IT exports hit record $348m in Dec'24

Despite connectivity challenges, IT sector achieves 15th consecutive month of growth, with exports up 15% YoY

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KARACHI:

The IT sector recorded its highest-ever monthly exports, despite frequent internet disruptions and persistently low connectivity.

Dedicated IT firms and freelancers have played an important role in driving the continuous growth of tech exports.

Pakistan achieved record monthly IT exports of $348 million in December 2024, marking a 15% year-on-year (YoY) increase and a 12% rise month-on-month. These exports also surpassed the 12-month average of $299 million. December 2024 marked the 15th consecutive month of YoY IT export growth, starting from October 2023. Cumulatively, the first half of FY2024-25 (1HFY25) IT exports reached $1.86 billion, up by 28% YoY.

According to Nasheed Malik, an official of Topline Research, the YoY jump in IT exports can be attributed to several factors, including the global expansion of Pakistani IT companies' client base, particularly in the GCC region. Other key contributors include the relaxation of the permissible retention limit by the State Bank of Pakistan (SBP) - increasing it from 35% to 50% in Exporters' Specialised Foreign Currency Accounts - as well as the introduction of equity investment abroad through these foreign currency accounts and the stabilisation of the local currency, which encouraged exporters to repatriate a larger share of their profits.

Pakistani IT companies have actively engaged with global clients through events like the Oslo Innovation Week 2024 and the Pak-US Tech Investment Conference.

A survey by the Pakistan Software Houses Association (P@SHA) found that 62% of IT companies maintain specialised foreign currency accounts. A significant development in FY25 was the SBP's introduction of a new category, Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire equity stakes in foreign entities using up to 50% of proceeds from their specialised foreign currency accounts. This move has further bolstered exporters' confidence in repatriating proceeds to Pakistan.

Despite these advancements, IT exports remain far below their potential due to widespread issues of interrupted and slow internet connectivity, which cost millions of dollars in lost revenue, according to experts and analysts.

Senior IT and Telecom Sector Analyst Muhammad Yasir predicted that IT exports might settle between $3.6 billion and $4 billion by the end of FY2024-25. However, he added that Pakistan could easily surpass the $4 billion mark due to the increasing contributions of IT companies and freelancers.

He recalled that IT exporters worked tirelessly to manage their operations to deliver projects on time to foreign clients gained through global events like GITEX and Singapore Tech Week. Pakistani IT firms are also pursuing aggressive strategies to explore business opportunities in non-traditional markets, particularly the GCC, in addition to their traditional markets, contributing to export growth, he said.

Yasir urged the government to address internet connectivity issues faced by IT companies and freelancers promptly. Enhancing IT sector growth is critical to the national economy, including stabilising Pakistan's current account.