might be replaced with indigenous dictators. Democracy, corruption, and good governance were issues for the future.

This year in Indonesia, from 18 to 24 April, some 87 delegations, including 40 heads of state or government and more than 100 ministers, celebrated the "golden jubilee" anniversary of the Bandung Conference. In a series of summit, ministerial, and other meetings they sought to "reinvigorate the Bandung spirit" and forge "a new Asian-African strategic partnership" for the 21st century. The week climaxed on 24 April on the same day and in the same hall where the original conferees had launched the "Bandung spirit" of solidarity against imperialism half a century before.

Some of the leaders gathered for the celebration -- Bandung II -- were content to repeat the nationalist pieties of the past, or to redirect them from European colonialism to American unilateralism as the enemy of the day. But the current president of Indonesia, Susilo Bambang Yudhoyono, known as SBY, struck a different note. His theme was not independence but introspection, not sovereignty but self-reform. He gently urged his fellow rulers to replace the old dogma of national liberation with a commitment to "good governance" as the latest and highest priority for developing countries -- in effect, self-reform as the new spirit of Bandung. At that moment, in Blitar, East Java, where he is buried, the nationalist firebrand Sukarno must have rolled in his grave.

"Good governance" did not and will not become the buzzword of Bandung II. The only other speaker who mentioned it, to my knowledge, was Singapore's prime minister Lee Hsien Loong. Fewer voices were raised in favor of self-reform than were aimed at American unilateralism. North Korea's Kim Yong Nam was among the latter. So was "Comrade R. G. Mugabe," as Zimbabwe's dictator called himself.

An Iraqi delegate, unable to insert in the ministers' communique a paragraph supporting his country's embattled transition to democracy, told me privately and bitterly, "The spirit of Bandung has not changed at all." In his view, most of the conferees in Bandung II preferred the odious sovereignty of Saddam Hussein to the induced democracy that followed, just as the leaders of the anti-colonial movement had tolerated tyrants in their ranks.

Yet SBY's speech did not fall on wholly deaf ears, and Iraq is not a good test case. More than a few delegates in Bandung supported democracy but opposed democracy-by-invasion. In developing countries, as representative government has spread, so has the desire to make it less corrupt and more effective. Over time, a new Asian-African agenda could give more prominence to democratization, religious moderation, the rule of law -- and honest, accountable governments as means to these ends.

But even if this does not happen, even if SBY's challenge is forgotten, the prestige of successfully hosting Bandung II already has strengthened his otherwise vulnerably "American" position inside a country whose future will help tip the balance of extremism and moderation in the Muslim world.

SBY is John F. Kennedy-esque: tall, handsome, young for a head of state, and able to project a democratic vision for Indonesia. A retired army general, he received American military and civilian training, including a master's in management from Webster University. No president before him has had more American exposure. This background will be in the spotlight when he pays his first presidential visit to the United States at the end of May.

Indonesia is the largest Muslim society, the third-largest democracy, and a tropical archipelago where defenders of the Bush administration are as scarce as snow. Indonesians will appreciate SBY's American experience if it enables him to deal with the world's only superpower in ways that help Indonesia. But if he is seen as too enamored of supposedly "American" values, he will create an opening for his political opponents.

In Bandung on the last day of the commemoration, crowds lined the streets, smiling and waving at the VIPs. Through the closed windows of air-conditioned limos and busses, the VIPs waved back. Compared with the week's grand abstractions -- sovereignty and self-reform -- this third spirit of Bandung was fleeting and local. But unless Asian-African solidarity becomes more than a slogan, or the vision of a better-governed Indonesia comes true, it may have been the most real.

Former National Security Advisor addresses the future of Asia, and explains why, by 2020, the world's five most important countries are likely to be, in this order, the United States, the European Union, the People's Republic of China, Japan, and India.

The Oksenberg Lecture, given in 2005 by Zbigniew Brzezinski, honors the legacy of Professor Michel Oksenberg (1938-2001) longtime member of APARC, senior fellow at the Stanford Institute for International Studies, and an authority on China. Professor Oksenberg was consistently outspoken about the need for the United States to engage with Asia in a more considered manner. In tribute, the Oksenberg Conference/Lecture recognizes distinguished individuals who have helped to advance understanding between the United States and the nations of the Asia-Pacific.

PALO ALTO, Calif. -- The European Union is increasingly showing a new independent stance on foreign-policy issues as the logic of its industrial and economic integration plays out in the international arena.

