Unleashing Pakistan’s IT & ITeS Sector Potential: Overcoming Barriers for $15 Billion Exports

Pakistan’s Ministry of Information Technology and Telecommunications has set its sights on achieving a monumental milestone – harnessing the country’s Information Technology (IT) sector export potential to the tune of $15 billion. However, beneath the surface of this ambitious goal lie numerous challenges that must be addressed to unlock this immense potential.

Remarkable Growth Amidst Challenges

Over the last five years, the IT & ITeS (Information Technology and IT-enabled Services) sector has experienced an impressive growth rate, soaring by a staggering 178 percent. This growth outpaces all other local industries, including the textile sector, which stands at 148 percent. Yet, the sector’s ascent has not been without its hurdles.

Policy Inconsistencies: A Confidence Eroder

One of the major hurdles facing the IT & ITeS sector is policy inconsistency. Frequent changes in taxation policies on IT & ITeS export proceeds have eroded the confidence of both local and international stakeholders, including investors, customers, and partners.

Taxation Troubles: A Burden for Businesses

The industry also grapples with taxation issues, which pose unnecessary challenges for businesses and freelancers alike. These complications need resolution to facilitate growth and foster a conducive environment.

Banking Barriers: Encouraging Offshore Retention

Furthermore, banking hurdles and restrictions discourage exporters from using formal banking channels, encouraging them to retain their export earnings abroad. A seamless banking experience is crucial for the growth of IT & ITeS exports.

The Skills Gap Challenge

The demand for skilled human resources in the IT & ITeS industry is on the rise. Yet, the supply of IT graduates with the necessary expertise to meet this demand falls significantly short. Accredited institutes produce 45,000 to 50,000 IT-related graduates yearly, but less than 5 percent are employable in export-oriented companies.

Infrastructure Limitations: A Regional Constraint

The lack of IT-ready infrastructure at affordable rates in major cities, as well as secondary and tertiary cities, is restricting the growth of the IT & ITeS industry and, consequently, its exports.

Capital Constraints: SMEs in Need

Limited access to capital is a pressing concern for many IT and ITeS businesses, particularly SMEs (Small and Medium-sized Enterprises). These enterprises often lack the necessary capital to expand their operations, hindering their growth potential.

Expanding Global Reach: A Necessity

To become a preferred global outsourcing destination, Pakistan’s IT & ITeS sector needs to invest significantly in international marketing, branding, promotion, and business development. Expanding these programs tenfold with appropriate funding is essential to reach the $15 billion export target within five years.

The Export Surplus and Global Recognition

Notably, Pakistan’s IT & ITeS sector has already contributed significantly to the country’s economy. It boasts the largest trade surplus across Services and the second-highest across Goods & Services after the textile sector. The sector recorded a trade surplus of $2.1 billion, marking a 15.96 percent increase compared to the previous fiscal year.

Pakistan has also garnered international recognition, ranking as the second most financially attractive IT & ITeS outsourcing destination in the world according to Kearney’s Global Services Location Index. Additionally, the International Labour Organization (ILO) has ranked Pakistan as the third-largest supplier of digital labor across various categories.

In the realm of software development & technology services, Pakistan stands as the second biggest supplier of digital labor, underscoring its potential for growth and prominence in the global IT & ITeS landscape.

As Pakistan’s IT & ITeS sector journeys towards its $15 billion export goal, addressing these challenges will be pivotal in realizing the full potential of this dynamic industry. With the right policies, infrastructure, and investment, Pakistan can continue to shine on the world stage as a leading player in the IT & ITeS arena.