Muhammad Asad Tahir Bhawana

The technology startup sector in Pakistan has witnessed a steady growth over the years, but both the funding and number of deals have gone down over the past several months due to the economic slowdown. From 2015 till date, startups in Pakistan have successfully raised approximately $945 million through 321 deals, according to Pakistan Credit Rating Agency (PACRA).

Most recently, in the first quarter of the ongoing fiscal year 2022-23, seven Pakistani startups secured funding of around $23 million. However, due to the challenging economic conditions, there has been a significant decline of approximately 86.6% year-on-year in the funding, as well as a decrease of approximately 68.2% year-on-year in the number of deals. In recent years, the government has focused its attention on the development of the technology industry, acknowledging the potential for growth and investment it holds.

The Ministry of Information Technology & Telecommunication (MoITT) through Pakistan Software Export Board (PSEB) has taken several measures to foster the industry's development and create a conducive environment for growth of businesses and startups. This includes establishment of Information Technology Parks and incubators aimed at promoting the industry and facilitating a supportive ecosystem. The PSEB has successfully established 22 IT parks in different cities throughout the country. As part of its expansion strategy, the board intends to increase the number of these parks to 40. These dedicated facilities offer vital infrastructure to technology companies at reduced expenses, enabling them to operate more cost-effectively.

Additionally, the government has taken the initiative to establish a National Incubation Centre, which aims to foster and nurture startups in the country. This centre serves as a platform for the growth of emerging businesses, particularly in the technology sector. Moreover, several private incubators are also operating in Pakistan, with many of them specialising in supporting startups involved in the creation and provision of technology-related products and services. The computer services sector in Pakistan encompasses a range of activities, including hardware and software consultancy services, trade of computer software, and other technological services.

Over the period since FY18, Pakistan has witnessed significant growth in exports of computer services with a Compound Annual Growth Rate (CAGR) of approximately 36%. In FY22, the total value of computer service exports reached Rs374 billion, compared to Rs276 billion in FY21. Concurrently, imports of computer services have also experienced growth, albeit at a relatively lower CAGR of around 21% since FY18, amounting to Rs94 billion in FY22, as opposed to Rs73 billion in FY21.

During FY22, software consultancy was the largest contributor to Pakistan's computer service exports, accounting for approximately 38% of the total. The export of computer software accounted for around 27% of the total computer service exports. In the first nine months of FY23, exports amounted to Rs231 billion, reflecting a year-on-year increase of approximately 40%. However, this growth can largely be attributed to the devaluation of the Pakistani rupee of around 40% during the same period, as the increase in the exports' value in US dollars was minimal, at only 0.1%.

Credit: Independent News Pakistan-WealthPk