U.S. Firms Pick Up Pakistan's Call for Outsource Work

It's poor and saddled with a history of political instability and corruption. The U.S. government has warned Americans to stay away because of possible terrorist attacks. Blackouts are common in big cities.

But John Armbruster is betting that Pakistan's attributes -- including a large, low-cost pool of English speakers -- point to a brighter future.

He's aiming to help the country carve out a piece of the lucrative outsourcing business dominated by its neighbor and longtime rival, India.

So far, the bet by Armbruster's company, TRG Pakistan Ltd., is paying off. It recently branched beyond its main office in Lahore and opened a second office in Karachi, the nation's commercial center. By year-end, TRG hopes to expand to 500 employees from 300 now.

"We blow India away as far as quality is concerned," said Armbruster, the company's director of operations. "The problem India has gotten into is that it has grown too fast."

Throughout the developing world, call centers are old news. But Pakistan is just getting into the game after years of economic stagnation fed by political and religious strife, as well as a dispute with India that occasionally has erupted into war.

Pakistan's border with Afghanistan became a battle zone in the U.S.-led war against terrorism. Buyers panicked and apparel exports plummeted. Investors went elsewhere.

But the Pakistani government, aided by the Bush administration, has launched an aggressive effort to get its economic house in order by reducing debts and privatizing state-owned utilities. Interest rates have fallen, along with electrical and telephone rates. The economy grew an impressive 6.4% last year.

Pakistan now hopes to capitalize on some of the qualities that propelled its much larger neighbor to the top of the outsourcing class.

Like India, Pakistan has a large number of educated English speakers willing to work for a fraction of U.S. wages. Operating costs are low, in line with other parts of South Asia.

To boost its appeal as a high-tech hub, the Pakistani government has provided a 15-year tax exemption on software exports, eliminated duties on technology imports and streamlined the investment process.