Arbisoft is software company based in Lahore, focusing on both its own IP and providing technical services for other companies. It has worked with giants such as Kayak, edX, Stanford University and Indeed.com. They also created Intellistats, an application that monitors your phone usage and tells you which plan works best for you. We sat with the co-founder and CEO, discussing the creation of Arbisoft, the problems they faced and how they became one of the leading software companies in Pakistan.
Thank you for sitting down for this interview. Let’s start with your background. What were you doing in the years leading up to the creation of Arbisoft?
Yasser: I am basically a veteran of the local software industry in Lahore. Began my career almost 17 years ago after graduating from LUMS in 1997. I have been extremely lucky to be part of great organizations throughout my career, which I began at a company called WorldWex. It was an offshoot of Cressoft – the biggest Pakistani software company in those days – and raised about $20 million in venture capital. I worked there for two and a half years, and joined another remarkable company called Align Technology, which was founded by a Pakistani entrepreneur. Align Technology was one of the fastest growing technology companies in the Silicon Valley, raising roughly $200 million and growing to 1000 employees, all in the middle of the dotcom crash. Today it has a $4 billion market cap and its innovations are still protected by multiple patents. After a few years at Align, I left Pakistan to pursue a graduate degree at Stanford University from 2003 to 2005.
In 2007, I had had 10 years of experience in the industry and decided to start my first company named DeepPixels. At DeepPixels, we post-processed 3D medical images such as CAT and MRI scans from around the world – essentially it was remote provision of work done by x-ray and radiology technicians. As a service company, you need barriers to entry because if you are profitable another service provider can jump in and price you out. The training and technical expertise needed for the particular service we provided, were our barriers to entry. The work we did at DeepPixels was definitey non-trivial.
While at DeepPixels, since my team and I had a software background, we got a bit bored with image processing and started experimenting with software development services on the side. Soon those experiments yielded better results than the imaging side of our business, and Arbisoft came into being as a software services company. Our focus in the first few years was building partnerships with clients in North America and delivering custom software development services to them, but we have also started working on our own products in the last two years. Arbisoft started with 3 people, and now we have more than 160 employees and numerous long-term partnerships with companies around the world.
DeepPixels has continued also albeit on a much smaller scale, as we turned our attention to Arbisoft, a company that has grown 30 times bigger than the former. We still do work under the DeepPixels banner, but sometimes you are doing several things at once and one becomes more important than the rest.
What were your initial steps to get your company off the ground?
Yasser: We got our initial office space in the typical way a new business does it in Pakistan – via friends and family. My father had an office space with a vacant second floor, so we moved in. As for funding, I had personal savings of Rs. 1.5 million and knew I could sustain a small team of 2-3 people for at least 5-6 months. We were not too desperate because we had a few leads in hand. A service company does not face that much of an issue when it comes to generating revenue in the start; you follow up on the leads you have and get paid for the projects you work on so revenues start coming in early.
It is actually much easier to bootstrap a service company in Pakistan than in the US, because of lower costs and the support infrastructure provided by your friends and family. In the US, we could not have found an office space so easily as we did here. As my friend and fellow entrepreneur Zafar Khan says, in Pakistan the cost of failure is very low; you can experiment and if you fall, it is not that big of a deal unlike in the US where you would probably be out on the street if you had no source of income. In that sense, Pakistan is actually a great place to be an entrepreneur.
Tell us about the biggest initial problem?
Yasser: The biggest initial problem was finding quality people, and it still is an issue. It is ironic because the one thing we have in Pakistan is an overflowing youthful population: 60% of our population in under the age of 30, and 50% is below 25. Clearly we have a huge supply of people, but it is unfortunate that very few of them are trained to form the skilled workforce needed to be globally competitive. Arbisoft could have been 10 times the size of the company it is now if we had found more qualified people at the right time. A lot of good projects had to be turned down because we could not find the right talent at the right time. This issue is consistent with both tech and non-tech companies in Pakistan. If you go to art design companies or even the manufacturing sector, they will all say the same thing – they cannot find the number of skilled workers they need.
