Pakistan achieved a significant milestone in October 2024, recording IT exports worth $330 million. This represents a robust 39% year-on-year (YoY) increase and a 13% month-on-month (MoM) growth, surpassing the 12-month average of $287 million, according to analysts at Topline Securities.
This marked the 13th consecutive month of YoY IT export growth, a streak that began in October 2023. Cumulatively, IT exports for the first four months of FY25 (4MFY25) reached approximately $1.21 billion, reflecting a strong 35% YoY growth.
Factors Driving Growth
The surge in IT exports can be attributed to three primary factors:
1. Global Expansion: IT export companies have expanded their client base, especially in the GCC region.
2. Policy Incentives: The State Bank of Pakistan (SBP) relaxed the permissible retention limit for exporters, increasing it from 35% to 50% in Exporters’ Specialized Foreign Currency Accounts.
3. Currency Stability: Stability in the Pakistani Rupee (PKR) has encouraged IT exporters to repatriate a higher portion of their profits.
Additionally, the MoM increase in October was driven by a higher number of working days (23) compared to September (20). Daily export proceeds were $14.3 million in October, slightly down from $14.6 million in September.
Engagement and Innovation
Pakistani IT firms have been actively networking with international clients. Recently, leading companies participated in the Oslo Innovation Week 2024 and the Pak-US Tech Investment Conference.
A survey conducted by the Pakistan Software Houses Association (P@SHA) revealed that 62% of IT firms maintain specialized foreign currency accounts, a practice supported by recent policy changes.
In a major boost to the sector, SBP introduced a new Equity Investment Abroad (EIA) category, enabling export-oriented IT companies to acquire stakes in foreign entities using up to 50% of their proceeds. This initiative is expected to further enhance remittances back to Pakistan.
Record Net IT Exports
Net IT exports, calculated as exports minus imports, reached an all-time high of $299 million in October 2024, a 47% YoY increase. This figure also exceeded the 12-month average of $253 million.
Future Outlook
The IT sector is poised for continued growth, with projections suggesting a 10-15% increase for FY25, potentially reaching $3.5–3.7 billion. Among industry leaders, Systems Limited (SYS) stands out, trading at promising valuations of 18.4x (2024E) and 12.5x (2025F) price-to-earnings ratios.
Pakistan’s IT sector continues to strengthen its global footprint, playing a crucial role in bolstering the country’s economy.
