Pakistan’s information technology exports rose 17% and reached $303 million in December 2023 against exports of $259 million in November, as the country’s IT experts and freelancers continued to make inroads into international markets.
This is in line with increased focus of the government and growing calls from analysts to capitalise on the high potential of Pakistan’s IT industry that is believed to push annual exports to $10 billion over the next three years.
On a year-on-year (YoY) basis, IT exports surged 22.7% in December as compared to exports valuing at $247 million in the corresponding month of last year.
In the first half (Jul-Dec) of the current fiscal year, IT exports came in at $1.5 billion, which was 9% higher than exports of $1.3 billion in the corresponding period of the previous year.
In December 2023, Pakistan’s overall services exports increased 15% month-on-month and stood at $727 million against $631 million in November 2023. However, on a YoY basis, services exports shrank 7%.
In the first six months of the current fiscal year, services exports dipped 3% to $3.77 billion against $3.87 billion in the corresponding period of last year.
Topline Securities, in its report, stated that IT exports in December 2023 were higher than the last 12-month average of $222 million per month.
“This jump in IT exports is due to the relaxation in retention limit by the State Bank of Pakistan (SBP), which increased it from 35% to 50% for exporters’ specialised foreign currency accounts, and a stable Pakistani currency, which encouraged IT companies to repatriate their foreign income and deposit it in local accounts,” it said.
Separately, Minister of IT and Telecommunication Dr Umar Saif in a statement boasted that the growth in IT exports stemmed from the government’s favourable policies.
“The aim of our policies is to promote the IT and telecom sector and stabilise the country’s economy,” he stressed, adding that it was just the beginning, big results would emerge soon and the export target of $10 billion would be achieved.
“The facility of keeping 50% of dollar proceeds, digital payment system and incentives for freelancers are the main factors behind the 17% rise in exports in December,” the minister pointed out.
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Saif congratulated the entire IT industry for achieving the milestone, but independent companies were not that happy as far as government’s assistance was concerned. They called it “organic growth”.
“No big contribution came from the ministry for pushing up IT exports; we are striving and increasing exports by taking initiatives on our own,” said Khawaja Fahad Shakeel, Founder and CEO of Workforce Commerce, a Lahore-based IT company catering to international clients.
After the departure of former president Pervez Musharraf, no government helped to address the emerging challenges, like regulatory hurdles in global markets, he said.
“Each day, almost 500 ‘General Service Agreements’ (GSAs), which are like tenders, are issued in the US, but unfortunately it is very hard for Pakistan to win these GSAs, as we need to be either the US national or work with a US national to get these agreements”.
The citizens of India, the Philippines, Turkey and others can easily open bank accounts and provide personal credit history on their passports in the US. On the other hand, “it is extremely tough for us to compete in this market as our passport is not considered strong enough”.
According to Shakeel, the individual growth of IT and software companies is much better than the overall growth of the IT sector.
“The industry is facing numerous challenges which include talent shortage, infrastructural problems, lack of access to funding, regulatory hurdles, cybersecurity concerns, to name a few.”
The CEO was of the view that overcoming the negative perception about outsourcing IT services to Pakistan and building a positive global image was another big challenge facing the IT industry.
“Government’s job is to provide an enabling environment, and if it cannot provide funds or other benefits, at least the authorities should formulate entrepreneur- and industry-friendly laws and promote the industry, as India did in Gujarat,” he said, but acknowledged that things were not that bad and the industry needed a proper ecosystem.
This way, “the world may trust more on us and we may be able to get a better share in outsourcing services via GSAs, which outsource IT-related procurements of up to $66 billion annually.”
Published in The Express Tribune, January 18th, 2024.
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