Pakistan’s thriving IT industry has emerged as a significant player in the global market, with the software business contributing a substantial 52 percent to the country’s IT exports during the financial year 2022-23 (FY23).
According to data recently released by the State Bank of Pakistan (SBP), the combined exports of software consultancy and computer software amounted to $1.36 billion out of the total exports of $2.61 billion recorded in FY23.
The software industry takes center stage in Pakistan’s IT exports, owing to the relatively underdeveloped state of its hardware industry. Furthermore, the official statistics include export proceeds of $743 million in FY23 for Other Computer Services. The central bank’s recent report also revealed an intriguing aspect, suggesting that an additional $1.5 billion of IT exports (including software and software consultancy) were estimated to have occurred through the grey market in 2019, which, as per current industry estimates, may have grown to $2.5 billion by FY22.
The dominance of Small Software Exporters and the Need for Diversification
Interestingly, small software exporters dominate the country’s IT exports, with most of them exporting less than $0.1 million annually. However, the IT exports are not as diversified, with the majority of the share being contributed by the US alone, accounting for more than half of the total exports, as per the report.
In light of these facts, Noman Said, a prominent software exporter, and CEO of SI Global Solutions, emphasized the need for the government to formulate sustainable policies that facilitate IT exporters, offering foreign exchange accounts, incentives, and tax holidays. Such measures would primarily bolster software exports, he suggested. To unlock the full potential of the software sector’s export, Pakistan should explore both traditional and non-traditional markets, including European countries, GCC states, African states, and the Asian and Pacific region. The key to growth lies in diversifying services with in-depth market research and innovative ideas. To achieve this, he further recommended that the government and IT companies collaborate by organizing conferences and exhibitions to access these markets effectively.
Promoting ICT Education and Encouraging IT Skills
For the IT industry to flourish, cooperation is essential among all stakeholders, including educational institutes. Noman Said stressed forging greater collaboration to promote ICT education in the country, ensuring a steady supply of fresh talent to the industry. In this regard, prioritizing training in ICT through short courses and boot camps for fresh graduates could be transformative. Moreover, non-IT professionals should also be encouraged to learn IT skills and engage in freelancing on basic IT projects.
IT Sector’s Role in Service Exports
Presently, IT stands as the leading contributor in the service sector exports, commanding a 35 percent share and ranking second after the textile industry in terms of high-performing export sectors.
Tufail Ahmed Khan, CEO of the Pakistan Freelancers Association (PAFLA), highlighted the significant role played by freelancers in contributing to the IT sector’s overall export. Despite facing multiple challenges, these freelancers continue to bring valuable remittances to the country.
Khan urged the government to collaborate with the private sector to encourage students and young professionals to embrace self-employment and provide their skilled services across technical and non-technical domains on freelancing platforms. By doing so, Pakistan could attract much-needed foreign exchange.
Positioning Pakistan as a Preferred Outsourcing Hub
An increasing trend in remote jobs has been observed, with several IT giants in developed countries outsourcing their projects. Khan emphasized the need for IT graduates to actively pursue such projects and deliver high-quality work, positioning Pakistan as the preferred outsourcing hub for foreign companies.
Pakistan’s software business has emerged as a vital force in the IT export landscape. With the right policies, support, and collaborations, the country can foster its software sector’s growth and continue to make significant strides in the global IT market.