Abdullah Kamran
While Pakistan’s overall exports struggle with sluggish global demand, rising energy costs, and competitiveness challenges, the country’s IT and IT-enabled services sector is charting a strikingly different course. Emerging quietly yet steadily, this sector has become one of Pakistan’s most resilient and scalable sources of foreign exchange, offering a beacon of hope for the broader economy.
Data from November 2025 and the first five months of FY26 illustrate this divergence clearly. While traditional merchandise exports falter, IT exports continue to post record numbers. In November 2025 alone, Pakistan’s IT exports reached $356 million, representing a 14 percent year-on-year increase, even though they were slightly lower month-on-month compared to October. While monthly fluctuations are natural, November’s performance is significantly above the 12-month average of $337 million, indicating that the growth trend is sustainable rather than a short-term spike.
Daily export proceeds in November also rose to $17.8 million, up from $16.8 million in October, showing that invoicing and repatriation flows remain robust despite short-term volatility. Net IT exports, which account for imports, stood at $309 million—a 13 percent year-on-year increase—demonstrating that the sector is generating real foreign exchange inflows rather than just gross billing volumes.
Over the first five months of FY26, Pakistan’s IT exports totaled $1.8 billion, reflecting 19 percent year-on-year growth. At this pace, the sector is on an annualized trajectory of around $4.3 billion, comfortably above FY25’s $3.8 billion and approaching the government’s FY26 target of $5 billion. Market analysts, including Topline Securities, expect IT exports to grow 18–20 percent by the end of FY26, making it one of the fastest-growing segments of Pakistan’s economy.
This growth is not merely cyclical; it reflects deep structural changes in how Pakistan’s IT firms operate and repatriate earnings. Traditionally reliant on the US and Europe, many IT firms are now diversifying into the Gulf region, tapping new markets in Saudi Arabia, UAE, and Qatar. This expansion has created new revenue streams across fintech, e-commerce, logistics, health tech, and enterprise IT, strengthening the sector’s global footprint and long-term competitiveness.
Regulatory reforms have played a pivotal role in enabling this transformation. The State Bank of Pakistan increased the permissible retention limit in Exporters’ Specialized Foreign Currency Accounts from 35 percent to 50 percent, allowing IT exporters to hold a larger share of earnings offshore. This reform has reduced long-standing disincentives to formal remittances, as companies can now use retained funds to cover cloud services, overseas staff, marketing, and operational expenses while safely repatriating profits.
The introduction of the Equity Investment Abroad (EIA) scheme is another transformative measure. By allowing IT firms to use up to 50 percent of their foreign currency earnings to acquire equity in foreign companies—such as sales offices, R&D centers, or client-facing subsidiaries—Pakistani firms are no longer just offshore vendors. Instead, they are integrating into global corporate structures, enhancing their competitiveness, revenue stability, and long-term growth potential.
Stabilization of the exchange rate has further encouraged exporters to repatriate profits rather than holding funds abroad as a hedge, contributing to a more consistent inflow of foreign exchange. Coupled with structural reforms, this has positioned the IT sector as a reliable engine of economic growth, capable of offsetting weaknesses in traditional merchandise exports.
The government’s “Uraan Pakistan” initiative sets an ambitious target of $10 billion in IT exports by FY29, implying a compound annual growth rate of around 27 percent over the next three years. While challenging, recent trends suggest this target is achievable if regulatory and policy support continues, particularly in areas such as foreign currency retention, outward investment, and taxation. The sector’s momentum underscores the importance of maintaining a stable business environment and facilitating global market access for Pakistani IT firms.
In conclusion, Pakistan’s IT sector is not just a niche segment; it is becoming a cornerstone of the national economy. Its growth demonstrates that structural reforms, market diversification, and policy support can transform a sector into a sustainable source of foreign exchange, even amid broader economic challenges. At the end of the day, IT exports are also a subject under the Council of Common Interests (CCI). As per the Federal Legislative List II, their development and regulation fall within the CCI’s mandate, making the coordination between federal and provincial governments critical to ensuring that Pakistan’s IT revolution achieves its full potential.
