IT boom, AI fears

Pakistan's technology sector is enjoying an impressive moment. IT and IT-enabled services exports have reportedly reached $4.6 billion, reflecting the country's growing ability to earn from the digital economy. The opportunity is particularly significant because the global technology industry is entering another period of transformation. AI is changing how businesses operate and what they demand from workers.

Yet beneath these encouraging figures lies a contradiction that policymakers might be ignoring. While Pakistan is producing more technology-related revenue, the traditional entry points into the technology workforce are increasingly under threat from AI which is rapidly changing the nature of work, particularly at the lower end of the technology sector. For a country whose digital economy has relied heavily on outsourcing and relatively inexpensive human labour, this presents both an opportunity and a warning. Greater automation could allow Pakistani firms to become more productive, but it could also reduce the very jobs through which young workers traditionally enter the industry.

However, Pakistan's deeper problem is the quality and structure of its human capital. An economy cannot leap into high-value technology while its education system struggles to provide strong foundations in critical thinking and problem-solving. Nor can technological ambitions be separated from persistent weaknesses in necessary civic services like electricity and internet connectivity. Pakistan therefore needs to rethink what it means to be a technology economy. Competing primarily on the basis of cheap labour will become increasingly difficult as automation improves. The objective must instead be to build capabilities that allow Pakistani businesses and workers to participate in higher-value segments of the global digital economy.

The AI revolution may ultimately create more opportunities than it destroys. But that outcome is not guaranteed. If Pakistan fails to reform its education system and economic infrastructure, AI could deepen unemployment and inequality rather than deliver a digital dividend.