Amir Saeed

Lack of recognition of Pakistan’s IT sector as an industry significantly inflates the operational costs and hinders its growth, necessitating government investment in branding and regulatory reforms to fully realize its economic contribution.

Talking to WealthPK, Muhammad Iqbal Kakakhail, CEO & Co-Founder of IdeoMetriX, highlights that the IT sector is on the cusp of significant growth, yet it remains unrecognized as a formal industry, which imposes considerable barriers, inflating the operational costs. “This lack of recognition translates into higher input costs due to tariffs and various regulatory hurdles that stifle innovation and competitiveness. The government must prioritize branding and policy reforms to unlock the sector’s potential, which could significantly contribute to the national economy.”

In Fiscal Year 2023-24, the IT industry achieved a remarkable milestone with export remittances soaring by 24% to reach USD3.223 billion, marking the highest exports ever recorded. The positive momentum continued into the first four months of FY 2024-25, where the ICT export remittances surged by 34.9%, totalling USD1.206 billion compared to USD894 million during the same period last year. This growth underscores the sector’s vital role in economy, as it has become the leading contributor among the services sectors, achieving a trade surplus of USD1.063 billion — 88.14% of total ICT export remittances.

He pointed out that despite its achievements, the IT sector faces numerous challenges that hinder its growth potential. The regulatory environment remains a significant barrier; for instance, stringent policies from the State Bank of Pakistan complicate processes for freelancers and IT firms, pushing many to establish bank accounts abroad. “This not only limits local investment but also results in lost opportunities for foreign direct investment (FDI). Moreover, the urban development policies restrict the use of residential spaces for office work, further stifling innovation and entrepreneurship.”

He suggested that harnessing the full potential of the IT sector requires a comprehensive strategy, including enhancing digital infrastructure and streamlining regulatory frameworks. The government should focus on creating a conducive environment for the startups and established companies alike by simplifying the banking processes and facilitating the foreign exchange movements. “Additionally, promoting e-commerce through effective frameworks can significantly boost the local businesses and attract international clients.”

Talking to WealthPK, Maher Nafees, a senior software engineer at Rin Technologies Ltd, said the government’s recognition of IT as a formal industry is essential for attracting investment and fostering innovation. Without recognition, many talented professionals are discouraged from entering the field or remain underutilized. He emphasized the need for a more supportive regulatory framework that encourages startups and facilitates an easier access to funding. Creating an enabling environment will not only boost the local businesses but also position Pakistan as a competitive player in the global tech landscape.

“Furthermore, branding Pakistan as a tech hub can attract global attention and investment. It is crucial to showcase the skilled workforce and competitive cost advantages to effectively position the country in the international market.” He pointed out that the regional countries have successfully leveraged their talent pool to become leaders in IT outsourcing. Pakistan must adopt similar strategies by promoting its strengths through international partnerships and marketing campaigns that highlight success stories within the local tech ecosystem.

“Establishment of tech parks and incubation centers across the country is a positive step towards fostering innovation and entrepreneurship. These initiatives can provide the startups with the necessary resources and support to thrive in a competitive environment. By investing in infrastructure and human resource development, the country can create a robust ecosystem that nurtures talent and encourages technological advancements.”

Credit: INP-WealthPk