Pakistan’s IT Sector—A Rising Digital Hub?
Part 2 of Pakistan’s Potential Role in the New Global Tech and Manufacturing Shift
Pakistan certainly has ingredients to capitalize on these shifts. Its IT industry has been growing steadily over the past decade. By 2023-24, the country’s software and IT-enabled services sector was estimated at around $3.2 billion in size.
This includes software development, outsourcing services, call centers, and other IT-enabled services – a sector where 60% of services are exported abroad. In fact, Pakistan has quietly become a global force in freelance work.
The country has consistently been in the top 5 largest providers of freelance services for many years, and self-taught young programmers and designers selling their skills online. The vibrant freelance economy – from coding to content creation – has not only brought in export dollars but also nurtured a generation of tech-savvy youth.1
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In this five-part series, we delve deep into Pakistan’s tech capabilities, strategic positioning, and how it could redefine itself amidst global change. We'll explore international examples, internal challenges, and strategic recommendations, offering insights and perspectives from around the world.
Series Overview:
Part 1: Shifting Sands—Understanding the New Global Economic Landscape
Part 2: Pakistan’s IT Sector—A Rising Digital Hub?
Part 3: How China’s Industrial Shift Could Transform Pakistan
Part 4: Stability at Stake—Addressing Pakistan’s Internal Challenges
Part 5: Lessons from Global Successes and a Roadmap for Pakistan’s Future
Over 5,100 IT companies are registered with the Pakistan Software Export Board, and Pakistan’s IT products and services reach clients in over 170 countries. These range from software houses to Call Center/BPO firms.
Growth was somewhat flat in 2023, but the long-term trajectory from 2024 is upward, with authorities targeting $3.5 billion in IT exports in the near term. Crucially, the government recognizes IT as a priority sector. Multiple policies and incentives have been introduced: foreign IT investors are allowed 100% ownership of companies in Pakistan, export incomes from IT services are tax-exempt, profits can be repatriated freely, and special technology zones are being developed for tech firms. 2
High-speed internet access has expanded and new IT institutes and training programs are underway to grow the talent pool. These steps signal Pakistan’s intent to emulate the success of its neighbors in the digital economy.
What lessons can Pakistan draw from peers like India, Vietnam, and Costa Rica?
First, invest in human capital relentlessly. India’s IT rise was built on producing masses of engineers and programmers, often through public-private initiatives in education. Pakistan can accelerate programs to train youth in coding, data science, and English fluency – the skills global clients demand.
Second, create an enabling environment for business. Investors often compare Pakistan with more stable destinations. Consistent policies, better infrastructure, and ease of doing business reforms are vital to compete with Vietnam’s efficiency or Costa Rica’s investor-friendly climate. For instance, India’s early IT parks and tax holidays attracted global firms; Pakistan’s Special Technology Zones must offer world-class facilities and one-stop problem-solving.
Third, leverage the Pakistani diaspora and global partnerships. India tapped diaspora networks to open doors abroad. Pakistani tech entrepreneurs in Silicon Valley and elsewhere can be bridges for investment if the local climate is right.
Finally, focus on niches of strength. Pakistan has excelled in areas like gaming software development and fintech innovation. Encouraging these niches can differentiate it in the global market.
It’s true Pakistan’s IT sector is still small relative to India’s giant, but it’s growing from a similar playbook. Over a decade ago, experts lamented that Pakistan had “a vast pool of talent” but lack of IT enablement kept its services sector from globalizing . That is changing now. The new generation of Pakistani techies are hungry, connected, and entrepreneurial. With prudent policy support, Pakistan’s IT industry can follow the trajectory of its neighbors – not to become the next Bangalore overnight, but to carve out its own respected place in the global digital economy.3
This series continues with “Part 3: How China’s Industrial Shift Could Transform Pakistan"