Pakistan’s IT Exports Increase Marginally in August

Pakistan’s Information Technology (IT) exports for August 2023 increased by 3 percent on a year-on-year (YoY) basis to $235 million due to an 11 percent YoY increase in Telecom and a 1 percent YoY increase in Computer Services.

The exports for August 2023 are up by 10 percent on a month-on-month (MoM) basis. Segment-wise, Telecom and Computer Services increased by 12 percent and 9 percent MoM, respectively.

According to a report by Topline Securities, August 2023 IT export inflows are better than the last 12-month average of $218 million.

IT exports in August 2023 improved on a MoM basis, mainly due to a higher number of working days compared to July 2023. Higher clearing days impacted the realization of proceeds. That said, IT export proceeds realization per day remained flat MoM in August 2023.

Among Computer Services, Hardware and Software Consultancy exports were up 21 percent and 18 percent MoM respectively in August 2023. Services Exports (Excluding IT) of Pakistan have also increased by 14 percent MoM due to the reason cited above.

The reported IT export number indicates the amount remitted back to Pakistan by technology companies. According to our channel checks, IT companies are retaining a greater portion of their proceeds outside the country due to declining business confidence and volatility of the exchange rate.

According to the IT Minister, IT companies are holding around $1-2 billion outside Pakistan. In 2MFY24, IT exports have increased by 5 percent YoY to clock in at $449 million.

Improvement in IT exports mainly reflects the global increase in IT spending. As per Gartner Inc. (Technology Research and Consulting firm) worldwide IT spending is projected to $4.7 trillion in 2023, an increase of 4.3 percent from 2022.

Net IT Exports (Exports-Imports) for August 2023 increased by 7 percent MoM and by 3 percent YoY to $204 million. In 2MFY24 net exports have increased by 4 percent YoY to $394 million compared to an increase of 5 percent YoY in overall IT exports number.

Net IT Exports on a TTM basis as of August 2023 also have grown by 13 percent YoY to $2.3 billion. Going forward, software and IT services spending is expected to increase by 13.7 percent and 8.8 percent respectively in 2023, according to Gartner research.

As per Gartner, the software segment will see double-digit growth in 2023 as organizations increase utilization and reallocate spending to core applications and platforms that support efficiency gains, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) applications. Vendor price increases will also continue to bolster software spending through this year.

This presents an opportunity for companies such as Systems Limited (SYS). The company currently trades at a 2023 PE of 13.1x and PS of 2.6x.

In 2MFY24, gross IT exports as a percentage of total exports increased by 7.9 percent compared to 7.0 percent in 2MFY23.

Segment-wise breakdown for the month of August 2023 indicates that Telecom Services increased by 12 percent MoM and by 11 percent YoY to $46 million and Computer Services increased by 9 percent MoM and by 1 percent YoY to $189 million.

The total share of Telecom/Computer Services exports for August 2023 stood at 20 percent / 80 percent respectively compared to 18 percent / 82 percent share in August 2022.

In 2MFY24 Telecom/Computer share of exports stood at 19 percent / 81 percent similar to witnessed same period last year.

  • This is an utter shamelessness of IT ministry with zero support and contributions they are evaluating the export on the basis of hunch. Not even a single freelancer neither IT firm share data with them because every one knows about their incompetence.

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