Pakistan records $348m in IT exports in Dec '24 despite internet slowdown

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Pakistan's IT sector has recorded its highest-ever monthly exports of $348 million in December 2024, marking a 15% year-on-year and 12% month-on-month growth.

This brings the total IT exports for the first half of fiscal year 2025 to $1.86 billion, a 28% increase compared to the same period last year, according to Topline Securities.

However, the growth comes amid growing concerns over slowing internet speeds and government crackdowns on VPN usage. Since last year, the federal government has been rolling out a nationwide firewall aimed at blocking harmful content and preventing cyberattacks.

This has raised alarm among businesses and IT associations, especially as the government also cracked down on unregistered VPNs, which are widely used by businesses and freelancers. A deadline to register VPNs was set for November 2024 but later withdrawn, with no new date confirmed.

The rise in IT exports is attributed to several factors, including the expansion of Pakistani IT companies' client bases globally, particularly in the GCC region, and a relaxation in the permissible retention limit for foreign currency accounts, which has encouraged IT exporters to bring higher profits back to Pakistan.

The State Bank of Pakistan has also introduced a new category, allowing IT companies to make equity investments abroad with up to 50% of proceeds from these accounts, further boosting confidence.

Despite these positive figures, there are concerns about the long-term impact of internet disruptions as the Pakistan Business Council (PBC) recently warned that slow internet speeds and the national firewall’s implementation could lead multinational companies to relocate, with some already having moved their operations.

The Pakistan Software Houses Association (P@SHA) also highlighted the risk of financial losses, with estimates suggesting that operational costs for the IT sector could rise by $150 million annually due to these issues.

Nevertheless, experts predict continued growth for the IT sector, with expectations of a 10-15% increase in exports for FY25, targeting a total of $3.5 to $3.7 billion.

The government’s economic plan, ‘Uraan Pakistan,’ sets an ambitious goal of $10 billion in IT exports by FY29, requiring a compound annual growth rate (CAGR) of 28%.