Date: 07 Mar 2000
Time: 07:59:31
Remote Name: 156.29.145.175
In an attempt to diversify Iran’s export base and to move away from over-reliance on oil for foreign exchange earnings, both the government and private sector are seeking high value added industries that can offer a competitive advantage. This interview with Ahmad Kiarostami, managing director of Negah.net, one of Iran’s leading software companies, pinpoints Iran’s potentials and shortcomings in this area. It also reveals a dangerous new development affecting Iranian internet service providers.
In recent times, India, which has a large supply of cheap, educated labor, has managed to take a special place in the global software development market. As the manager of one of Iran’s better computer programming companies, do you think that Iran has the potential to become another India in the field of software development?
India enjoys a number of qualities that helped it become the India that we now talk about. It has very cheap work sources and low-cost professional sources. Iran enjoys the same points as well. We have cheap professional sources too, so we can compete on that front.
But India has two other traits that Iran lacks. First is government support. The Indian government started to support software exporters by providing Indian computer companies with the facilities they needed. For example, a part of the satellite facilities that linked India to the world was handed over to the companies so that they could access foreign satellites easily and in order to bolster their work in this field. The Indian companies enjoyed this benefit with a good discount price as well. Unfortunately, we do not have such a facility in Iran. This shortcoming is a matter of government policy.
The second shortcoming stems from us as Iranian professionals. We have not learnt teamwork in our academic studies. As long as the project framework is based on an individual, we can do it extremely well. We have what it takes: intelligence, ability and knowledge. But when it comes to teamwork, it requires another set of skills, which we lack. In addition a working team needs a good experienced manager to direct the group. We have management problem in any field in Iran. There are a few who are good managers. However, they also face different problems. Those who manage well do not correspond with the system and have to leave the field very soon.
Another factor working against us is that we lack a stable environment in Iran, so that no-one makes long-term investments. Regulations change all the time and cannot be counted on. For a while we have used internet services without any problem, but now there is talk about putting some restrictions on the service. It is said that internet utilization is going to be limited but not completely prohibited. Such a development would deter investment in internet services.
In summary, lack of long-term investment, good management and teamwork are currently the main reasons for us to remain behind India.
Is there any room for optimism that these obstacles holding down Iran’s software industry can be overcome?
Under the current circumstances, we have several sources helping and pushing us to improve. The first is the current economic condition. Today the oil price has rebounded, but after a period of low prices we, as a nation, learnt that the issue of diversifying Iran’s export income base is a serious one and that our over-reliance on petrodollars carries a big risk. I am not able to do something at the governmental level, but if any individual can produce a good income for himself or herself, it helps. I do not talk about higher circles. This is a risk that made us change our manners in comparison with the past. I think we have become more serious and cooperate with others more easily. This can be a solution for the teamwork case. I know that the government has realized the threat of over dependence on oil income, but I do not know if it has found the solution and if it has, whether it can solve the problem.
The second issue is that of quality. When you talk about pistachio or machinery exports, we face several problems, namely bringing the quality of foodstuffs and developing technology up to that of the modern countries. Nevertheless, as far as the software market is concerned, we enjoy a good position. Keep in mind that there is no copyright in Iran. Multi-thousand dollar software packages are at out disposal at very low prices, which means we have learnt to work with many different tools. In other words, if a graphics arts specialist in a Western country is usually familiar with only one or two software packages, ours may know seven or eight. This is sometimes an advantage, it empowers us.
There are external factors that are in our favor as well. As far as I know, Indian prices are getting higher and India’s foreign partners are tending to cooperate with other countries. With Indian prices low in the past, it was hard to convince foreign firms to work with us. Additionally, Indian products are of good quality and Indians are very experienced in the business. But, increased prices in India provide us with a good opportunity to become a second or third India. Once we succeed in getting the contracts, it will be easier to obtain a good position in the market.
Doesn’t the fact that Iran lacks copyright laws scare off foreign companies from working with you?
Many foreign companies that want to work with us are concerned about copyright. But there is a solution. Although Iran lacks adequate copyright regulations, a contract between two parties could take care of the problem. A contract is considered the rule between the two partners. It has nothing to do with the country’s laws. Every point related to copyright can be mentioned in the contract. Keep in mind that we have good reason to take these contracts very seriously as well. As a firm seeking foreign projects, I would never jeopardize my reputation by breaching one contract. It would be very myopic to do so. If I do not respect the contract, nobody will be my client any more. I can earn well for a short period this way, but it will not last for a long time. Therefore, I would never violate the terms of the contract.
Do the guarantees you give foreign companies convince them or are they still unsatisfied?
They’re not absolutely satisfied, there is always a little concern. They are not familiar with the Iranian environment. Their vision of Iran differs from what it really is.
