Pakistan’s IT and ITeS sector has become one of the country’s most important export opportunities. At a time when many traditional sectors have struggled with inflation, currency pressure, energy costs, and weak domestic demand, IT exports have continued to grow. Computer services exports rose from USD 1.67 billion in FY2021 to USD 3.24 billion in FY2025, a 94 percent increase. The broader ICT sector reached USD 3.81 billion, generated a USD 2.4 billion trade surplus, and accounted for 45 percent of Pakistan’s total services exports. These figures show that IT is no longer a secondary services category. It has become one of Pakistan’s strongest routes toward export diversification and foreign exchange growth. The global market gives this opportunity even more weight. Digitally delivered services exports reached USD 4.25 trillion in 2023, grew 9 percent year-on-year, and accounted for 13.8 percent of total world goods and services exports. Pakistan is already participating in this fast-growing global market through freelancers, software firms, startups, and remote technology workers. The country has shown that it can compete internationally and earn through digital services without relying on the same physical inputs and logistics that constrain many traditional exports.
The challenge is that Pakistan’s IT growth is still built on a fragile structure. Much of the sector remains concentrated in low-to-mid-value services, fragmented freelance work, staff augmentation, and cost-based outsourcing. These areas helped Pakistan enter global digital markets, but they are also the areas most exposed to price pressure and AI-led disruption. The fall in median freelance transaction value from USD 106 in FY2021 to USD 63 in FY2025 shows that the lower end of the market is already under pressure. Pakistan’s next priority should not only be increasing IT exports. It should be changing the composition of those exports. The sector needs to move toward higher-value services, scalable firms, stronger product development, better payments, stronger talent, reliable infrastructure, clearer regulation, and serious global market positioning. Pakistan has already built momentum. The real question is whether it can turn that momentum into a durable digital advantage.
Growth with Structural Fragility
Pakistan’s IT sector has grown in conditions that would have slowed many other industries. During a period of macroeconomic stress, weak investor confidence, and pressure on traditional exports, the sector has continued to bring in foreign exchange. This makes it especially important for a country that needs export engines beyond textiles, agriculture, and other conventional categories. The numbers show that the sector is no longer only a promising area of growth. Computer services exports almost doubled between FY2021 and FY2025, while ICT exports reached USD 3.81 billion in FY2025 and made up 11.8 percent of Pakistan’s total exports. The SBP figure of USD 3.24 billion for computer services exports should also be read as a base figure rather than the full size of the sector. Some IT-related earnings appear to be recorded under personal remittance codes, while some revenue is generated through foreign-registered Pakistani-founded firms. Once these flows are taken into account, actual IT-related earnings may be closer to USD 5 billion or more. This measurement gap matters because policy support, incentives, and sector planning are often built around official export classifications, even when the real economic activity is larger.
The growth story becomes more complicated when the structure of the sector is examined. Freelance transactions account for 90.8 percent of all recorded IT export entries, or 2.17 million out of 2.39 million entries in FY2025, but they generate only 24.1 percent of total value. The average freelance transaction is USD 359, compared with USD 12,618 for software consultancy and USD 31,699 for the average software export transaction. This shows that Pakistan has a large digital workforce, but much of it remains concentrated at the lower end of the value chain. That lower end is becoming harder to sustain. In FY2025, around 434,000 transactions, or 20 percent of total recorded IT export entries, were below USD 18 each, while the maximum recorded single transaction was USD 5.57 million. The sector is therefore splitting into two very different layers: a small group of high-value practitioners and a much larger base of workers exposed to low pricing, global competition, and AI-driven commoditization.
The formal corporate base reflects the same imbalance. Pakistan has 33,172 SECP-registered IT companies, but only 12 are publicly listed, while around 32 percent are single-member companies. This means the sector has many participants, but not enough firms with the scale, governance, capital, and international credibility needed to win larger contracts, build global products, or attract serious institutional investment. Pakistan’s IT growth is real, but it is not yet secure. The country has built a presence in global digital services, yet the base remains too fragmented and too dependent on low-value work. Without a shift toward scalable firms, stronger capabilities, and higher-value export categories, the sector may struggle to sustain its growth against AI disruption and stronger global competition.
