KARACHI: Pakistan’s information technology sector is emerging as one of the fastest-growing segments of the country’s economy, with exports on track to approach the $5 billion mark amid record monthly earnings and sustained double-digit growth.
According to data released by the State Bank of Pakistan (SBP), IT and IT-enabled services exports reached an unprecedented $437 million in December 2025 – the first time monthly receipts have crossed the $400 million threshold.
The figure represents an increase of approximately 23% month-on-month and about 26% year-on-year, underscoring accelerating global demand for Pakistani digital services and the sector’s rising competitiveness.
Sustained upward trend
The December performance caps a strong first half of fiscal year 2025-26 (July–December), during which cumulative IT exports reached $2.24 billion, compared to $1.87 billion in the same period a year earlier — an increase of roughly 20%.
The steady rise suggests the growth is not a one-off spike but part of a broader structural transformation. Analysts tracking SBP data estimate that maintaining monthly exports in the $400–450 million range would place Pakistan within reach of the widely discussed $5 billion annual export target for FY2025-26.
If growth of 18–20% continues through June 2026, total IT exports could reach between $4.5 billion and $5 billion for the fiscal year.
A decade ago, Pakistan’s annual IT exports hovered near $2 billion with limited diversification. By FY2024-25, exports had climbed to $3.8 billion, marking 18% year-on-year growth despite global economic uncertainty.
The rapid succession of new monthly highs — from $342 million in March 2025 to $386 million in October and $437 million in December – signals a decisive shift in the country’s export composition.
Policy reforms and global demand
Industry analysts attribute much of the expansion to regulatory reforms and supportive central bank policies.
One key measure has been the SBP’s decision to increase exporters’ retention limits in Exporters’ Specialised Foreign Currency Accounts (ESFCA) from 35% to 50%.
The move allows IT firms to retain a larger share of foreign exchange earnings, improving liquidity and enabling reinvestment without heavy reliance on domestic financing.
The introduction of the Equity Investment Abroad (EIA) framework has further empowered exporters to establish overseas subsidiaries and partnerships using retained foreign currency, strengthening access to international clients.
Global outsourcing trends have also worked in Pakistan’s favour. As companies worldwide seek cost-effective providers for software development, cybersecurity, cloud services, and digital transformation, Pakistan’s skilled workforce and competitive pricing have gained prominence.
Export destinations have diversified beyond North America and Europe to include Gulf Cooperation Council (GCC) countries, Southeast Asia, and parts of Africa, supported by participation in international technology exhibitions and trade forums.
Freelancers drive growth
Freelancers and small and medium-sized enterprises are playing a pivotal role. Industry estimates suggest freelance-driven inflows could reach between $800 million and $1 billion annually if current trends persist.
The formalisation of freelance earnings through banking channels — supported by digital payment solutions — has contributed significantly to rising export receipts.
IT exports now account for more than 40% of Pakistan’s total services exports, making the sector a vital stabiliser of the country’s external account. Unlike many merchandise exports, IT services rely less on imported inputs, resulting in a higher net foreign exchange contribution.
Economic impact and challenges
The sector employs hundreds of thousands of professionals directly and indirectly, generating high-value jobs aligned with Pakistan’s youthful demographic profile. Growth in IT services is also stimulating related industries, including telecommunications, fintech, education, and professional services.
Government planning documents outline longer-term ambitions to scale annual IT exports toward $10 billion within three to four years, contingent on sustained reforms and capacity building.
However, challenges remain. Reliable high-speed broadband outside major cities continues to limit geographic expansion. Skills development is another priority, particularly as global demand shifts toward advanced technologies such as artificial intelligence, machine learning, cybersecurity, and cloud computing.
Regulatory consistency and ease of doing business will be critical to sustaining momentum. Industry observers caution that predictable taxation policies and streamlined cross-border payment systems are essential to maintaining investor and exporter confidence.
Structural transformation
The record $437 million achieved in December 2025 represents more than a statistical milestone. It signals a gradual transformation of Pakistan’s economic model — from reliance on traditional, low-value exports toward a knowledge-based, services-driven growth strategy.
With $2.24 billion already earned in the first half of FY2025-26, the $5 billion annual target appears increasingly attainable.
If current growth rates are maintained and structural reforms continue, the IT sector could consolidate its role as a cornerstone of Pakistan’s long-term economic resilience and integration into the global digital economy.
