IT exports in 7MFY24

14 March 2024

Published in: Business Recorder

The IT sector has emerged as a key contributor to the country’s exports over the last few years. More recently, ICT or information and communications technology has been posting growth consecutively since October 2023 in its monthly exports. The IT exports for December 2023 were the highest ever monthly exports with a tally of $303 million. However, as per the latest data by the State Bank of Pakistan, the IT exports for January 2024 stood at $265 million, down by 13 percent month-on-month. Nonetheless, IT exports for Jan-24 surged by 39 percent on a year-on-year basis, and they were higher than the last 12-month average of $227 million. Overall, the IT exports for the first seven months of FY24 (7MFY24) stood at $1.7 billion, depicting a growth of 13 percent year-on-year.

Segment-wise, where the month-on-month decline was seen across all three key segments, the growth on a year-on-year basis was led by Telecommunication Services that had previously been witnessing a lull. The subsector exports posted a rise of 42 percent year-on-year. Computer Services, and primarily computer software and other services – the biggest contributor to IT exports also continued to show growth in exports. The segment witnessed a growth of 39 percent year-on-year during Jan-24.

Key factors for growth in Jan-24 and 7MFY24 IT exports as highlighted by market analysts and industry experts include the relatively stable currency and the relaxation in the permissible retention limit in the foreign currency accounts for the exporters’ Specialized Foreign Currency Accounts by the SBP from 35 percent to 50 percent. The market believes that the exports at the current rate could total between $3–4 billion for FY24 – higher than FY23 IT exports but certainly lower than the IT Ministry target of $5 billion.

The growth in the IT sector exports however hinges on multiple other factors as well. The Ministry of Information Technology and Telecommunications talks about issues like inconsistent policies, taxation, and banking hurdles as factors restricting the sector from reaching its export potential. What they don’t want to talk about is the internet disruption and blockages also pose threat to the sector, hindering e-commerce businesses and eroding international investor confidence.