The Limits of the Current Model
The first major limit is talent readiness. Pakistan produces around 43,000 IT graduates each year, but only 10 to 12 percent are considered immediately employable without significant remediation. The issue is not only technical ability. Employers point to gaps in communication, workplace discipline, professional conduct, reliability, and client handling. These skills matter because higher-value IT work depends on trust and delivery quality as much as coding ability. The problem becomes more serious at senior levels. Pakistan does not have enough executives who can scale IT companies internationally, manage enterprise sales, lead global teams, or build product-led businesses. It also lacks enough professionals who combine technology skills with sector knowledge in areas such as finance, healthcare, law, logistics, cybersecurity, and public services. Global demand is moving toward specialized, domain-led solutions. Pakistan’s talent system still produces too many workers for basic delivery and too few leaders for complex export growth. Women’s participation is another underused source of capacity. Women represent only 21 percent of Software Technology Park workers, and only 38,000 of 2.32 million registered freelancers with bank accounts are women. This is not only a social issue. It is an economic limitation. Pakistan cannot build a deep technology workforce while leaving a large share of potential talent outside formal participation.
Tax and regulatory design also hold the sector back. There is no clear statutory distinction between a gig worker and a remote employee. This creates confusion for freelancers, salaried workers, firms, banks, and tax authorities. IT export income may be legally exempt, but uncertainty around FBR audits still creates risk for businesses. Internet services carry a 34 percent effective tax, while laptop import duties and cloud infrastructure taxes raise the cost of operating in an export sector that is supposed to be supported. Banking and payments are another major constraint. Many exporters cannot easily hold dollar balances or accept card-based international payments through Pakistani banks. Processing delays, documentation issues, and forced conversion concerns create cash-flow problems. Firms with stable USD revenues also struggle to access working capital because banks usually require physical collateral and do not properly value software assets, contracts, IP, or export revenues. FDI approval timelines can exceed twelve months, which is far too slow for startups and growth-stage firms.
Infrastructure gaps weaken competitiveness further. Pakistan has only one to two Internet Exchange Points. Fixed broadband costs USD 0.53 per Mbps, which is 6.6 times higher than India and 53 times higher than Romania. Pakistan’s ICT access ranking is 128th out of 139 economies. These figures matter because high-value IT exports depend on reliable, affordable, and fast digital infrastructure. The product-development gap is just as important. Pakistan’s export base is still heavily service-led, with little depth in proprietary products. The country has no strong domestic digital public infrastructure layer that can help private firms build local reference deployments and then commercialize them abroad. Government-owned IT entities often develop software for public departments outside competitive procurement, reducing the ability of private firms to build credibility through local projects.
Pakistan’s innovation indicators also show the scale of the challenge. The country ranks 99th out of 139 economies in the Global Innovation Index 2025, 14th among 37 lower-middle-income economies, and 7th among 10 economies in Central and Southern Asia. R&D expenditure stands at only 0.16 percent of GDP, with Pakistan ranked 92nd on that indicator. These numbers are a warning sign for a country that wants to move into AI products, advanced software, cybersecurity, chip design, and product-led exports. Market access is another weakness. Pakistan does not appear in some major global IT delivery location assessments used by large buyers. It is often not evaluated and rejected; it is simply not in the consideration set. Country-of-origin risk, cybersecurity concerns, political instability, and data protection gaps can screen Pakistan out before technical capability is even assessed. Pakistan also has very few captive ICT operations compared with India’s 1,700-plus captive operations, which generate USD 64.6 billion annually.
AI makes these weaknesses more urgent. Pakistan’s current strength lies heavily in staff augmentation, BPO, and routine service work. These are exactly the areas where AI tools are reducing prices and changing delivery models. The 41 percent fall in median freelance transaction value between FY2021 and FY2025 suggests that this pressure has already started. If Pakistan does not move into higher-value, domain-led, product-based, and AI-augmented work, the sector may grow in volume but weaken in value.
The Transition Pakistan Needs
Pakistan needs to move from a low-cost IT services model toward a higher-value, AI-resilient digital export economy. This shift does not mean moving away from services. Services will continue to remain central to Pakistan’s IT export base. The real change should be in the quality, complexity, and credibility of those services. Pakistan needs to compete less on price and more on specialization, reliability, product integration, domain knowledge, and trust. The next stage of growth should be built around services that are harder to commoditize and better aligned with the direction of global technology demand. Talent reform is the first part of that transition. Universities need stronger industry involvement in curriculum design, mandatory practicums, communication training, and exposure to real client work. Soft skills should be treated as part of export competitiveness, not as a secondary concern. Pakistan also needs stronger founder leadership programs, enterprise sales training, international market-entry support, and domain-specialist tracks that combine technology with finance, healthcare, law, logistics, cybersecurity, and other high-value sectors. AI bootcamps can also help freelancers and routine service workers move into AI-augmented delivery before displacement becomes more severe.
