Ahmed Khan Malik

Despite global slowdown in the information technology (IT) spending, Pakistan managed to fetch $2.6 billion exports during the fiscal year 2022-23. It wasn’t a bad performance keeping in view the global trend, but still, Pakistan’s IT export growth during FY23 was the lowest since FY16. Though Pakistan started the journey of IT growth late compared to other regional countries, the growth in this sector remained phenomenal. The flourishing IT sector not only fetch precious foreign exchange for the country, but also employed hundreds of thousands of graduates. Segment-wise analysis indicates that computer services exports for FY23 were $2.1 billion and telecom services exports reached $490 million. The share of computer services in total IT exports increased to 81% during FY23 from 40.4% during FY14. Computer services are further composed of software consultancy, export of software and other services, etc. Telecom services comprise telecom and call centers.

Pakistan net IT exports, unlike gross exports, increased by 15% on a YoY basis during FY23. Net exports have now reached the highest ever level of $2.3 billion. This development is driven by the increase in computer services exports from $330 million during FY14 to $2.1 billion during FY23. This growth was magnified during the Covid period of FY20-22 where computer services exports more than doubled to $2.1 billion during FY22 from $896 million during FY19. During the Covid-19 pandemic, IT and telecom were declared essential services, while other regional competitors faced lockdowns. IT companies and freelancers of Pakistan took advantage of increased global IT spending, especially in the Middle East, to gain market share. Computer services are mostly software-based, and require no raw material imports, and very minimal equipment imports. These exports require IT developers, unlike the textile sector, which is dependent on imported cotton and machinery to generate exports.

As a result, IT services have become an important segment of Pakistan’s exports with share in total exports (goods and services) increasing from 2.7% during FY14 to 7.4% during FY23. Pakistan’s Board of Investment (BOI) noted in a report on the IT sector that Pakistan is experiencing rapid digital growth. IT/ITeS sector is one of the fastest growing sectors of the country, contributing about 1% to its GDP. To support the growth of the IT industry, the Pakistan Software Export Board (PSEB) has established seven software technology parks in Faisalabad, Gujrat, Jamshoro, Karachi, Multan, Peshawar, and Rawalpindi cities. These parks aim to facilitate the IT sector and create a conducive environment for its development. Pakistan holds immense potential in the IT sector, ranking as the fourth-largest nation contributing to the IT freelancing segment globally. The country’s young population, English-speaking IT professionals, and technological capabilities position it for greater success.

Credit: INP-WealthPk