You noted earlier that there is a capable workforce in Iran when it comes to software development. But let’s make things a little more tangible. For example, how difficult would it be for a foreign software company that is interested in coming to set up shop in Iran to find, say, 50 top-notch developers?
If you have a short-term vision, and for example, you want to have your team in place in a matter of three months, it is fairly difficult to do so. Unfortunately, emigration to Canada is getting easier for computer experts. Canada has recently been accepting them without the usual interviews, or so I hear. Hence, the number of Iranian experts available here has dropped considerably. However, with a longer-term vision, and by offering some training, a foreign company could do quite well with its recruitment here. Iranian universities enjoy very favorable potentials. It is a matter of having patience, but the rewards could be great.
So if a foreign company wants to have a software package developed in one year, the only realistic option is to refer to an existing Iranian company.
It cannot directly start the activity. It should first train the sources and then in the second year commence its operations. So, yes, if it needs to develop software in a one-year period, its best option is contracting one of the better Iranian companies or entering a joint venture with one. Incidentally, this is the way most foreign firms have operated thus far.
You have mentioned that Iran offers cheap, specialized labor. Can you give us an idea of the range of wages of Iranian computer experts?
If it is only the matter of a programmer, with whom you can start the work, he or she gets from Rls1,000,000 to Rls4,500,000 a month. I know somebody who earns up to Rls7,000,000 – however, he is a exception. But if you want somebody who directs the company at the same time, the income ranges from Rls4,000,000 to Rls5,000,000. But this is not the only cost of labor to a company. Some 23% of the wage should be paid to the government as tax and insurance charges.
The internet has removed borderlines. The world has become smaller through the internet. How has it contributed to introducing Iran’s software structure to the world?
The internet has played a great role in this regard. It has helped everybody who deals with software. In fact, software today means software connected with the internet. To supply non-internet or non-intranet applications does not make sense any more. The internet is the place we put software on. It was an unknown phenomenon when it was introduced in Iran some five years ago. Its usage and users were limited. First, it was only the Telecommunication Company of Iran (TCI) that used it. Then Neda Rayaneh started to give internet services. Today, we are witnessing many internet service providers (ISPs) in Iran, but they have still a long way to go in offering good services. Their main shortcoming is that they are mainly concerned with their short-term interests. In proportion to the incomes here, their prices are extremely high. Overall, however, I believe that things are getting better. Besides, foreign companies are making investments in this area.
There is something important to point out here. Recently, a rumour has been spread about the introduction of limitations on the provision of internet services. It is said that only the TCI will be given the right to supply internet services, and all the other ISPs will have to provide their services through TCI. Mind you, this is not an uncommon system. In fact, Dubai has a similar system in place. However, such an occurrence would stop any competition in this field and foreign investment would be reduced or would disappear. The third problem is that if TCI continues working the way it did before, we can expect to see high charges persist.
The TCI’s policy has so far been geared towards generating income, instead of providing quality services. Therefore, if it maintains this policy, many ISPs will have to quit because of their limited financial resources. On the other hand, many companies will seek alternatives to using our ISPs. Presently, many foreign companies, such as Nokia, already report problems. They take part in telecom tenders, and if the communication channel between their head office and their local branch is the TCI, they will face security problems as well. They will not accept such a system. However, they will not have such concerns when working with a private company. If every connection is set up through a single channel, the process of communication will become more difficult. This will make the investment situation for foreign companies uneasy. I hope Iranian officials read my words and take them into consideration.
Now I want to refer to the positive points of the internet. Yesterday, when I made software, nobody outside Iran could get acquainted with it. But today, Iranians abroad can see it through the internet. The Fath newspaper site – which originally started out as Khordad – is a good example. Very comprehensive work has been done on this site. It is the first time that one can search archives using Arabic or Persian text, that is we developed a Persian-language search engine. And this is a start; Iranians who live outside Iran are connected to non-Iranians and our software developments will be introduced by them to others. We have received many complimentary mails from foreigners. Another example is our development for the Painting Gallery. Non-Iranian artists get familiar with our works. The introduction starts with a foreign group, with which only one Iranian cooperates. The connection at large is under way, and it has helped us to introduce our market to the world.
In your expert opinion, what do you see as the best market for the sale of software developed in Iran? Software export relates to two areas. One is the availability of a market and I would suggest looking at the market of Iranians outside the country, which is not a small one. I have no precise statistics, but it is said that 1,000,000 Iranians live in Los Angeles alone, so it cannot be a small market. When we think about all the Iranian residents worldwide, who want to have something about Iran, we find out the possibility to export our products. We have already made CDs on Iran’s football and cinema. Two other CDs are under development. The problem is that we, as Iranian companies, do not know how to market our products. That is another area where a foreign firm could play a big role.
Second is the ability to develop a high-quality product at low prices. We have the possibility and facility needed for the production of software. Development is not expensive in Iran, so we can be very competitive in that sense.