Pakistan’s exports of Information and Communication Technology (ICT) services have broken the $2 billion barrier, as per latest data released by the State Bank of Pakistan for the year ended June 30, 2021. This development has stirred optimism about potential of digital services in raising Pakistan’s export profile. To be exact, the ICT exports tally came in at $2.12 billion during FY21, achieving significant growth of 47 percent year-on-year, or $683 million more compared to FY20. As a result, ICT exports’ share in overall goods and services exports increased from 5 percent in FY20 to 7 percent in FY21.
While observers are focused on the headline export number, it is important to take a deeper look and evaluate which segments within the ICT services are faring better than the rest. Within the $2.12 billion export pie during FY21, based on SBP data, one can see that the ‘computer services’ led with a market share of 79 percent, followed by 21 percent stake for ‘telecommunication services’, and a negligible 0.2 percent slice for ‘information services’. These shares have remained around those levels in recent years, with ‘computer services’ gaining ascendancy.
It was the ‘computer services’ that accounted for 82 percent of the $683 million yearly gain in ICT exports during FY21. Focusing on these particular services, the annual exports clocked $1.66 billion in the period, showing a solid growth of 50 percent over FY20. Within ‘computer services’, the three main segments – software consultancy services ($554 mn), export of computer software ($417 mn), and other computer services ($694 mn) – showed annual growth of 36 percent, 25 percent, and 84 percent, respectively.
Background discussions suggest that Pakistani software firms did rather well since the onset of the pandemic last year, as the government had allowed the IT companies to function during the lockdowns. This helped local companies to secure and deliver on demands of both new and existing clients, at a time when several other countries were in lockdowns. Besides, it is plausible that IT exports have grown also due to the decision of prominent IT companies to bring more of their export proceeds back into Pakistan during the pandemic.
The ‘telecommunication services’ – which totaled $452 million in FY21, growing at 38 percent year-on-year – have provided 18 percent of the incremental ICT exports for the year, based on SBP data. Within these exports, the leading segments of ‘call centers’ showed an annual increase of 22 percent to reach $154 million. Whereas the core ‘telecom services’ – which include services offered by telecom operators to foreign operators – had expanded by 47 percent to reach $299 million during FY21.
It is clear that growth in overall ICT exports is led by ‘computer services’, or the IT services, especially linked with software exports. The IT exports standing in FY21 have nearly doubled since FY19. Before that, IT exports took four years to double in FY19. At this pace, can one expect IT exports to double again soon? The government, through measures like facilitating ease of doing business and setting up of the Special Technology Zones, is aiming to kick start high growth in the technology sector. Let’s see what FY22 turns up.
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