Pakistan’s burgeoning information technology (IT) and IT-enabled services (ITeS) sector continues to be a bright spot in the country’s economy, with export remittances soaring to new heights. In a significant development, the sector’s exports surged by a remarkable 32% during the first five months (July-November) of the current fiscal year 2024-25, reaching $1.530 billion compared to $1.152 billion in the same period of the previous year.
November 2024 witnessed a 25% year-on-year increase in IT export remittances, totaling $324 million, up from $259 million in November 2023. However, on a month-on-month basis, there was a slight 2% decrease from October 2024’s $330 million.
IT sector’s stellar performance culminated in a record-breaking year in 2023-24, with exports reaching $3.223 billion, a 24% increase over the previous year’s $2.596 billion.
Despite these impressive figures, the government acknowledges that a substantial portion of IT export revenue remains unremitted. To address this issue and further boost the sector’s growth, the government has set ambitious targets, aiming to increase IT exports from $3.2 billion in FY24 to $4.2 billion in FY25.
A significant challenge facing the IT sector is the large number of freelancers who operate outside the formal banking system. While Pakistan boasts 2.32 million freelancers, contributing 15% of IT exports, only 38,000 have bank accounts. To encourage formalization, the State Bank of Pakistan (SBP) is actively working to open new accounts, with 500 new accounts being added weekly. However, retaining these account holders and motivating more freelancers to follow suit is crucial.
In response to the sector’s needs, SBP has taken several measures to facilitate IT exports. The foreign exchange retention limit has been increased to 50% or $5,000 per month (whichever is higher), up from 35%. This incentivizes IT exporters and freelancers to bring their earnings back to Pakistan. Additionally, banks have been directed to streamline the process of opening accounts in both Pakistani Rupees and foreign currencies for freelancers and IT companies, making it easier for them to participate in the formal economy.
As Pakistan’s IT sector continues to thrive, government policies and industry initiatives are playing a pivotal role in unlocking its full potential and contributing to the country’s economic growth.
