Amir Saeed

The primary reason behind the underutilisation of Pakistan’s tech industry is the lack of local demand for IT services, impeding the sector’s ability to innovate and advance.

This fact was highlighted by Asif Javed, an associate research fellow at Sustainable Development Policy Institute (SDPI). Talking to WealthPK, he said that the key factor that impedes the growth of the IT services sector is the small scale of the country’s digital economy. “Compared to other emerging markets, Pakistan’s adoption of technology in businesses remains relatively limited. Small and medium-sized enterprises (SMEs), which account for a sizable amount of the nation’s economic activity, are particularly affected.” He further highlighted that SMEs were usually reluctant to transform digitally, mostly because they are afraid of investing in digital solutions or are unaware of technology's potential advantages. “As a result, the local market's slow demand for IT services prevents the industry from expanding.” “One of the main causes of this low demand is enterprises’ preference for conventional business methods.

Many businesses, particularly those in the SME sector, still use antiquated techniques and manual procedures. Due to the lack of adoption of creative strategies, local firms have little motivation to look for IT services that could increase productivity, lower expenses and streamline operations,” Javed pointed out. “Despite the digital tools’ potential to boost competitiveness, many firms see technology as an extra luxury rather than a need. The expansion of the IT services industry in the country is hindered by this cultural inclination towards tradition,” he lamented. “With a solid foundation of software engineers, designers, and developers, the country boasts a sizable and expanding pool of highly qualified tech professionals. IT companies are well-positioned to deliver quality tech services, yet they often face the dilemma of focusing on international clients due to the weak domestic market,” he said.

Talking to WealthPK, Anees Amin, Chairman of Gilgit-Baltistan Software House Association (GBSHA), said that lack of knowledge about the benefits of new technology contributed to the reluctance to accept digital solutions. “The business community is unaware of the direct advantages that IT services like automation tools, cloud computing and data analytics may offer. This problem is exacerbated by the lack of digital skills among managers and company executives.” “Many business owners may not see the necessity to invest in IT services unless they have a thorough understanding of how technology can improve their operations. The market for tech firms is constrained by this lack of awareness,” he pointed out. Amin lamented that the reliance on foreign businesses hampers the development of the sector locally as companies are forced to modify their services to international standards and markets rather than innovating based on local needs and challenges.

“Without a strong domestic client base, innovation in the tech sector remains limited, and the industry misses out on opportunities for growth within the country.” “The solution to this problem lies in addressing the technology adoption gap among local businesses. Both the public and commercial sectors must work together to support digital transformation to boost domestic demand,” he suggested. “This could involve providing incentives to businesses that adopt technology, such as tax breaks or subsidies, and creating platforms that encourage collaboration between IT service providers and local businesses. Moreover, fostering awareness through digital literacy programmes and workshops for business owners and decision-makers would play a crucial role in highlighting the tangible benefits of IT services,” stressed the GBSHA chairman.

Credit: INP-WealthPk