How did you found the people you have right now?
Yasser: In terms of team size, our growth has been slow because we usually grow organically by getting our own people to find others whose capabilities they trust. However, we do go out to local universities, but that pool is very limited because every company wants to get the best students from those universities. We have been more successful with recruiting from universities outside of Lahore, and have discovered that the best students, from what some would consider tier 2 or tier 3 schools, can perform better than average ones from tier 1 universities. By the best, I do not mean high GPA. Possessing other qualities such as drive, commitment and initiative is far more important.
Also, finding the right people for ancillary disciplines that contribute to quality software development, like UX and product design, is difficult. Modern software interaction design requires skills in aesthetics (UI) and user experience (UX). While we still have some UI folk in Pakistan, UX skills are very hard to find. The latter kind of knowledge comes from coursework in human-computer interaction or product design, and those disciplines are virtually nonexistent in our current university curricula. We are trying to promote UX education but encouraging our UI designers to learn that skill via online courses.
How do you differentiate yourself from any other software house?
Yasser: Arbisoft focuses heavily on long-term business relationships, stellar work and above all, a collaborative culture where everyone aspires to do the best work they are capable of. We definitely want to be perceived as a high-quality player as opposed to a low-cost option. The goal is to make our clients and partners feel that their experience with us is similar to the professional work they expect from a top notch US-based consulting outfit. The formula for that is to always under-commit and over-deliver. Deliver value to your customers and you are guaranteed to get repeat business and referrals. Usually people in this part of the world set high expectations and subsequently fail to meet, let alone exceed, them. That hurts their business and the perception of our country as an outsourcing destination.
What is one of the major turning points that helped grow it?
Yasser: Some of the major turning points were signing brand names known around the world as our partners. The first was KAYAK.com, which is still one of our biggest clients. KAYAK and Arbisoft have had a relationship for the last 6 years now, and we currently have a team of 30 people working with them. The projects we have done for them have been of a wide variety, from their mobile apps to their backend infrastructure. Signing up someone like KAYAK built a lot of credibility for us and the quality work we did for them became a great reference point. We also work with edX, which is one of the most important MOOCs (Massive Open Online Courseware) started by content from MIT, Berkley and Harvard. Our partners in the past have included Indeed.com – the largest job search engine in the world, and my alma mater – Stanford University. People who look at our portfolio know who we have worked with, and thus associate a certain level of quality from us. Not only that, there are reasons each and every one of these partners is as successful as they are, so we learn a lot from working with them as well.
What are the some of the biggest problems working in a company outsourcing in general?
Yasser: Service businesses have this challenge of keeping a balance between supply and demand. Sometimes you have a lot of demand for your services but not enough people to execute – which, as I mentioned, is the problem our business has faced a lot in the past. At other times you have enough people but not enough work to keep them engaged fully which affects the bottom line and causes motivational issues for the whole organization. Keeping the right balance such that you always have elastic capacity that can expand or contract on demand, is a really interesting problem to solve. It requires a really strong HR department for effective recruitment and motivational strategies. We have gotten much better at solving this problem over the years.
Another problem is remote outsourcing. Working with teams in different time-zones definitely has its overheads. For distance-related problems, we try to videoconference as much as possible. To mitigate time differences, you have to extensively train your people and shift to overlap your team’s schedule with the customer’s. You have to give your customers more contacts to communicate with, normalize communication channels and constantly tweak your team’s schedule to accommodate changes on the other side. Training employees in the correct procedures to overcome these hurdles is extremely important.
Are there any specific problems when outsourcing from Pakistan?
