About 42.4 percent of freelancers in Pakistan are in software development, making up about 10.5 percent of the global freelancers in software development. This is much higher than in Bangladesh, Nepal, and Sri Lanka, but is lower than in India, according to the World Bank.
In its latest report ‘At Your Service? The Promise of Services-Led Development’, the bank stated that the Pakistan Software Export Board has currently registered 4,641 IT firms and 4,066 call centers. The industry is primarily spread across three major cities — Karachi, Lahore, and Islamabad, and employs more than 300,000 IT professionals.
A survey of 300 IT firms by the National ICT R&D Fund (currently known as ‘Ignite’) under the Ministry of Information Technology and Telecommunication revealed that 14 percent of the firms had 50 or more employees, 17 percent had between 25 and 50 employees, and the rest had fewer than 25 employees.
The sector comprises mostly domestically owned firms with limited foreign operations. At least 13 percent of the surveyed firms were foreign, and only one of the top 10 exporters is foreign. However, Pakistan’s multinational IT presence includes IBM, Oracle, and Cisco, among others.
The report mentioned that about 53.8 percent of the industry’s revenue comes from the export market, according to the country’s largest private-sector association for the IT industry, Pakistan Software Houses Association for IT and ITeS.
The report also highlighted that Pakistan’s ICT services exports have grown by a compound average growth rate of 10.8 percent per year, increasing from $433 million in the fiscal year 2009-10 to more than $1 billion in 2018-19 when 52 percent of the telecommunications, computer and information services exports went to the United States, followed by 8.8 percent to the United Arab Emirates, and seven percent to the United Kingdom.
The share of computer-related services within these ICT services exports increased from 44 percent to 73 percent between 2009-10 and 2018-19, with average annual growth of 17.3 percent. The report further detailed that within the computer-related services, exports are concentrated in low- to medium-value-added software services that include enterprise planning, application development, and integration. There is also limited activity in product development.
Furthermore, low-value-added services, such as call centers, lead the BPO segment, accounting for 90 percent of the export revenue in this segment. A small number of firms supply offshore services in higher-value-added segments like banking, finance, insurance, and health care.
Still, while only accounting for less than 1 percent of world exports in computer-related services, there is ample room for Pakistan’s exports in this subsector to grow. However, official statistics do not capture the full extent of Pakistan’s export success. Industry experts believe that approximately $1.5 billion worth of exports is not reported — $1 billion by small and medium enterprises (SMEs) and $0.5 billion by online freelancers.
Additionally, Pakistan now has the third-largest number of freelancers among the IT and IT-enabled services in the world, right after India and Bangladesh.