Already the EU has taken a distinct and independent approach to both the Israel-Palestinian conflict and the nuclear crisis in Iran. Now it has broken ranks over the Korean Peninsula, fed up and concerned with the failure to resolve the ongoing crisis over North Korea's development of nuclear arms.

Reflecting this new stance, the European Parliament this week passed a comprehensive resolution on the Nonproliferation Treaty (NPT) and nuclear arms in North Korea and Iran:

• It urges the resumption of the supply of heavy fuel oil (HFO) to North Korea in exchange for a verified freeze of the Yongbyong heavy-water reactor, which is capable of producing weapons-grade plutonium, to avoid a further deterioration in the situation. At the same time it is calling for the European Council and Commission to offer to pay for these HFO supplies.
• It urges the Council of Ministers to reconsider paying 4 million Euros of the suspension costs for KEDO (the Korea Energy Development Organization) to South Korea to ensure the continued existence of an organization that could play a key role in delivering energy supplies during a settlement process.
• It demands that the Commission and Council request EU participation in future six-party talks, making it clear that the EU will in the future adopt a "no say, no pay" principle in respect to the Korean Peninsula. Having already placed more than $650 million worth of humanitarian and development aid into the North, it is no longer willing to be seen merely as a cash cow. This view was backed in the debate by the Luxembourg presidency and follows a line initially enunciated by Javier Solana's representatives last month in the Parliament's Foreign Affairs Committee.
• It urges North Korea to rejoin the NPT, return to the six-party talks and allow the resumption of negotiations.

The EP cannot substantiate U.S. allegations that North Korea has an HEU (highly enriched uranium) program or that North Korea provided HEU to Libya. It has called for its Foreign Affairs Committee to hold a public hearing to evaluate the evidence. "Once bitten, twice shy" is the consequence of U.S. claims that Iraq possessed weapons of mass destruction.

The world order is changing; the EU -- like China -- is emerging as a significant global power economically with the euro challenging the dollar as the global currency (even prior to the latest enlargement from 15 to 25 member states, the EU's economy was bigger than that of the United States). Speaking at Stanford University earlier this month, former U.S. foreign policy adviser Zbigniew Brzezinski pointed out that the EU, U.S., China, Japan and India will be the major powers in the new emerging global order. Since the new Asia will have three out of the five major players, he stressed the importance of engaging with it.

How will those already in play respond? Some may claim that statements by North Korea welcoming the EU's involvement and participation are merely polite, inoffensive small talk that cannot be taken seriously. Yet there have been a spate of pro-EU articles appearing in Rodong Sinmun, the daily newspaper of the Central Committee of the Korean Workers Party, since 2001.

Of 128 EU-related articles between 2001 and 2004, a majority praised Europe's independent counter-U.S. stance, emphasized its increasing economic power and influence, and heralded its autonomous regional integration. Rodong Sinmun portrays the EU as the only superpower that can check and balance U.S. hegemony and America's unilateral exercise of military power.

North Korea's perception of the EU is well reflected in articles such as: "EU becomes new challenge to U.S. unilateralism"; "Escalating frictions (disagreements) between Europe and U.S."; "European economy (euro) dominating that of the U.S."; "Europe strongly opposing unilateral power play of U.S.," and so forth.

Concurrently, North Korea has pursued active engagement with the EU by establishing diplomatic relations with 24 of the 25 EU member states (the exception being France). It is not necessary to read between the lines to recognize North Korea's genuine commitment to engagement with the EU based on its perception of the EU's emerging role on the world stage.

The Republic of Korea has publicly welcomed the prospect of EU involvement, while China wishes to go further and engage in bilateral discussions with the EU on its new policy toward the North. Russia will follow the majority. The problem is with Japan and the U.S.

In Japan, opinion is split by hardliners in the Liberal Democratic Party who view problems with North Korea as a convenient excuse to justify the abandonment of the Peace Constitution. They don't want a quick solution until crisis has catalyzed the transformation of Japan into what advocates call a "normal" country.

The U.S. expects an EU financial commitment, but not EU participation. The neocons believe that EU participation would change the balance of forces within the talks inexorably toward critical engagement rather than confrontation.

The question is whether the EU's offer will point the U.S. into a corner or trigger a breakthrough. Will U.S. fundamentalists outmaneuver the realists who favor a diplomatic rather than military solution? Only time will tell.

Glyn Ford, a Labour Party member of the European Parliament (representing South West England), belongs to the EP's Korean Peninsula Delegation. Soyoung Kwon is a postdoctoral fellow at Stanford University's Asia-Pacific Research Center.