Virtual University of Pakistan

Evaluation Sheet for Internship Report

FALL 2020

COMII619: Internship Report (Commerce) Credit Hours: 3

Evaluation Criteria Result

Name of Student: Mouzma Raza Report writing Pass
Student’s ID: Mc190203547 Presentation & Viva voce

Final Result
PASS

Dear Ms. Mouzma Raza,

You are being declared PASS in your written work as the

improved version of your report is satisfactory.

We appreciate your efforts not only for the learning through this
particular activity but also for the compilation of the report.

Now, you are advised to read Lesson 06 on VULMS carefully and

prepare your presentation (PPT) slides accordingly. The template
of PPTs is available in the DOWNLOADS section of this course
that provides guidelines for preparing the presentation slides. We
hope that you’ll perform well in your presentation and viva voce
just like you have done in your written work.

You many not find an assignment opened on VULMS for PPTs

submission; so, you may submit your presentation (PPTs) via
email at “[email protected]”. Further, you are advised to
keep checking your email on regular basis for the call of
“Presentation and Viva Voce”.

For any other relevant query or information, you can contact via
MDB, Email ([email protected]), or call at 0331-1582181.

Internship Report

Netsol Technologies Limited

Internship Report on Netsol Technologies Limited

A REPORT SUBMITTED TO THE DEPARTMENT OF MANAGEMENT

SCIENCES, VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS IN BUSINESS
ADMINISTRATION

Submitted By:

Mc190203547

MOUZMA RAZA

Fall 2020

January 22, 2021

Department of Management Sciences,

Virtual University of Pakistan

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Internship Report on Netsol Technologies Limited

Dedication

The report is dedicated to my parents, siblings, friends and all of my

mentors who have been a great support system for my academic and
professional development. I thank you all to support and lift me in my
moments of despair.

Acknowledgement

I would like to thank my teachers at Virtual University for guiding me throughout this report and
being supportive.

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Internship Report on Netsol Technologies Limited

Executive Summary
Netsol is an IT Based Company and have following product and service Lines:
 Application development & maintenance
 Technology and Business Process Outsourcing
 Enterprise solutions:
 NFS Ascent TM
 NETSOL Financial Suite TM
 NFS Mobility
 IT consulting and Business Process Reengineering
 Business Intelligence
In Enterprise Solutions, Netsol Enjoys a leading position at global level. The company has 97%
equity to debt ratio.
Netsol has diversified portfolio of clients in multiple sectors but its niche has been global asset
finance and leasing industry.
The current environment in Pakistan is feasible for the growth of the Company and it has
potential to become an IT service provider in Pakistan.

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Internship Report on Netsol Technologies Limited

Table of Contents

1. Brief Introduction of IT Business Sector 5

2. Overview of the Netsol Technologies Limited 6

3. PEST Analysis 11

4. SWOT Analysis 12

5. Organizational Analysis 13

6. Conclusion 15

7. Recommendations for Improvement 16

8. References and Sources Used 17

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Internship Report on Netsol Technologies Limited

Brief Introduction of IT Business Sector

Netsol Technologies Limited (NTL) is operating in the IT industry of "prepackaged software"

Sector. NTL has specialized in its niche of providing innovative IT solutions to the global asset
finance and leasing industry.
There is intense market change in the IT sector and digitalization, including the use of digital
technology to simplify business processes, increase the competitiveness of the organization, and
enhance customer experience. The fulfillment of customer needs, which shifts along with the
advancement of technologies, is one of the primary digitization steps, namely the creation of a
more comfortable and more convenient. Therefore, companies like NTL have seen a boom in
this sector. We barely see a company without a specialized IT solution to cater the needs of
respective industry.
NTL has multiple competitors which are operating within prepackaged software Sector under
their respective niches:
 DIRTT Environmental Solutions (DRTT),
 Inspired Entertainment (INSE),
 MTBC (MTBC),
 Qumu (QUMU),
 Newgioco Group (NWGI), and
 Elys Game Technology (ELYS).
In Pakistan, IT sector is still an emerging sector. The Government is putting its emphasis on IT
services by allowing tax rebates and exemptions on incomes derived from export of IT services,
given that proceeds are realized and received in Pakistan. Few of the listed IT companies that
provides prepackages software and digital services are:
 Systems Limited
 Avanceon Limited
 Hallmark Company Limited
*source of information: PSX website
Although TPL does not have close competitor in its niche in Pakistan, however, it continuously
faces fierce competition due to globalization of businesses.

