“I took a huge risk and used the savings I had set aside for my daughter’s university fees to start my business,” says Dr. Saira Sadiq, reflecting on her bold decision to venture into the IT sector after the COVID-19 pandemic. Initially, she had a small team of just four people, but today, her business employs over 100 individuals in Pakistan and has expanded to the Middle East.
According to a report from the Ministry of IT last year, Pakistan has grown at an annual rate of approximately 26% over the past seven years, coinciding with the expansion of Dr. Saira’s business. The Ministry of IT recently announced a remarkable 62.3% increase in IT exports in April this year compared to the same period last year.
Economic Bright Spot
Amid a struggling national economy, rumors of new taxes in the upcoming budget, and headlines dominated by fiscal deficits, the growth in IT exports is a welcome development. Data shared by the Ministry of IT with the BBC indicates that the fiscal year 2023-24 has seen an increase in IT exports compared to the past two years (from July to April).
What accounts for this recent growth? And is Pakistan’s IT sector performing up to its potential? To answer these questions, we spoke with several individuals involved in this industry.
Policy Consistency and Strategic Initiatives
In July last year, Prime Minister Shehbaz Sharif established the Special Investment Facilitation Council (SIFC) through Parliament. This civil-military body was initially aimed at attracting foreign investment, but over time, its objectives expanded to include bringing reforms in various sectors, overseeing administrative matters, formulating policies, and enhancing coordination among departments.
The IT sector is one of the five key areas that SIFC has focused on. According to Shaza Fatima, Minister of State for IT, one significant reason for the increase in exports is policy continuity. She further elaborated that SIFC has not only ensured policy consistency but also improved the decision-making process by incorporating input from military leadership and the chief ministers of all provinces, among other stakeholders.
Addressing the challenges faced by companies exporting IT services, Shaza Fatima mentioned that these companies were previously allowed to retain only 35% of their earnings in foreign currency accounts. She believes that increasing this limit to 50% in October 2023 was a positive step that contributed to the rise in exports.
Industry Insights
Zohaib Khan, Chairman of the Pakistan Software Houses Association (P@SHA), attributes the recent increase in IT exports to consistent policies. He emphasized that the industry received a clear message that policies would remain stable regardless of changes in government. He also credited SIFC for playing a crucial role in this growth, acknowledging the contributions of various government departments and individuals involved in the council.
On the other hand, Aamir Wyne, founder and CEO of the multinational digital payment and banking company I2C, believes that while the government has not introduced any negative policies for the IT sector, the increase in exports is not due to any structured policy but rather a natural progression within the industry.
Conclusion
The growth in Pakistan’s IT exports is a testament to the resilience and potential of the sector amidst broader economic challenges. Initiatives like SIFC and policy consistency have played significant roles in this development. However, opinions differ on whether this growth is driven by strategic government policies or the inherent capabilities and evolution of the industry itself.
Regardless of the cause, the increase in IT exports brings hope and highlights the importance of fostering a supportive environment for the IT sector. This progress not only contributes to the national economy but also positions Pakistan as a competitive player in the global IT market. As stakeholders continue to navigate and shape the future of this sector, maintaining a balance between strategic policies and leveraging the industry’s natural growth will be key to sustaining this upward trajectory.