Pakistan’s IT export sector has delivered a strong start to the new fiscal year, with figures for July and August 2025 (2MFY26) reaching $692 million, marking an 18 percent rise compared to the same period last year. In August alone, exports stood at $337 million, reflecting a 13 percent increase year-on-year, though marginally lower on a month-to-month basis. Net IT exports, after adjusting for imports, amounted to $306 million in August, up 19 percent over the previous year. These figures underscore steady momentum in the sector despite global economic challenges, with the IT industry continuing to expand its footprint in regional and international markets.
Analysts attribute this growth to a combination of strong demand and favorable domestic policy measures. Pakistani firms have been securing more contracts from clients in the GCC region, where interest in outsourcing, digital transformation, and fintech solutions remains robust. This demand has been matched by supportive policies at home, particularly measures announced by State Bank of Pakistan. These include raising the retention limit for exporters in foreign currency accounts from 35 percent to 50 percent and allowing equity investment abroad through such accounts. As a result, exporters are showing greater confidence, and more companies are now opting to maintain specialized foreign currency reserves. At the same time, relative stability in the Pakistani rupee has encouraged firms to remit higher volumes of profits back into the country, adding to the official export figures.
While the trend is encouraging, sector-wide challenges persist. Pakistan’s IT export base remains narrow compared to regional competitors such as India, with structural bottlenecks limiting scale-up. Infrastructure shortfalls, unpredictable taxation frameworks, and regulatory inconsistencies continue to weigh on the industry’s ability to expand rapidly. Another concern is the steady outflow of talent, as skilled engineers and developers pursue better opportunities overseas. Furthermore, a significant portion of Pakistan’s freelance and small-scale IT income remains undocumented, preventing export statistics from fully capturing the sector’s potential. Despite these challenges, the government has set a $5 billion export target for FY26 under its “Uraan Pakistan” economic plan, alongside an ambitious $10 billion target for FY29.
The broader global market presents opportunities that align with Pakistan’s existing strengths, particularly in areas such as artificial intelligence, cloud-based services, cybersecurity, and fintech. With policy execution and sectoral reforms, experts suggest Pakistan could leverage this demand to boost its presence. Recent government initiatives, such as the enhanced foreign currency retention policy and the allowance for overseas equity investment, have created a more enabling environment for firms. However, long-term performance will hinge on sustained consistency in implementation and addressing structural barriers. Reforms in taxation, stronger digital infrastructure, and investment in human capital remain critical to ensuring that the sector not only meets near-term targets but also establishes itself as a central contributor to Pakistan’s economic growth trajectory.
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