IT exports increase 34pc YoY to $286m in July

KARACHI: Information technology (IT) exports reached $286 million in July, a 34 per cent rise from a year earlier, according to data from the State Bank of Pakistan released on Monday.

However, IT exports fell by 4.0 per cent on a month-on-month in July. These exports stood at $298 million in the previous month.IT exports contributed 46 per cent to the overall services exports, which increased by 6.0 per cent to $622 million in the first month of the current fiscal year. These monthly IT exports in July are higher than the last 12-month average of $269 million, said Topline Securities in a note.

Growth in clients for IT export companies worldwide, particularly in the Gulf Cooperation Council (GCC) region, the relaxation of the SBP’s permissible retention limit -- which increased it from 35 per cent to 50 per cent in exporters’ specialized foreign currency accounts -- and a stable Pakistani rupee have all contributed to the year-over-year increase in IT exports, it added. Pakistani IT companies are active in engaging with global clients. Recently leading IT companies of Pakistan attended London Tech Week 2024 and Collision Canada 2024. The companies’ presence at the event was supported by IT representative bodies and the Pakistani government, it noted. According to the Pakistan Software Houses Association (P@SHA) survey, 62 per cent of IT companies maintain specialized foreign currency accounts.

“A major development in July was the SBP adding a new category of equity investment abroad (EIA), specifically for export-oriented IT companies,” said the Topline note.“IT exporters can now acquire interest (shareholding) in entities abroad without prior bank designation utilizing funds from specialized foreign currency accounts. The previous restriction of acquiring only one entity per jurisdiction has also been lifted.”

Net IT exports displayed a monthly number of $252 million and increased by 33 per cent YoY in July. The net IT exports numbers are also higher than the last 12-month average of $236 million.

Analysts predict that the IT sector will maintain its current growth trajectory and momentum, with a projected rise of 10-15 per cent to $3.5-3.7 billion in FY25.However, IT companies in Pakistan are having a challenging time due to the slowdown and disruption of internet services amid the imposition of a national firewall.

According to reports, the government is installing an internet firewall to control and monitor social media sites and content. The government denies the use of the firewall for censorship. The country’s economy could suffer losses of up to $300 million due to internet interruptions, according to officials in the IT sector.

IT exporters are required to fulfil project deadlines; yet, due to current connectivity problems, numerous companies are unable to complete their projects even with additional work hours. IT is one of the high-performing sectors in the economy, having the potential to shore up macroeconomic indicators, increase exports, and boost foreign direct investment.