Payments, finance, and regulation need to support this transition rather than hold it back. IT exporters should be able to receive money in multiple currencies, hold dollar balances, accept card payments, process remittances quickly, and make international payments without repeated approvals. IT Export Dollar Accounts would help firms manage global operations more realistically. Banks should also be able to lend against export contracts, recurring revenues, IP, and software assets, supported by risk-sharing mechanisms. Startups need faster FDI approvals and funding channels that match the speed at which technology businesses operate. Pakistan also needs a statutory freelancer definition, a safe harbour for exempt IT export income, lower effective taxes on internet services, and a stable policy compact for the sector. These steps would reduce uncertainty and encourage more workers and firms to formalize. Data protection and cybersecurity should also become core parts of the export strategy. Global clients, especially in finance, healthcare, and regulated industries, will not shift sensitive work to Pakistan unless the legal and security environment is credible. Infrastructure should be treated as an export issue. More Internet Exchange Points, an open-access fiber backbone, lower connectivity costs, and better cloud infrastructure would directly improve Pakistan’s IT competitiveness. AI readiness will also require compute capacity, data governance, and access to structured datasets. Pakistan generates valuable data through institutions such as NADRA, FBR, and SBP, but this data is not organized in a way that supports AI development. Without stronger compute and data foundations, Pakistan risks becoming only a user of AI tools rather than a producer of AI products. Product and ecosystem development also need a clearer place in policy. Pakistan has real digital strengths that are not being fully converted into export value. It ranks 17th globally for mobile app creation per GDP and 18th for ICT services exports as a share of total trade. Pakistan also recorded 1.42 billion mobile app downloads in 2024, yet mobile apps, gaming, 5G-enabled services, space-tech, cybersecurity, and chip design remain underdeveloped policy areas. These segments should be treated as export frontiers rather than side opportunities.
Domestic procurement and market access should complete the transition. Private Pakistani firms need fair access to government technology contracts so they can build reference projects that support international sales. A Pakistan Stack, built around digital identity, payments, and public APIs, could create the domestic foundation for products that can later be commercialized abroad. Local firms need opportunities to prove themselves at home before they can compete with stronger international players. Pakistan should also build a dedicated captive attraction function, engage global IT delivery assessors, place digital trade officers in priority markets, and develop a stronger Pakistan GBS business case. International technology events and MOUs should be judged by actual deal conversion rather than announcements. The sector also needs broader market reach beyond the US and UK, especially across the GCC, EU, ASEAN, Central Asia, and Africa. These reforms cannot be treated separately. Skills reform will have limited impact if payment systems continue to push firms offshore. Product development will remain weak if domestic procurement excludes private firms. AI ambition will stay limited without compute capacity, data governance, and R&D. Market access will remain difficult without cybersecurity and data protection credibility. Pakistan does not need isolated fixes. It needs a coordinated shift in how the IT sector is supported, financed, regulated, and positioned globally.
Turning IT Momentum into a Durable Digital Advantage
Pakistan’s IT sector has already proven that it can grow. It has built a large digital workforce, strong freelance participation, emerging startups, and firms with international clients. It has continued to earn foreign exchange during difficult economic conditions and has become one of the country’s strongest services export categories. The next phase will be harder. AI is putting pressure on low-value work. Global buyers are becoming more demanding on data protection, cybersecurity, reliability, and domain expertise. Competitor countries are building stronger infrastructure, product ecosystems, captive operations, and innovation capacity. Pakistan cannot rely only on cost advantage and individual talent. The priority now is to move from IT export growth to IT sector transformation. Pakistan needs stronger talent pipelines, scalable firms, better payments, clearer regulation, lower infrastructure costs, deeper product capability, and a serious global market access strategy. The opportunity is already visible. The task is to build the foundations that allow Pakistan’s IT growth to become higher-value, globally trusted, and resilient in an AI-driven services economy.
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