IT exports surge 42% as firms expand client base

Increase in retention limit for forex accounts, stable rupee support export growth

KARACHI:

Pakistan's information technology exports maintained their growth as they fetched $292 million in September 2024, up 42% from the same month of last year and higher than the last 12-month average of $280 million.

It is the 12th consecutive month of year-on-year (YoY) growth in IT exports, beginning October 2023.

According to the State Bank of Pakistan (SBP), IT exports for the first quarter (July-September) of the current fiscal year grew 34% from the same period of last year, to stand at $877 million.

The growth came in the backdrop of a widening client base of exporters globally, especially in the Gulf Cooperation Council (GCC) region, relaxation in the permissible retention limit from 35% to 50% in the Exporters' Specialised Foreign Currency Accounts and stability of the Pakistani rupee, which was an encouragement for IT exporters to bring back a higher proportion of their profits to Pakistan.

According to a survey of the Pakistan Software Houses Association (P@SHA), 62% of IT companies are maintaining specialised foreign currency accounts.

Local IT companies are active in engaging with global clients as recently leading firms attended the London Tech Week 2024, Collision Canada 2024 and Black Hat, USA.

A major development in financial year 2024-25 was the SBP adding a new category of Equity Investment Abroad, specifically for export-oriented IT companies.

IT exporters can now acquire interest (shareholding) in entities overseas by utilising up to 50% proceeds from their specialised foreign currency accounts. This will further boost the confidence of IT exporters and prompt them to remit proceeds to Pakistan.

IT exporter Dr Noman Ahmad Said called the growth in IT exports tremendous considering the challenges of slow internet in Pakistan, which continued to hurt the productivity of IT companies. Yet, these companies managed to make extra efforts to fetch foreign exchange for the country.

Monthly IT exports should go up to $300-350 million in the coming months to achieve real growth on the back of efforts put in by the government and IT companies in the last few months, he said.

According to Said, IT companies are optimistic about expanding their businesses in collaboration with foreign and local firms in traditional and non-traditional markets.

Net IT exports (exports minus imports) reached $255 million, an increase of 56% YoY in September 2024. This number is also higher than the last 12-month average of $245 million.

Saad Shah, another IT exporter, said IT firms should also explore established and emerging markets of the GCC and the Association of Southeast Asian Nations (Asean) rather than sticking only to the North American region.

It will help diversify their export markets in different regions that could result in attracting an increasing number of clients.

In this regard, IT companies should enhance their penetration and then offer multiple services to their clients, including financial services and enterprise solutions, automation and AI adoption through joint ventures and collaborations. Once IT companies stabilise their foothold, export receipts would augment gradually, he added.

It is estimated that the IT sector will continue its growth trajectory and momentum with likely increase of 10-15% in financial year 2024-25 to a total of $3.5-3.7 billion.

In a statement issued on Monday, Minister of State for Information Technology and Telecommunication Shaza Fatima Khawaja remarked that Pakistan's IT exports were increasing owing to initiatives for the ease of doing business, adding that steps were underway for giving a further boost to IT exports.