IT exports increased 10% monthly in August 2023 and 4% annually in 2MFY24.

IT exports in August 2023 above the US$218 million average over the previous 12 months.

On a month-over-month basis, IT exports in August 2023 increased, mostly as a result of more working days than in July 2023. Our banking channel inspections reveal that the realization of funds was hampered by greater clearance days.

Despite this, MoM IT export revenue realization per day in August 2023 was unchanged.

Hardware and software consulting exports increased by 21% and 18% MoM, respectively, in August 2023 among computer services.

Pakistan's services exports (excluding IT) have risen by 14% MoM as a result of the aforementioned factors.IT exports for August 2023 rose 3% year over year to US$235 million, driven by an 11% YoY gain in telecom and a 1% YoY rise in computer services.

The amount that technology businesses have remitted to Pakistan is shown by the stated IT export figure. Our channel checks reveal that because of the volatile exchange rate and diminishing business confidence, IT businesses are keeping a larger amount of their profits outside the nation.

The IT Minister claims that IT firms have between $1 and $2 billion in assets outside of Pakistan.

IT exports rose 5% year over year to US$449 million in 2MFY24.The improvement in IT exports is mostly attributable to the rise in global IT spending. According to Gartner Inc. (a technology research and consulting business), global IT investment will reach US$4.7 trillion in 2023, up 4.3% from 2022.

For August 2023, Net IT Exports (Exports minus Imports) grew by 7% MoM and by 3% YoY to US$204mn. In 2MFY24, net exports climbed by 4% YoY to US$394 million, while overall IT exports increased by 5% YoY.

As of August 2023, Net IT Exports on a TTM basis increased by 13% YoY to US$2.3 billion.

According to Gartner research, expenditure on software and IT services is anticipated to rise in 2023 by 13.7% and 8.8%, respectively.

The enterprise resource planning (ERP) and customer relationship management (CRM) apps are two examples of core applications and platforms that promote efficiency benefits. According to Garter, the software industry will experience double-digit growth in 2023 as firms increase utilization and reallocate investment to these platforms. Through this year, vendor pricing rises will also support software investment.

For businesses like Systems Limited (SYS), our top pick in the IT industry, this creates an opportunity. SYS is currently trading with a PE of 13.1x and a PS of 2.6x for 2023.

Gross IT exports as a percentage of all exports climbed from 7.0% in 2MFY23 to 7.9% in 2MFY24.

For the month of August 2023, a segment-by-segment breakdown shows that Telecom Services climbed by 12% MoM and by 11% YoY to US$46 million and Computer Services increased by 9% MoM and by 1% YoY to US$189 million.

In August 2023, the total percentage of telecom and computer services exports was 20% and 80%, respectively, up from 18% and 82% in August 2022.

In the second quarter of FY24, telecom and computer exports accounted for 19% and 81% of total exports, respectively.