Pakistan’s Information Technology (IT) industry has been growing steadily for months, allowing its exports to reach $1.5 billion for the first time. Aside from that, another milestone was set in March, when the country received $213 million in export remittances.
According to data released by the State Bank of Pakistan, export receipts through IT and IT-enabled services reached an impressive $1.512 billion in the first nine months of the current fiscal year 2020-21, compared to $1.053 billion in the same period last year. This was up $459 million, or 43 percent, from the previous year.
The key drivers of the exceptional growth were software consulting, BPO, e-commerce, and telecommunication services. Another aspect was the introduction of COVID-19, which increased businesses’ dependence on technology.
The pandemic has hit major IT export competitors, especially India, in the last year and a half, causing many clients to move their projects to Pakistan’s far more reliable IT companies. IT companies have now won long-term and sustainable ventures to increase export receipts due to strong demand in IT markets such as the United States, the United Kingdom, the European Union, and the Middle East.
Pakistan earned an average of $504 million in IT and IT-enabled services. IT exports are expected to reach $2 billion in the final three months of the current fiscal year. According to Barkan Saeed, Chairman of Pakistan Software Houses Association for IT and ITes ([email protected]), the IT industry’s success has been excellent, but it has yet to reach its full potential. He went on to say that if comprehensive growth strategies are formulated and implemented by major stakeholders such as tech companies, the government, and concerned authorities, IT exports could reach $2 billion to $3.5 billion in the next fiscal year.
“Given the situation in competing markets due to the Covid-19 pandemic, it is anticipated that Pakistani tech houses will win more IT projects from foreign companies in the coming months,” he said. “Not only can IT businesses increase their service exports, but they can also employ skilled workers.”
The exemption for the IT sector expired in March, well ahead of the 2025 deadline. The abrupt removal of the exemption has caused concern in the IT sector, as well as disappointment among many foreign investors who appeared to be committed to projects in the country due to the company’s tax break.
The IT industry’s players have pledged to pay taxes to the government, but they are worried about the tax department’s unethical activities, such as bribery and bogus threats to business owners.
Furthermore, recent intelligence agency raids on IT companies have failed to build a favourable climate for other tech companies, which are now considering moving their offices abroad.
Revenue experts, on the other hand, argue that healthy IT balance sheets can contribute to the national exchequer in the form of taxes, particularly when the industry is at its peak. The industry has also been accused of being involved in scams, which, if left unchecked, may damage the country’s picture.
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