Pakistan’s IT sector has achieved a remarkable milestone, recording its highest-ever monthly exports of $348 million in December 2024. This marks a 15% year-on-year growth and a 12% increase compared to the previous month. The growth comes despite significant challenges, including internet slowdowns and the government’s crackdown on VPN usage.
The December export figure brings Pakistan’s total IT exports for the first half of fiscal year 2025 to $1.86 billion, representing a 28% increase compared to the same period last year. This achievement highlights the resilience of Pakistan’s growing IT sector, despite the external obstacles it has faced. According to Topline Securities, the sector’s performance demonstrates the expanding global reach of Pakistani IT companies, especially in key markets like the Gulf Cooperation Council (GCC) region.
The rise in IT exports is attributed to several factors. One of the key drivers has been the expansion of Pakistani IT companies’ client bases internationally. The relaxation of the permissible retention limit for foreign currency accounts, which allows IT exporters to repatriate higher profits to Pakistan, has also played a crucial role in boosting exports. Additionally, the State Bank of Pakistan recently introduced a new category that enables IT companies to make equity investments abroad with up to 50% of proceeds from these accounts, further enhancing confidence in the sector.
However, the growth comes amid growing concerns over the impact of the government’s internet policies. Since last year, the federal government has been implementing a nationwide firewall aimed at blocking harmful content and preventing cyberattacks. While the intention behind the firewall is to safeguard national security, it has raised alarm among businesses and IT associations, particularly as it has led to slower internet speeds and difficulties in accessing international markets.
In addition, the government’s crackdown on unregistered VPNs, which are widely used by businesses and freelancers to ensure secure and private internet connections, has created challenges for the sector. A deadline was initially set for November 2024 to register VPNs, but this was later withdrawn, leaving uncertainty in its wake. The lack of clarity regarding the government’s stance on VPN regulation continues to be a source of concern for IT firms that rely on secure internet access for their operations.
The Pakistan Business Council (PBC) has also raised concerns that the internet disruptions and the implementation of the national firewall could lead multinational companies to relocate their operations. In fact, some companies have already moved their business elsewhere. The Pakistan Software Houses Association (P@SHA) has warned that the disruptions could result in significant financial losses, with operational costs for the IT sector potentially rising by $150 million annually.
Despite these concerns, experts remain optimistic about the future of Pakistan’s IT sector. The country’s IT exports are expected to grow by 10-15% for the fiscal year 2025, with a target of reaching between $3.5 billion and $3.7 billion. The government’s economic plan, ‘Uraan Pakistan,’ sets an ambitious goal of achieving $10 billion in IT exports by FY29, requiring a compound annual growth rate (CAGR) of 28%.
As Pakistan continues to face challenges on the digital front, the government and industry stakeholders must work together to ensure that the IT sector remains competitive and continues to thrive in the global market. With the right policies and infrastructure, Pakistan’s IT industry is well-positioned to contribute significantly to the country’s economic growth in the years to come.
