Pakistan’s IT exports are on the rise and are expected to hit the $3 billion mark in 2024. This rise is mostly favoured by the effective policies of the government as well as the recent deals with the companies.
Interestingly, Saudi firms have a big role in this backed by the Kingdom’s Vision 2030.
In February 2024, the country’s IT exports reached $257 million, which is 32% higher than what was earned from these exports in the same month last year.
This figure is also higher than the average monthly earnings of $233 million from IT exports over the past year, according to recent data from the central bank.
During the first eight months of the current fiscal year, which started in July 2023, Pakistan’s IT exports rose by 15 percent, reaching $2 billion. This is an increase from $1.7 billion during the same period in the previous fiscal year.
Understanding The Surge of IT Exports
Pakistani IT exporters have seen a significant increase in their overseas sales, largely thanks to supportive government policies.
These policies have encouraged local companies to repatriate their earnings and have also included the formation of the Special Investment Facilitation Council (SIFC).
Moreover, the SIFC, a unique body combining civil and military efforts, is designed to attract and increase foreign investment in Pakistan.
Key Factors Driving Growth
Zohaib Khan, chairman of the Pakistan Software Houses Association (P@SHA), explained that several recent changes have spurred this growth.
For instance, the State Bank of Pakistan increased the retention limit from 35 percent to 50 percent for exporters’ earnings in foreign currency accounts.
Additionally, the formation of the SIFC has reassured businesses that any operational issues they face will be swiftly addressed. These initiatives make it easier and more appealing for IT companies to bring their overseas earnings back to Pakistan.
Khan is optimistic about the future, predicting that IT exports could reach between $3.15 billion and $3.5 billion this year, with a goal of $5 billion next year. This optimism is fueled by improved mechanisms for cross-border payments, which facilitate the easier movement of funds.
Additional Support From The Central Bank
The central bank has also introduced new financial products, such as corporate debit cards, which are designed to simplify the process of repatriating funds parked in foreign accounts.
This is particularly beneficial for exporters who previously faced challenges in making direct payments from Pakistan to overseas companies or individuals.
Government and Market Optimism
The Pakistani government is keen on maximizing the potential of IT exports. Finance Minister Muhammad Aurangzeb recently expressed hope that the country’s IT exports might climb to $3.5 billion this year.
Additionally, the software sector alone is valued at approximately $3.2 billion and has shown steady growth over the years.
Dominance in the U.S. Market
The United States remains the largest market for Pakistan IT exports, accounting for 54.5 percent of the total in FY 2023.
The IT sector in Pakistan is predominantly focused on software development and IT-enabled services (ITeS) like data centers, technical service centers, and telecom services.
A significant portion of the sector’s revenue comes from serving international clients, driven largely by the contributions of freelancers and emerging tech startups.
The Future of IT Exports in Pakistan
IT Exporter, Co-founder and Managing Director of 10Pearls, Zeeshan Aftab, stressed the need for investing in building large organisations, as large clients prefer working with established entities boasting strong human talent pools.
He suggested collaborative efforts between private and government agencies to improve IT exports through comprehensive strategies encompassing joint efforts in marketing, international cooperation, and participation in global IT events to expand market reach.
Aftab encouraged IT companies to focus on innovation, research, and development to enhance learning opportunities. Additionally, he stressed the importance of improving cybersecurity measures and fostering partnerships between industry and academia to create a sustainable and competitive IT ecosystem, ultimately contributing to IT export growth.
Pakistan’s population of 250 million, with over 60% under the age of 40, presents significant potential for a service-based economy. With internet connectivity and English proficiency, the country is well-positioned to address the supply side and increase IT exports, he said.