Despite facing various challenges, Pakistan’s Information Technology (IT) exports for August 2023 have shown a significant increase of 10% on a month-on-month (MoM) basis, totaling $235 million. This boost can be attributed mainly to a higher number of working days compared to July 2023.
Dr. Umar Saif, the Federal Minister for Information Technology & Telecommunication, has set ambitious goals to elevate ICT exports from $2.62 billion to a staggering $10-20 billion. However, Pakistan’s IT exports have not experienced substantial growth in recent years due to foreign exchange constraints, high taxes, and other economic uncertainties.
Foreign exchange constraints have led to the closure of factories, including smartphone assembly plants. Additionally, the government’s practice of charging fees in dollars for spectrum allocation to IT companies has raised concerns.
High taxes continue to burden IT companies, limiting their growth potential. The IT sector experts emphasize the need for significant investment, achievable only through sustainable policies and the resolution of existing issues, particularly high taxation.
Segment-wise, telecom and computer services exports increased by 12% and 9% MoM, respectively. August 2023’s IT export figures exceeded the 12-month average of $218 million, primarily due to a higher number of working days.
Among computer services, hardware and software consultancy exports saw remarkable growth, with a 21% and 18% MoM increase, respectively, in August 2023. Services exports (excluding IT) also increased by 14% MoM.
On a year-on-year (YoY) basis, IT exports for August 2023 increased by 3% to $235 million, driven by an 11% YoY increase in telecom and a 1% YoY increase in computer services. Many IT companies retain a significant portion of their proceeds outside Pakistan due to declining business confidence and exchange rate volatility, amounting to around $1-2 billion, according to the IT minister.
In the first two months of FY24, IT exports increased by 5% YoY to reach $449 million, reflecting global growth in IT spending. Software and IT services spending are expected to increase significantly in 2023, driven by increased utilization and vendor price increases.