Pakistan’s Information Technology (IT) exports experienced a significant surge of 24% in May 2023, reaching a total of $236 million. The growth in telecom and computer services played a key role in this increase, with month-on-month (MoM) growth rates of 92% and 11% respectively. The export of software, other services, and software consultancy within the computer services segment also recorded positive growth rates.
While the overall technology exports in May 2023 witnessed a significant year-on-year (YoY) increase of 28%, the cumulative IT exports for the 11 months of FY2023 showed a marginal decline of 1% compared to the previous year. Although the country has posted a current account surplus for the third consecutive month, experts believe this surplus is expected to be short-lived.
The MoM increase in IT exports can be attributed to the higher number of working days in May 2023. Services exports excluding IT also showed growth, increasing by 18% MoM. However, the realisation of IT export proceeds per working day declined slightly.
On a YoY basis, IT exports in May 2023 increased by 28%, primarily driven by significant growth in telecom and computer services. This increase can be partially attributed to the low base effect from May 2022 and the interbank rates reaching a certain level in May 2023. However, for the 11-month period of FY2023, IT exports experienced a marginal decline of 1% YoY.
It is worth noting that the IT export numbers only represent the amount remitted back to Pakistan, excluding income retained abroad. IT players are retaining a greater portion of their proceeds outside the country due to declining business confidence and exchange rate volatility.
In terms of segment-wise breakdown, telecom services and computer services exhibited notable growth both MoM and YoY. Net IT exports (minus imports) for May 2023 increased significantly, and over the 11 months of FY2023, net exports increased by 16% YoY.
Looking ahead, despite the global slowdown, there are opportunities for exporting companies in Pakistan as spending on software and IT services is predicted to increase in 2023.