Pakistan’s freelance industry is experiencing a remarkable boom, with the country ranking fourth in terms of freelancing activity globally. This growth is driven by the younger population, who are drawn to the flexibility and autonomy offered by freelancing. According to a report by the Oxford International Institute, Pakistan has firmly established itself as the world’s fourth-fastest-growing freelance market.
The freelancing revolution is transforming Pakistan’s economy, offering a world of opportunities for individuals with internet access and skills. Freelancing platforms like Upwork, Fiverr, and Freelancer have made it easier for individuals to find work in various fields, including software development, writing, and virtual support. This growth has created new opportunities for women to enter the workforce and has contributed to Pakistan’s economic growth.
The expansion of freelancing is boosting Pakistan’s economic growth, with the country now ranking fourth in terms of freelancing activity. Freelancers earn and spend more money, which benefits local companies. According to many reports, Pakistan’s freelancing employment has increased by more than 70% since 2016. This growth of freelancers is reshaping the labor sector and economy.
Internet usage in Pakistan increased by more than 150% between 2015 and 2020, with over 80 million internet users presently. More than 60% of the population currently has mobile broadband connection. The COVID-19 epidemic has also pushed the trend towards remote working.
While freelancing gives people more freedom and flexibility, it also generates new digital opportunities, allows more women to work, and diversifies Pakistan’s economy. The growing popularity of freelancing has also generated new chances for women to enter the industry. Cultural and societal hurdles sometimes impede women’s involvement in traditional employment. However, freelancing enables women to work from home, create their own schedules, and keep their independence. This freedom has allowed many Pakistani women to pursue freelance employment in writing, graphic design, and online teaching.
The emergence of freelancing illustrates Pakistan’s immense potential to dominate the global digital economy. Freelancing is altering Pakistan’s economy in significant ways. Every year, freelancers earn more than $1 billion in revenue for the Pakistani economy. This extra money is spent on local goods and services, which benefits other companies. Furthermore, this industry has produced over 100,000 employments in Pakistan and continues to develop significantly. This helps to address the nation’s elevated rate of unemployment in a scalable manner. Many freelancers end up founding their own businesses, which creates additional jobs. Freelancing’s flexibility allows people to get creative with company ideas without having to quit their jobs. Some freelancers create whole agencies and studios.
Over 60% of Pakistan’s population is under the age of 30, and freelancing provides young people with economic opportunities and freedom. Young Pakistanis acquire confidence and experience by working for themselves. According to the Economic Survey, in FY2023, freelancers contributed USD269.8 million to foreign exchange profits. The IT industry generated USD156.9 million in foreign exchange, while the non-IT sector added USD112.9 million to the reserves.
However, the freelancing industry still faces challenges. These include the need for better digital skills education and access to global payment systems. Pakistani universities fail to keep up with the cutting-edge digital skills required in the global freelancing economy, and freelancers often have to pay for additional online training to improve their skills.
Moreover, most freelancing sites do not enable payments to Pakistani bank accounts due to restrictions imposed by PayPal and other payment processors. Freelancers have to use middlemen to receive payments, reducing their profits by up to 20% in costs.
The tech industry brings in 88% trade surplus export income, which can address foreign exchange payment problems if it reaches $15 billion in annual export volumes. However, the Finance Ministry and FBR resist lowering taxes for the tech sector, fearing reduced collections and potential demands from other sectors. This approach neglects the industry’s potential to address the country’s dual deficit problem – fiscal and current account.
To address these challenges, a two-pronged approach is necessary. On one hand, a tax-paying group can help address the fiscal deficit. On the other hand, export income-earning industry sectors can bring in foreign exchange. Flexible facilitation policies can cater to both groups, providing a balanced approach to the industry’s growth.
Mandatory freelancer registration can help streamline the industry, while loss of freelance status and tax benefits for those drawing a second salary from local businesses can prevent abuse. Registration as an organization, even sole proprietorship, can address negatives and provide a clear framework for the industry.
Pakistan’s tech industry requires a balanced approach that addresses the challenges faced by both freelancers and the organized sector. By implementing preferential taxation and registration policies, and presenting strategic initiatives to the IMF and Finance Ministry, Pakistan can unlock the full potential of its tech industry and drive sustainable growth.
