The Information Technology (IT) industry of Pakistan is experiencing sustained growth since months now enabling its exports to surpass $1.5 billion for the first time ever. Apart from this, another record was broken as the country received $213 million in export remittances in March alone.
As per the data released by the State Bank of Pakistan, the export receipts through IT and IT-enabled services during the first nine months of the current fiscal year 2020-21 stood at an impressive $1.512 billion compared to same receipts in the corresponding period last year which was $1.053 billion. This showed an increase of $459 million or 43% year-on-year.
Software consultancy, BPO, e-commerce and telecommunication services were the main drivers behind the exceptional growth witnessed. Another factor was the emergence of COVID-19 which increased the reliance of business on technology.
The last one and half year has seen the pandemic hit major IT export competitors, especially India, which has resulted in many clients shifting their projects on the much reliable IT companies in Pakistan. Due to high demand in IT markets such as USA, UK, EU, and the Middle East, IT companies have now received long term and sustainable projects to boost the export receipts.
On average, Pakistan received $504 million through IT and IT enabled services. With 3 months left in the current financial year, the IT exports are set to touch $2 billion. Barkan Saeed, Chairman Pakistan Software Houses Association for IT and ITes (P@SHA), said the performance of the IT industry has been impressive but still has not met its true potential. He clarified that IT exports should touch $2 billion to $3.5 billion in the next financial year if robust growth plans are developed and implemented by major stakeholders including software houses, the government and concerned authorities.
“Keeping in view the situation of the Covid-19 pandemic in competing markets, it is expected that Pakistan’s software houses will grab more IT projects from foreign companies in the coming months,” he said. “Not only can IT companies enhance their exports of services but they can also provide jobs to skilled workers.”
The exemption to the IT sector has expired in March, much earlier than the planned year of 2025. The sudden withdrawal of exemption has created uneasiness in the IT market which has also disappointed several foreign investors who looked to be committed to the projects in the country due to the tax holiday provided by the company.
The players in IT market have assured to pay taxes to the government, but are concerned about the immoral practices conducted by tax department in terms of bribery and bogus threats to the owners. Furthermore, the recent raids on IT houses by intelligence agencies has failed to create a conducive environment for other software houses which are now considering to move their offices abroad.
On the contrary, revenue experts say that the healthy balance sheets of IT companies should contribute to the national exchequer in shape of taxes, especially, when the industry is in its prime. The industry has also been criticized in being involved in scams which could result in deteriorating image of the country if left unchecked.