Pakistan's IT Sector Ranks Second

Introduction:

The recently released Economic Survey 2022-23 by the government of Pakistan has marked a significant milestone by including the IT and telecommunication sector. This move has been widely praised by experts, recognizing the IT industry’s potential to boost other sectors and drive efficiency.

Ranking in Global Outsourcing:

According to the survey, Pakistan has been ranked as the second most financially attractive location worldwide for offshore outsourcing of IT and Information Technology Enabled Services (ITeS). Kearney’s Global Services Location Index (2021) acknowledged Pakistan’s appeal in the realm of offshore IT services.

Supporting Data and Recognition:

The International Labor Organization (ILO) Flagship Report (2021) further acknowledged Pakistan’s standing as the second-largest supplier of digital labor services. The report highlighted Pakistan’s strengths in providing various services, including office and data entry, creative and multimedia, professional, sales and marketing support, software development, and writing and translation services.

Major Tech Hubs:

Lahore, Karachi, and Islamabad/Rawalpindi have emerged as major tech hubs, housing the highest number of registered companies under the Pakistan Software Export Board (PSEB). These cities represent 91.4% of registered IT and ITeS companies, while the remaining 10% are distributed across other cities.

Startup Funding and Incubation:

Besides while the report does not mention the low startup funding in the first quarter of 2023, it highlights the successes of previous years. In 2021, National Incubation Centres supported 60 startups, generating $373 million in capital. In 2022, 40 startups raised $343 million, reaching a valuation of $3.5 billion.

IT Exports and Trade Surplus:

Although IT exports witnessed a slight decline of $10 million during July-March FY23, Pakistan’s IT and ITeS industry still achieved a trade surplus of $1.72 billion. IT exports constitute the largest proportion among all services sector exports, accounting for 35.1% of the total.

International Markets and Growth:

The United States remains the largest market for Pakistan’s IT and ITeS exports, followed by the UK, UAE, Ireland, and Singapore. Over the past five years, the IT and ITeS industry has experienced remarkable growth, with a compound annual growth rate of 30% and a significant increase of 178% in exports.

Freelancers and Foreign Exchange Earnings:

Furthermore Pakistani freelancers have made significant contributions to foreign exchange earnings, with remittances totaling $269.8 million during July-March FY2023. Moreover, this includes $156.9 million from the IT sector and $112.9 million from non-IT sectors.

Conclusion:

Finally, the addition of the IT and telecommunication sector in Pakistan’s Economic Survey 2022-23 reflects the government’s recognition of its significance and potential for economic growth. The country’s high rankings in global outsourcing and the thriving IT ecosystem highlight the opportunities and successes within the industry. With continued support and investment, Pakistan’s IT sector is poised to make further strides, driving innovation, creating employment opportunities, and contributing to the country’s economic development.