ISLAMABAD: Pakistan’s IT sector continues to demonstrate resilience and growth, with the country recording IT exports of US$286 million in July 2024. This figure marks a significant 34% year-on-year (YoY) increase, although it reflects a 4% month-on-month (MoM) decline. The July exports also surpassed the 12-month average of US$269 million, highlighting the sector’s upward trajectory.
As per Topline Pakistan Research, the substantial YoY growth in IT exports can be attributed to several key factors. Pakistani IT companies have expanded their global client base, particularly in the Gulf Cooperation Council (GCC) region. This expansion is coupled with a favorable regulatory environment, including the State Bank of Pakistan’s decision to raise the permissible retention limit in Exporters’ Specialized Foreign Currency Accounts from 35% to 50%. Additionally, the relative stability of the Pakistani Rupee (PKR) has encouraged IT exporters to repatriate a larger portion of their earnings back to Pakistan.
The sector’s global engagement is evident in the participation of leading Pakistani IT companies in prestigious events such as London Tech Week 2024 and Collision Canada 2024. These appearances were supported by the IT representative bodies and the Government of Pakistan, further strengthening the country’s presence on the international stage.
A survey conducted by the Pakistan Software Houses Association (P@SHA) revealed that 62% of IT companies are maintaining specialized foreign currency accounts, reflecting the growing importance of these accounts in the industry.
A major development in July 2024 was the introduction of a new category by the State Bank of Pakistan: Equity Investment Abroad (EIA). This category is specifically designed for export-oriented IT companies, allowing them to acquire equity in entities abroad without prior bank designation. The previous restriction of acquiring only one entity per jurisdiction has also been lifted, providing greater flexibility for Pakistani IT exporters.
Net IT exports (exports minus imports) for July 2024 stood at US$252 million, a 33% YoY increase. This figure is also above the 12-month average of US$236 million, further underscoring the sector’s robust performance.
Looking ahead, industry analysts predict that Pakistan’s IT sector will continue its growth momentum, with an anticipated increase of 10-15% for the fiscal year 2025, potentially reaching US$3.5-3.7 billion. Within the sector, Systems Limited (SYS) remains a top pick, trading at forward price-to-earnings (PE) ratios of 13x and 9x for 2024 and 2025, respectively.