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Internship Report on Netsol Technologies Limited

Overview of the Netsol Technologies Limited

Netsol Technologies Limited was incorporated in Pakistan on 22 August 1996 under the repealed
Companies Ordinance, and was later transformed into a public limited company in 1984 as a
private company limited by shares. The company's main activity is the production and selling of
computer software and related services in Pakistan and abroad.

History at a glance

1996 Incorporation of NTL in Pakistan

2005 Listed its shares on the Pakistan Stock Exchange

2006 Acquired CMMI Level 5 Status

First IT vendor to implement a mobile point of sale solution in the

2013 global asset finance and leasing domain

NETSOL signed a $100 contract million for NFS Ascent implementations

2015 across 13 markets

Company’s sister concern signed a contract with a major global auto

2018 captive for the implementation of NFS Ascent Retail and Wholesale
Platforms in China

Awarded First Rate and Best-Selling Leasing Solution Provider for the 7th
2019 consecutive year at the annual China Leasing Summit

2020 Successfully implemented NFS Ascent in Hong Kong and Malaysia

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Internship Report on Netsol Technologies Limited

Organizational Hierarchy
The Company being the service industry has divided its departments into core function and
supporting departments:

Core Functions
 Product Development
 Professional Services Department
 Network Operation Services
 Sales Department
Supporting Departments
 Finance
 Human Resources and Administration
 Internal Audit

Business Volume
The Company has seen huge success in terms of market valuation in the year 2020-2021. As on
January 22, 2021, the current value of the share of the company (Par Value of PKR 10 per share)
is PKR 191.93. The five-year analysis of the share price is presented below to depict the increase
in demand of the Company’s Shares:

Source: NETSOL - Stock quote for NetSol Technologies Limited - Pakistan Stock Exchange
(PSX)

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Internship Report on Netsol Technologies Limited

Key Financial Figures:

Netsol has seen increasing trends in all of its key financial figures up to financial year 2019. Due
to Covid-19 pandemic, the company has seen a dip in the sales, profit and Earnings Per Share
(EPS). The comparative information of the company is tabulated below:
2020 2019 2018 2017
Sales* 4,708,374 5,381,196 4,284,800 3,925,697
Profit after taxation* 244,840 1,243,484 1,065,970 320,296
EPS 2.73 13.86 11.89 3.58
*Figures are in thousands “000”
The performance of the Company can also be assessed using other measuring tools such as key
profitability ratios:

2020 2019 2018 2017

GP Margin (%) 33.26 38.85 45.24 31.60
Net Profit Margin (%) 5.2 23.11 24.88 8.16
EPS Growth (%) (80.30) 16.57 232.12 506.78
PEG (0.23) 0..29 0.04 0.03
Dividend Payout Ratio (%) - 28 25 14.50

Few other financial highlights are presented in graphical presentation:

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Internship Report on Netsol Technologies Limited

Services Portfolio
Netsol offering following services to their customers:
 Application development & maintenance
 Technology and Business Process Outsourcing
 Enterprise solutions:
 NFS Ascent TM
 NETSOL Financial Suite TM
 NFS Mobility
 IT consulting and Business Process Reengineering
 Business Intelligence

Competitors
1. Netsol does not have local competitor in Enterprise Solutions.
2. Netsol has great competition in business process outsourcing services such as Systems
Limited.
3. Netsol have many competitors in the form of small, medium and large software houses in
application development and maintenance services

Brief Introduction of all departments

 Product Development
This department comprises of innovative personnel which are involved in development of
enterprise solutions.
 Professional Services Department
This department offers technology and business process outsourcing services to the clients.
 Network Operation Services
This department offers the technical support to the customers and also involved in
development & maintenance the application
 Sales Department
Sales Department is divided in to two divisions i.e., Pre-sale department which coordinates
with the customers to understand the need and Sales Department which is involved in
strategic decisions.
 Finance
The Finance department caters the finances, budgeting, cash flows and investment matters of
the Company.
 Human Resources and Administration

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Human resource department ensures that best talent is acquired and retained in the Company
for success.
 Internal Audit
Internal Audit department is an independent department that ensures that internal controls are
effectively working and Board Audit Committee is updated with emerging risks.

