IT sector suffers $1 million loss per hour due to internet shutdowns, says P@SHA

Pakistan’s information technology sector is incurring losses of over one million dollars per hour due to frequent internet shutdowns, according to Sajjad Mustafa Syed, chairman of the Pakistan Software Houses Association (P@SHA). 

Speaking to media persons, Syed emphasized that achieving the government’s target of $15 billion in IT exports depends on improving market access, infrastructure stability, taxation policies, and the availability of skilled human resources.

Syed explained that for every dollar the government invests in market access, a return of $49 is generated, based on trends over the past three years. He noted that the IT sector has seen a 40% growth in exports, which now stand at $3.2 billion. Of this, 55% is directed to the United States, while 20% goes to Europe. 

However, he stressed the need for the government to focus on branding to fully realize the sector’s potential.

Addressing the impact of internet shutdowns, Syed stated that 99% of IT firms reported disruptions to their services, with 90% experiencing financial losses. He highlighted the example of a call center that incurred a $2 million penalty due to a recent internet shutdown.

On the issue of Virtual Private Networks (VPNs), Syed warned that free VPN services pose data security risks and recommended a more secure, industry-friendly model. He pointed out that under the Prevention of Electronic Crimes Act (PECA), VPNs cannot be blocked as they are tools, not content.

Syed also pointed out that the IT sector is taxed on its revenue, which he said impedes growth. He called for tax incentives to stimulate the sector, attract remittances, and increase investment. He added that while the barriers to entering the IT sector are low, the exit barriers are equally minimal, urging the government to avoid policies that could drive companies to relocate and instead create a more favorable environment to attract investment.

He lamented that the IT sector is not officially recognized as an industry, resulting in higher input costs due to tariffs and related expenses. 

Syed also discussed the role of P@SHA in policy harmonization, stressing that the sector must not operate in isolation. He acknowledged that while around 35,000 IT graduates are produced annually, only 5,000 to 6,000 are able to find employment in the sector due to a mismatch between their qualifications and industry requirements. 

Syed revealed that the government is planning an Rs8 billion project aimed at developing skills, which he believes will yield positive results for the industry.