Pakistan's IT Industry Takes Off: 9% Export Growth in November

In a significant development for Pakistan's technology sector, information technology (IT) exports recorded an impressive 9% month-on-month surge in November, reaching a noteworthy $259 million. This surge, the highest in the past 12 months, is credited to the State Bank of Pakistan’s (SBP) decision to increase the permissible retention limit for IT exporters. The SBP's move allowed exporters to retain 50% of their foreign earnings in specialized accounts, up from the previous 35%, fostering an encouraging environment for IT companies.

Caretaker IT Minister Umar Saif underscored the potential impact of the IT sector on the country's foreign exchange reserves, suggesting that repatriating $1-2 billion potentially parked outside Pakistan by IT companies could significantly contribute to economic growth.

The IT export figure comprises funds remitted back to Pakistan by technology companies engaged in diverse services, including software development, web design, data processing, and call centers catering to global clients.

Computer services took the lead, constituting 83% of the total IT exports in November 2023, experiencing a notable 14% month-on-month and 20% year-on-year growth. Meanwhile, telecom services, making up the remaining 17%, witnessed an 11% month-on-month decline. Among computer services, consulting, training, and maintenance recorded the highest growth rate, surging by 28% month-on-month, followed by a 14% month-on-month increase in computer software exports.

In the first five months of the fiscal year 2023-24 (July-November), IT exports saw a commendable 6% year-on-year increase, reaching $1.2 billion, constituting 7.4% of the country's total exports. Net IT exports, after deducting IT imports, also saw an 11% month-on-month and 7% year-on-year increase to $226 million in November 2023. On a trailing 12-month basis, net IT exports reached $2.4 billion, marking a solid 10% year-on-year growth.

Looking ahead, the IT sector is poised to benefit from global and regional trends indicating increased spending on software and IT services. A report by Gartner, a leading technology research and consulting firm, projects a 13.8% growth in worldwide spending on software and a 10.4% increase in spending on IT services in 2024. In the MENA region, software spending is forecasted to grow by 12.3%, accompanied by an 11.1% increase in IT services spending, facilitating digitalization and automation in the region.