Yasser: Ease and frequency of travel. It is good for work for people from both sides of a partnership to travel back and forth and meet each other from time to time; being in Pakistan, it can be difficult for both our clients and us to do so. Visas on both sides can be problematic. Even when visas are granted to our partners who want to visit us and even if they are willing to do so, their families are hesitant because of the general perception of Pakistan in the West. Politics and our perception in the West has hurt business in this country. Align Technology, which was the second company I worked at, would have still been in Pakistan if 9/11 had not happened, changing Pakistan’s perception forever.
Our partners have other outsourcing destinations, in say India or Eastern Europe. A lot of value is associated with business trips where one gets to see a new place or gets to interact with a new culture. They cannot do that here with the same ease and security. I always used to tell people how great it is to take a flight from Islamabad to Gilgit or Skardu; just the flight alone is definitely worth it. I take it every few years even if only to look outside my window; it is a remarkable experience. It would be huge if we could attract business tourists to these places, asking foreign teams to come and work for a week, then take time off to see Gilgit, Hunza or Skardu but all easier said than done. Lack of security and even grimmer perceptions of it around the world, really hurt the prospects of more people traveling to, or doing business in, Pakistan.
What are some of your favorite projects you have worked on?
Yasser: We have worked on a lot of cool projects. A recent example is a 3D game, Scoop (on Android and iPhone), that we developed with a partner in California; it’s a realistic 3D excavator simulator in a game like setting. In my opinion, from an engineering and physical modeling perspective, it may be one of the most advanced tablet based applications to have come out of Pakistan. All development was done at Arbisoft, and we won a couple of awards for it also. There was one from the Pakistan Software House Association, and one in the e-learning category at the 2013 Asia-Pacific ICT Awards. The latter was very competitive, with the competition pool seeding from 18 member organizations in the Asian-Pacific region, such as Singapore, Australia, Malaysia, Indonesia and China.
We have recently launched our own product, Intellistats, which analyses your phone usage, deduces patterns and tells you what carrier and plan suits you the most. Since the application needs a lot of back-end processing of networks in the region, it has only been released in the US and Pakistan so far but we do plan to gradually launch in other countries around the world. Intellistats is our first fully owned product and I am very excited about its prospects.
In the past, we have also used a mixture of cash and equity models to invest in product companies we are working with. That model is great because some of those products will really hit it big and generate a huge ROI for us in the process. For example, we have done 8 equity investments over the last coupe of years, and 2 of them have already been externally funded in series A rounds. Thus, validating our investment decisions.
So I have seen that you have a huge team out there. How do you manage all that? What is your role in the company?
Yasser: We operate as a collection of close-knit, self-contained and fully functional teams. There are about 15-16 small sized teams of 5-10 people, each of them working as an independent unit. They are all either fully handling a product or exclusively servicing a partner. The idea is to scale that way, and one of the hats I wear makes me responsible for ensuring that these teams understand the culture that allowed us to come this far, and replicate that culture within those teams. This is how we want to keep scaling Arbisoft so that our core values are upheld by all the teams and not diluted as we grow.
When I say self-contained, I mean that teams are dedicated to a partner and have all the resources they need within themselves. There will be a Project Manager, engineers, designers and QA people. They talk directly with the client and work more as an extension of the onshore team rather than just another remote team to whom some work has been outsourced. We do not change team compositions very often to ensure both sides get to know each other, and can build long-term relationships.
What is the future of Arbisoft? Where do you see it in 5 or 10 years?
Yasser: We want Arbisoft to be more than a company. We want us to be an enabling platform for our own people to do bigger and better things. Our team members are encouraged to think of their own product ideas and work on them using Arbisoft’s resources. Intellistats came into being this way. 10 years down the road, I want Arbisoft to be a company from which multiple successful startups have spun off. You have to give your people opportunities to grow, so that they do not feel stuck in a job for the rest of their lives. Ambitious people look beyond a stable routine, and we want to encourage that. We want them to look for problems to solve, and use the platform we provide to build something remarkable which is their own.