Pakistan’s IT industry has become popular as the talk of the town in the government and private circles due to its overwhelming contribution to export and the national economy and the future potential for growth and expansion. Every aspiring student wants to pursue studies in computer science or information technology, every graduate is willing to set up a startup in IT and IT-enabled services, and every investor is planning to invest in the IT sector, targeting promising future returns and sustainable growth.
The IT industry maintains the third-highest export values among all sectors of the economy. It is the top contributor to service exports, having a significant role in the stability of macroeconomic indicators and employment generation for skilled professionals. In the financial year 2018-19, the IT industry achieved its first notable milestone of $1 billion in exports. Since then, the growth trajectory has been upward despite multiple challenges and issues, including inconsistent policies and a shortage of human capital. In the outgoing financial year 2023-24, IT exports surged to over $3.2 billion within the next few years, and it maintains its growth momentum at a handsome rate.
Major Achievements
In the last two years, the IT industry recorded landmark achievements on the local and global stages.
At an international level, major achievements included attaining all-time high IT exports at $3.2 billion, hosting APICTA awards in Pakistan for the first time, chairing the judging committee of APICTA for the first time from Pakistan, having a status for Pakistan as an observer at Digital Corporation Organization (DCO), branding of Pakistan in 24 countries, positioning Pakistan uniquely in global events, including GITEX and LEAP, strengthening ties with Saudi Arabia and the United Arab Emirates, signing MoUs with different countries at state-level, namely Bahrain, Brazil and Jordan.
At a country level, a few notable achievements included the resumption of IT exports reward for IT companies after five years, the continuation of 0.25% corporate tax for three years, the initiative of Techlift (a capacity-building program for the IT industry), the establishment of P@SHA offices in three major cities, the partnership with HBL for streamline revenue, the addition of new member companies from 15 cities, 50% retention allowance on foreign currency account, the collaboration with government and private sector entities particularly with Tech Destination, Pakistan Software Export Board, Ministry of IT, Ignite, NADRA, etc, and incorporation of IT as the preferential sector in the Special Investment Facilitation Council (SIFC).
The IT representative association P@SHA and its leadership have been crucial in these major achievements. Although it serves to facilitate its members companies but it also expanded its role to support every relevant ministry and department of the government and private sectors, including the Ministry of IT and Telecommunications (MoITT), Pakistan Software Exports Board (PSEB), and others. In the last two years, the association worked tirelessly with different governments, ministers, and secretaries, enhancing the export numbers to a record level.
These major achievements have sustainable dividends for the industry that may last for decades.
The government has realized the potential of the IT sector, collaborating with IT companies under the platform of P@SHA to enhance its multi-dimensional growth for earning foreign exchange and bridging the current account deficit in the next few years.
Issues and Challenges
The Internet is considered the lifeline for software houses and IT-enabled services. It is even a business of every individual in Pakistan; hence, uninterrupted and fast Internet is mandatory. The concerned authorities have addressed this issue through the whitelisting of IT companies and freelancers to provide them with undisrupted internet connectivity. The Internet should be affordable and accessible in remote and rural areas.
The cost of doing business is higher due to the high electricity cost, slowing down the growth of small and medium-sized software houses.
Most importantly, continuation of the policies is very important in the future for enhancing IT export receipts and foreign exchange earnings. Not only this, but the government should also extend its facilitation of policies that were promised earlier. Similarly, the IT industry faces immense challenges for skilled and experienced staff, impeding companies’ growth. The government should collaborate with the private sector to work on different dimensions, which could provide talented human resources to the local industry and handsome job opportunities to Pakistan’s youth.
Future Prospects
In the next few years, the number of IT and tech companies will increase as more technology parks will be available to facilitate. The exports will break records every year from the previous year.
The IT industry is listed as one of the priority sectors at the Special Investment Facilitation Council (SIFC). It is hoped that the IT sector will continue to flourish and be facilitated. The representation of Pakistan’s IT companies is more prominent in major tech events that will create access to these companies in new emerging markets, similar to what has been observed in the case of Saudi Arabia.
As Pakistan’s fourth largest freelancing community on different platforms, several training programs at a domestic level will also grow the presence of Pakistani freelancers on different freelancing platforms and their contribution, which will attract foreign exchange to the company.
The Author is the former Chairman P@SHA