Pakistan’s information technology (IT) and IT-enabled services (ITeS) sector saw significant growth in export remittances, recording a 33.7% increase in the first quarter of the current fiscal year (July-September), according to official data.
The remittances reached $876 million, up from $655 million during the same period last year, driven by computer services and call center exports. IT exports saw a remarkable year-on-year (YoY) growth of 41.7% in September 2024, standing at $292 million compared to $206 million in September 2023, according to official data.
However, on a month-on-month (MoM) basis, IT remittances slightly declined by 2.1%, dropping from $298 million in August 2024 to $292 million in September.
IT exports remittances reach all-time high of $3.223 billion in FY2023-24
The IT sector also reached an all-time high of $3.223 billion in export remittances during the fiscal year 2023-24, marking a 24% growth compared to $2.596 billion in the previous fiscal year. Industry experts predict that the sector will continue its upward trajectory, with an estimated growth of 10-15% in fiscal year 2025, potentially reaching $3.5 to $3.7 billion.
Minister of State for IT and Telecommunication, Shaza Fatima Khawaja, commented on the sector’s robust performance.
“The remittances from ICT services exports amounted to $292 million in September 2024, a 41.7% increase from $206 million in September 2023,” she said.
Khawaja also emphasized that steps are being taken to further boost IT exports, particularly through initiatives aimed at improving the ease of doing business.
She further noted that under the guidance of the prime minister and with the support of the Special Investment Facilitation Council (SIFC), the Ministry of IT and Telecommunication, alongside the Pakistan Software Export Board and the IT industry, is dedicated to increasing export figures.
IT sector achieves trade surplus amid broader deficit
The IT and ITeS industry achieved a trade surplus of $764 million during the first quarter of FY 2024-25, which constitutes 87.21% of total ICT export remittances, a 36.67% rise from $559 million during the same period last year. In contrast, the overall services sector faced a trade deficit of $699 million.
ICT exports, totaling $656 million between July and September 2024, outperformed all other services sectors, with “other business services” coming in second at $374 million.
Telecom experts attribute the YoY jump in IT exports to several factors, including the expansion of IT companies’ client bases, particularly in the Gulf Cooperation Council (GCC) region, and favorable policies such as the State Bank of Pakistan’s relaxation in the permissible retention limit, which increased from 35% to 50%. Additionally, stability in the Pakistani rupee (PKR) has encouraged IT exporters to bring a larger portion of their profits back to the country.
A significant development in July 2024 was the introduction of the Equity Investment Abroad (EIA) category by the State Bank, specifically designed for export-oriented IT companies. This allows IT exporters to acquire interest (shareholding) in foreign entities using up to 50% of their proceeds from specialized foreign currency accounts. Experts believe this move will further enhance confidence among IT exporters and drive even higher remittances back to Pakistan.