Information Technology Industry in Pakistan
There has been tremendous growth in Information Technology industry in Pakistan since 2011 . This growth is the result of government’s friendly policies for the industry. These policies proved beneficial for the players as well as for the Government in fetching foreign exchange revenue through export of IT related goods and services.
Share of IT Industry in Export
IT industry is among the top 5 net exporters of the country . It is at the top in the services industries with the highest net exports . By A.T. Kearney’s Global Services Location Index Pakistan has been declared the 5th most attractive location in the world financially for offshore services. Pakistan is the 4th most popular country for freelancing. The size of IT industry is expected to cross $20 billion by 2025 per Pakistan Vision 2025.
Growth Rate of IT Industry
There has been a steady growth in IT & IT-enabled Services (ITeS) remittances over the last 5 years. The compound annual growth rate (CAGR) is 18.85 percent. It is the highest growth rate in comparison with all other industries. Micro enterprises, independent consultants and freelancers have contributed immensely in IT & ITeS exports. ITeS export remittances comprising of computer services and call center services have surged to US$1.113 billion at a growth 41.65 percent during July-February FY2021 in comparison to US$785.686 million during July-February FY2020. The number of Pakistan Software Export Board (PSEB) registered IT & ITeS companies as of 30th March, 2021 is 3,013 indicating a growth of 21 percent over a year.
Incentives for IT Industry
The government has provided many incentives to promoting IT industry. Gist of a few such incentives is as mentioned below:-
- Zero income tax on IT exports till 30 June 2025
- Three-year tax holiday for Pakistan Software Export Board registered IT startups
- 100 percent equity ownership to foreign investors
- 100 percent repatriation of capital and dividends
- Tax holiday till 2024 for venture capital funds
- 30 percent depreciation on computer equipment
- Foreign currency account allowed for receipt of export remittances
When we see the state of country’s foreign exchange reserves, balance of payment and the flight of Pakistan rupee against US dollar, we can predict safely that the Government will extend the current incentives to IT Industry even beyond financial year 2025.
