VZCZCXRO5401
RR RUEHLH RUEHPW
DE RUEHIL #0789/01 0540452
ZNR UUUUU ZZH
R 230452Z FEB 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 5316
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEHDO/AMEMBASSY DOHA 1496
RUEHNE/AMEMBASSY NEW DELHI 2870
RUEHKP/AMCONSUL KARACHI 9049
RUEHLH/AMCONSUL LAHORE 4898
RUEHPW/AMCONSUL PESHAWAR 3598

UNCLAS SECTION 01 OF 02 ISLAMABAD 000789 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O.  12958:  N/A 
TAGS: EINV ECON PREL PK
SUBJECT: HI-TECH START-UP COMPANIES IN LAHORE -- A BRIGHT SPOT 
 
 
Summary 
 
¶1.  (SBU)  Summary:  Economic and Commercial Affairs Counselor and 
FCS Specialist visited a number of hi-tech start-up companies 
founded by Pakistanis with extensive U.S. experience in the Lahore 
area February 11-13.  NetSol, PalmChip and Raffles were particular 
standouts, with each NetSol license selling for over a million 
dollars.  End summary. 
¶2.  (SBU)  During a visit to the Lahore area February 11-13, 
Economic and Commercial Affairs Counselor and FCS Specialists 
visited a number of U.S. companies founded by Pakistanis returning 
from the U.S. after studies and long-term experience in the U.S. 
high tech sector.  NetSol, Palm Chip and Raffles were particular 
standouts for their contributions to the Pakistani economy, the 
desire of the owner-founders to give back to their communities, and 
quality jobs. 
NetSol 
¶3.  (SBU)  Founded in 1995 and headquartered in Calabasas, 
California, NetSol specializes in information technology and 
software development.  It was the first Pakistani company to trade 
on NASDAQ beginning in 1999 and also trading in Karachi Stock 
Exchange since 2005.  While it survived the technology crash and 
9/11, NetSol's founder Salim Ghauri explained that the company lost 
all its U.S. business during this period.  Today, NetSol, with an 
annual turnover of $40 million, has 550 employees globally, 
including about 100 in Lahore.  The company's specialty is 
customized software for automotive company leasing, financing and 
fleet management.  Most automobile manufacturers, including 
Daimler-Chrysler, Fiat, Nissan, Toyota, BMW and Mercedes, use NetSol 
software.  Individual software licenses start at $1 million each. 
Closer to home, the company is also developing a pilot land record 
management system for the Punjab funded by the IBRD.  (Comment: Some 
70 percent of Pakistani court cases are land disputes.  Lack of a 
secure land tenure regime also affects access to credit, 
particularly for small and medium sized enterprises.  End comment.) 
 
¶4. (SBU)  The Embassy has been assisting NetSol with an IPR case 
involving two former employees, who left the company last year and 
recently launched their own company via the web selling NetSol's 
products worldwide.  Allegedly, both gradually took code, project 
information, customer information and correspondence with the intent 
to start their own competitive company.  According to NetSol, the 
two former employees launched their company in July 2007 thus 
violating previous trade secrets disclosures.  NetSol filed a case 
with Pakistan's Federal Investigation Agency (FIA) in November 2007. 
 The Embassy continues to work with FIA to ensure a proper 
investigation. 
PalmChip 
¶5.  (SBU)  PalmChip was founded in 1996 and is headquartered in 
Silicon Valley, California with offices in Lahore and Islamabad. 
Today the company has over 100 employees and is growing with annual 
sales of $1.5 million.  Its Lahore office specializes in software 
and chip development, including a "system on a chip software" used 
in most PDAs, mobile phones, digital cameras and wireless modems 
among other products.  Customers include Toshiba, Philips, Motorola, 
IBM, Hewlett-Packard, AMD and others.  Over 65 licensees and over 30 
consumer products use this technology.  PalmChip's senior management 
is all Pakistani-American citizens with extensive experience in U.S. 
IT companies.  PalmChip is also developing its business with 
Pakistani mobile phone companies and has developed a secure parking 
compound software package for a Lahore client. 
Raffles 
¶6.  (SBU)  Raffles was founded in 2000 by a Pakistani educated in 
the U.S. who had already obtained licensing agreements with Intel, 
Apple and Microsoft in the late 1990s.  The company having turnover 
of $1.5 million is the first and only locally assembled branded 
computer manufacturer in Pakistan.  Its products are sold in UAE, 
Singapore, Malaysia, among others.  One of the company's proudest 
achievements, however, is the development of a $200 laptop 
mini-computer using Microsoft software and Intel chips for the 
primary and secondary education sector.  It is the size of a 
portable DVD player and reportedly resistant to being dropped. 
Raffles is still testing a $100 laptop, and will soon offer a $25 
Windows operating system in Pakistan.  The company has also worked 
with some success with local banks to provide consumer financing for 
the PC sector since Pakistan does not have any mega stores offering 
consumer electronics and retail credit. 
Comment 
¶7.  (SBU)  While still small, Pakistan's indigenous software and 
hardware development companies are a bright spot in the effort to 
diversify exports away from textiles.  The government is doing 
everything it can to help this sector develop, as it is providing 
high value exports and good jobs.  End comment. 
 
ISLAMABAD 00000789  002 OF 002 
 
 
PATTERSON