In the fiscal year 2023, the Pakistan IT sector, renowned for its potential, experienced sluggish growth, falling short of expectations. Recent reports indicate that Pakistan’s IT exports reached $2.6 billion, showing a 15% increase from the previous year.
However, the growth rate has slowed down to its lowest level since FY2016, with export inflows remaining flat compared to the previous year.
According to Nasheed Malik, an ICT analyst at Topline Securities, the growth rate of IT exports in FY2023 significantly lags behind the Compound Annual Growth Rates (CAGR) of the past 5, 10, and 15 years, which stood at 19.5%, 12.5%, and 16.3%, respectively.
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This slowdown is attributed to two key factors: tech companies retaining income abroad and the global economic slowdown impacting IT exports.
Experts in the field are expressing their concerns and offering suggestions to propel the IT sector forward.
Kapeel Kumar, an ICT expert, emphasized that Pakistan can improve its IT exports by attracting more foreign investment, developing skilled IT professionals, and promoting the IT sector to international buyers.
To address the issue of declining foreign investment in the IT sector, experts propose that the government should offer tax breaks and incentives.
Universities & Colleges Collaboration
Collaborating with universities and colleges to develop more IT training programs would help nurture skilled IT professionals for the industry.
Additionally, promoting the IT sector at international trade shows and conferences and facilitating connections between Pakistani IT companies and potential buyers through chambers of commerce and business organizations could enhance global visibility.
Experts believe that with the right policies and investments, the IT sector can become a major driver of economic growth in the country.
When comparing Pakistan’s IT exports with other Asian countries, Pakistan has been struggling to keep up. In the first nine months of FY23, IT exports in countries like Korea, Sri Lanka, Bangladesh, China, and the Philippines either experienced a YoY decline or modest growth compared to the strong growth they witnessed in FY22.
Notably, computer services’ share in IT exports has increased significantly from 40.4% in FY14 to 81.0% in FY23, indicating a potential area of growth for the industry.
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Looking ahead, Gartner Research predicts a global increase in software spending by 13.5% to 14.0% in 2023 and 2024. This projection bodes well for the IT sector, with Systems Limited (SYS) being highlighted as a top pick.