The 4th Industrial revolution that is occurring presently is quantifiable. The actual size of the global digital economy in 2016 was 15.5% of the nation ’s GDP. The first third, or $3.8 trillion, is made up of base digital assets, and the remaining $7.5 trillion is made up of digital spillover effects. Thus, Pakistan’s IT sector is crucial in revolutionizing its economy
Overview of IT sector
Information technology has acquired a crucial role in the evolving dynamics of knowledge economy. Pakistan’s Information Technology (IT) sector is establishing itself as a distinct source for software development, BPO, and freelancing.
Pakistan was ranked fourth in the world for freelancing development, and IT exports surged by 70% in the last three years. Pakistan’s digital growth is growing at a fast pace. Technology exports were the highest of all time, totaling $1.067 billion in fiscal year 2017-18, up from $939 million in the prior year. According to the State Bank of Pakistan, Pakistan’s software exports are reportedly worth $700 million. Furthermore, in comparison to FY2020-21, Pakistani freelancers made $396.243 million in export earnings which resulted in an increase of $363.064 million in IT-related exports. According to Pakistan Vision 2025 and the Digital Policy of Pakistan 2018, the size of the ICT industry is expected to reach $20 billion by 2025.
Most significantly, Pakistan’s security situation has improved. Companies like Careem, Daraz, Zameen.com, and Rozee.pk are attracting investment into Pakistan, as seen by AliBaba’s recent acquisition of Daraz and Easypaisa. Conventional investors from Pakistan’s other industries, such as textile and fertilizers production, are also showing a particular interest in the startup environment. In the conventional IT trading sector, other South Asian countries are becoming more and more expensive, making it difficult for these nations to compete in technological fields like artificial intelligence, the internet of things, cyber security, automation, etc.
Ecosystem of Pakistan IT Industry
The IT sector in Pakistan is a dynamic ecosystem made up of businesses, experts, academics, and policymakers. Comparing Pakistan to Europe or North America, IT resources are accessible at a savings of about 70% per year. Pakistani IT firms are skilled in a range of IT services, including the creation of high-end, enterprise-grade software, systems integration, mobile apps, gaming, animation, consultancy, and BPO services including telemarketing, technical support, medical transcription, and invoicing. During the past five years, Pakistan’s exports of information technology have increased by 137%. Many multinational corporations have developed global consulting services centers, research & development facilities, and BPO support services institutes in Pakistan, including Global Enterprises like Bentley®, Ciklum®, IBM®, Mentor Graphics®, S&P Global®, Symantec®, Teradata®, and VMware®. There are several opportunities in Pakistan’s IT & ITeS sector. The expansion of Pakistan’s IT industry offers prospects for both domestic and local investors, including company mergers and acquisitions, IT startups, venture capital funds, IT parks, software development and research labs, technology incubators, gaming and animation studios, and data centers and BPO. Pakistan’s IT sector has a bright future, is packed with talent, and has the capability to become the state’s largest export business.
Reasons to Invest
Many factors make investing in Pakistan’s IT sector advantageous for a brighter future;
- Expanding Industry: Pakistan’s IT sector is quickly expanding and has done consistent development over the last decade. The Pakistan Software Export Board reports that the IT sector’s export income has grown by 20% on average yearly.
- Ample Talent Pool: Pakistan has a significant talent pool because to its youth and its many graduates in technological subjects like computer science, engineering, and mathematics. This offers the IT sector an intellectual capital, which may spur progress and creativity.
- Favorable Government Policies: The Pakistani government has implemented a number of incentives to encourage IT investments, including decreased telecommunications costs, tax breaks for IT exports, and greater investment in R&D projects.
- Cost-Effective: Pakistan has a workforce that is economical, which may help IT businesses lower their overall operating costs which might potentially boost revenues while assisting businesses in maintaining their competitiveness on the worldwide market.
- Strategic Location: Pakistan is located in a key area that may serve as a gateway to the Middle East, Central Asia, and South Asian markets. This might be advantageous for IT firms who seek to expand their presence in certain locations.
Challenges faced by IT Industry
Despite being one of the top outsourcing locations, Pakistan’s IT industry still faces numerous difficulties that hindered its development and keep it from reaching its full potential.
Low Quality of Internet: Due to the introduction of 3G and 4G networks in Pakistan during the last ten years, broadband penetration has increased significantly. Despite this, a major portion of the population is still without access to high-quality internet services.
Insufficient Funding: Another key issue for Pakistan’s IT industry is the lack of finance for new technological ventures and innovative ideas. The venture capital industry in Pakistan is still in its developing stages, and there is a lack of institutional investment and assistance for entrepreneurs.
A Significant Education Gap: The abilities of recent IT graduates fall well short of what is needed by the sector. Pakistan’s educational program and ICT educational capabilities fall short of international norms. The IT sector requires graduates with the latest capabilities that are demanded by multinational clients, yet graduates are still being taught using outdated curriculum and technology. In order to generate graduates who are more capable and skilled, all colleges should include current technologies into their curricula.
Political Instability: Pakistan’s political unrest has an impact on the expansion and development of the IT sector. Companies find it challenging to plan long-term investments and plans due to the frequent changes in government laws and regulations.
Lack of Legal Framework for E-Commerce: E-commerce plays a significant role in every nation’s IT sector, and in some, it serves as the industry’s mainstay. We need a suitable legislative framework in Pakistan to encourage e-commerce and e-payment systems. A legislative framework has to be created in to avoid online fraud and foster confidence between online merchants and customers, which will progress e-commerce in Pakistan.
Conclusion
To conclusion, the IT industry is critical to the economic transformation of Pakistan. Pakistan is quickly becoming a desirable place for outsourcing and software development, thanks to its fast increasing IT industry. The country’s government regulations, low-cost labor, strategic position, and abundant talent pool make it an appealing site for IT investment. The growth of Pakistan’s IT industry offers several prospects to both domestic and foreign investors. Nonetheless, difficulties like as poor internet quality, limited finance for new enterprises, and a skills deficit continue to be impediments for the business. Nevertheless, Pakistan’s IT sector has a promising future and has the potential to become the country’s largest export enterprise.