Comments on organizational structure

The Company specialized departments in their respective area of services which reports to the
CEO of the Company through COO.
COO is also a major shareholder of the company and director of the company. This structure of
business is called closely held entity.
In closely held companies, all decisions are taken by the owner of the business, which often
hinders innovation and the focus is mainly shifted towards better financial returns.

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Internship Report on Netsol Technologies Limited

PEST ANALYSIS

Political Economic

 Zero Income tax on IT & ITeS exports  Pakistan IT exports have increased 70%
 Open Investment Policy during last three years
 100% foreign ownership of IT & ITeS  Exchange rate increase stimulates exports
companies as well as local purchases.
 100% repatriation of foreign IT & ITes  Lower interest rates and higher inflation
Investors  World economy is in a big recession
 Funding to small and medium enterprises leading to decreased affordability
by the Government bring more potential  Since WTO international trade barriers are
customers being removed day by day, economies of
 Zero Income tax for PSEB registered IT scale can be achieved
start-ups  Market routes to Europe and Middle East
 Political stability helps to create the
confidence in foreign customers to
contract for work with Pakistani
organizations
Social Technological

 Work force in Pakistan is cheap than the  Internet penetration increasing from 2% to
advanced countries of the world close to 30% in the past 4 years
 Due to security concerns people don’t  Consumers started preferring the paperless
want to come to Pakistan and as a result environment and encourage remote access
representative have to go to their countries creating demand for applications
for getting the contracts.  Competing technology development in
 Pakistan has more than 2000 IT Pakistan and Worldwide
companies & call centers and the number  Consumer attitudes toward automation has
is growing every year. Also, there are 13 increased over the years
software technology parks.  Government has also started
 More than 20,000 IT graduates and computerizing it’s all operations
engineers are being produced each year  Copy rights and patent violations cost the
coupled with a rising startup culture. IT companies billions of dollars per year.
 Pakistan was ranked at number four for  Replacement technology/solutions due to
freelance development in the world. innovations

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Internship Report on Netsol Technologies Limited

SWOT ANALYSIS

Strengths Weakness

 Niche product line focused i.e., Financial  More focus on global asset finance and
ERP for asset leading leasing industry
 No local competitor  Lack of local established market for IT
 Established brand name tools and import of latest technology on
 Multinational Operations high cost
 Global knowledge base  Heavy subscription fees to the parent
 Only company with Mobile Application company
support  Limited local market of its products
 Global leader global asset finance and
leasing industry

Opportunity Threats

 Growing economy  International Competitors

 Great future outlook of Pakistan Business  Growing local small competitors
Sector due to CPEC leading to potential  Penetration of major competitor from the
growth of the Company outside
 New market segments may be explored  No solid Government policies for IT
 Growing trend of business process sector
outsourcing  Exchange rate fluctuations
 Increasing trend of doing business on the  Political Instability may affect the repute
go creates demands for mobile in international market
applications.

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Internship Report on Netsol Technologies Limited

Organizational Analysis
Human Resource Management
Mr. Faisal Rasheed Bhatti – Head of Human Capital Division leads the department and he is
assisted by 5 personnel to carry out strategic and day to day activities of the departments. Major
functions of the department are listed below:

 Staff planning and recruitment of talented staff

 Succession planning of employees, especially key management positions
 Assessment of employee training & development needs and arrangement
 Annual appraisal & promotional
 Employees’ grievance and disciplinary actions
 Employee related Insurance
 Labor Contracts, Relations and Management
 Payroll, overtime, Gratuity and Other Benefits management
 Management of attendance through biometric devices
 Medical and Other Reimbursements
 Travel & Entertainment
 Transfers, job enrichment, job rotation and separation policies

Since the Company is an IT service provider, therefore, the main strength of the Company is its
human resources. The company has been successful in head hunting one of the best team in
Pakistan. The company has stability of tenure for key positions.

