The exports of IT and IT-related services increased to $1.090 billion in the financial year 2018-19 as compared to $1.065 billion recorded in the financial year 2017-18, showing a modest growth of 2.44%, according to data released by the State Bank of Pakistan.
This is the third consecutive record of the IT industry for attaining an all-time high. The country also achieved the highest value of IT remittances during the financial year 2018-19. The value of IT exports is three times higher than the remittances reported by the central bank, which means the overall number crossed $3 billion in the financial year.
As for the sector’s composition, export revenues of 35% or nearly $355 million of the total 3,228 ICT exporting entities came from computer software, including software consultancy services. Whereas the rest had either limited or no product orientation, as they generated revenues only from low value-added services (e.g. call centers), according to a study of SBP.
According to the industry experts, the dominance of low value-added services is not favorable for the country on a sustainable basis, particularly from foreign exchange’s generation point of view.
The average receipts from software exports including software consultancy were more than double than the average receipts from other ICT exports. Therefore, it is not surprising to see that only 56 firms had exports of $2 million and above on an annual basis, as an overwhelming majority of firms could not even fetch US$ 0.1 million receipts during the financial year.
The majority of the IT-based exports are from the US market (60%). It is followed by European countries with a total of 38% share. And exports to the Middle Eastern countries stand at number three.
The breakup of IT industry Exports of Services and Products
|Heads of IT Exports||Financial Year 2017-18||Financial Year 2018-19|
|Call Center||$103.980 million||$107. 315 million|
|Telecommunication Services||$229.980 million||$186.355 million|
|Hardware Consultancy||$4.171 million||$2.366 million|
|Software Consultancy||$287.701 million||$355.945 million|
|Computer Repair/Maintenance||$1.761 million||$ 6.038 million|
|Export of Computer Software||$321.968 million||$277.512 million|
|News Agency Services||$1.023 million||$1.011 million|
|Information Services||$2.120 million||$2.380 million|
|Other Computer Services||$114.289 million||$152.179 million|
People from the industry say that the business of local IT companies is gradually growing as many foreign client visits to Pakistan are increasing due to the improved security conditions. Not only large corporations, but several startups are also attracting big investments.
Umair Nizam, Vice President, ITCN Asia said:
In addition to exports, Pakistan’s IT sector has immense potential to grow at a local level as well as attracting investment and clients from different countries. An impressive number of Pakistani IT companies are emerging over this decade, with the transformation of different technologies and sectors such as Cloud Computing, E-commerce, and Mobile Broadband. Technology has been even more prevalent with new areas of this sector, including cybersecurity, augmented reality, virtual reality, machine learning, Internet of Things.
According to the Pakistan Software Export Board, there are more than 3000 active IT/ITeS companies, which possess expertise in custom software development, enterprise resource planning (ERP), financial solutions, mobile content, document management, enterprise computing, and business process outsourcing (BPO).
|Financial Year||Exports Value||Yearly Growth|
|2018-19||$ 1091 million||2.4%|
|2017-18||$ 1063 million||13%|
|2016-17||$ 938 million||19%|
|2015-16||$ 788 million||-0.4%|
|2014-15||$ 821 million||0.60 %|
|2013-14||$ 816 million||1.70 %|
|2012-13||$ 802 million||74.4 %|
|2011-12||$ 460 million||3.87 %|
|2010-11||$ 443 million||-0.05 %|
|2009-10||$ 443 million||16.6 %|
Although the potential is immense, more needs to be done and there is an immediate requirement for local companies to increase their capacity through collaboration and integration to develop core strengths at a national level. This will not only attract clients from different countries but will also help them build a strong mark locally.
Events like ITCN Asia could prove to be a catalyst, there is a dire need for events that can steer intellectual discussions and help bring the entire ecosystem under one roof.
However, this cannot be done in isolation, as the identification of important stakeholders and active engagement is crucial for a change to happen. Ease of doing business should be encouraged so more creative minds can enter the field, and payment methods need to be diversified.