Finance Department
Mr. Boo-Ali Siddiqui – Chief Financial Officer – CFO of the Company leads the finance
department. The major functions of the department include:
 Budgeting
 Project Costing and Monitoring
 Fixed Assets
 Treasury Management
 Taxation
 Account Payable
 Accounts Receivable
 General Accounting and FSCP

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Internship Report on Netsol Technologies Limited

Source of Funds and its allocation

The company has good debt to equity ratio i.e., 97% of the funds are through equity investment
i.e., from the sponsors of the Company and shareholders.
The company has invested majority of its funds into working capital and fixed assets of the
Company. Only a short amount is invested into long term investments.
Details are tabulated below:

Sources of Funds
2020 2019 2018 2017
Shareholders’ Equity 6,879 6,879 6,686 5,692
Non-Current Liabilities 187 63 40 23
Total Funds 7,085 6,942 6,726 5,715
Allocation of Funds
Fixed Assets 2464 2893 3268 3700
Working Capital 4380 3740 3149 1796
Long Term Investment 240 309 309 219
Loan to Employees 1 0.5 0.5 0.5
7085 6,942 6726.5 5715.5
Source: Financial Statement 2019-2020 (All figures in Millions)

Management Department
At Netsol, Management uses Decentralized decision-making model as each department has the
authority to make its own decisions. Company provides services and maintenance to the
customers along with the customization and packaged software so in this scenario, the given
model helps to provide better customer services by prompt and appropriate decisions making by
the team directly involved in the particular project. It is also suitable model for management
make decision in case of any emergency as each department is keeping a keen eye on the
efficiency, productivity and profitability in their relevant area which may lead to decisions as
cutting costs, changing sales model, productive use of resources, handling government policy
changes etc.
A higher level of work specialization is being experienced at Netsol as employees are allocated
to different teams according to their area and level of expertise. As, there are different software
developed at the Company and also customized software are developed for different
organizations, employees are parted in team according for each project.

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Conclusion
Netsol has a great potential to become one of the leading IT based Company in Pakistan.
It has specialized enterprise software in which it enjoys monopoly in Pakistan and also
considered as global leader. This puts the company is advantage at many forums.
The Company has many competitors in software development and maintenance area however,
due to the established brand name, the company enjoys premium prices.
The area in which company needs to capture the market is business process outsourcing where it
has a major competitor in the form of Systems Limited.
The company has advantage and the field to grow now more than ever, due to major government
policies in favor of the Company and many tax legislatives.

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Internship Report on Netsol Technologies Limited

Recommendations for Improvement

The Company needs to improve the following areas to become the leading IT based Company in
Pakistan:
 By hedging agreements, exchange rate fluctuations can be hindered.
 Numerous companies of the world offer the products and services same as it is offering. It
should offer unique ideas.
 Customers of NetSol are few big companies; if some of them switch to others it will create
problems for the company.
 NetSol has greater focus on foreign contracts and foreign customers. Pakistan is a big it
market which it is not exploring to the highest degree as a result other companies of the
world are taking the advantage.
 IT world is changing rapidly day by day and there is a need to spend much on research and
development which it is not doing to that extent.
 Expand its foreign operations to obtain maximum benefit from the tax exemption
 Invest more in training of the Employees to keep them updated in the race of technology
 Government of Pakistan is computerizing its operations; company can take it as a big
customer.
 It is known for innovation, by adopting the latest technologies and techniques, it can provide
better products and services.
 Netsol should focus on its marketing and advertising as it’s a major concern now

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Reference and Sources

References should be provided in APA format.

Financial Statements of the Company for the Year 2020: Annual Reports :: NETSOL
Technologies, Inc. (NTWK)
Netsol Website: Asset Finance and Leasing Software | NETSOL Technologies Inc.
PSX: NETSOL - Stock quote for NetSol Technologies Limited - Pakistan Stock Exchange (PSX)
International Competitors Details: NTWK - NetSol Technologies Stock Competitors |
MarketBeat

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