Written by: Mr. Musa Abubakr
The New Steam Engine: IT as a Prime Economic Driver of the 21st Century
Human inquisitiveness has led to the rise and fall of many industries. Similarly, the 21st century has introduced another major revolution: the Information Technology revolution.
IT has influenced global stock markets, created millions of employment opportunities, reshaped the international economy and transformed the world into a global village. It has also produced technology companies whose economic value exceeds that of many countries and regions.
The global IT market was valued at approximately $10.5 trillion in 2023, with an estimated compound annual growth rate of 11%.
The United States remains a global leader in software development, cloud computing, data centres and artificial intelligence technologies. Its IT industry supports more than 12 million jobs and drives innovation across both specialized and non-specialized sectors.
According to The Diplomat, the United States accounts for approximately 35% of global IT spending.
India has also developed a massive technology sector and established its own version of Silicon Valley. Approximately 7.5% of India’s national GDP comes from the IT sector, which generated around $245 billion in FY2023.
India’s IT services sector and technology startups have collectively created around five million jobs.
Through its ambitious Digital India initiative, India aims to develop a $1 trillion export economy by 2030. The initiative is expected to support further growth in financial technology, e-governance and digital infrastructure.
These developments have positioned India as a major global participant in the IT sector.
Pakistan’s IT Industry in Grey Waters
Pakistan’s IT Industry Is Seriously Lagging Behind
Despite its potential, Pakistan’s IT industry remains significantly behind major global and regional technology economies.
Several factors have limited its growth, including low investment, poor infrastructure, insufficient skills development, weak research culture and inconsistent government policies.
IT Market Size and Exports
Out of the approximately $10.5 trillion global IT industry, Pakistan’s total IT market is valued at slightly more than $15 billion. This represents only around 0.14% of the global IT economy.
By comparison, the IT economies of the United States, India and South Korea are valued at approximately:
- United States: $1.3 trillion
- India: $401 billion
- South Korea: $70 billion
- Pakistan: Slightly more than $15 billion
These economies are approximately 86, 26 and 4.7 times larger than Pakistan’s IT economy, respectively.
Pakistan’s IT exports also remain limited.
In 2023, Pakistan exported approximately $3.2 billion in IT products and services. In comparison:
- The United States exported approximately $926 billion
- India exported approximately $194 billion
- South Korea exported approximately $121 billion
- Pakistan exported approximately $3.2 billion
These figures demonstrate the significant gap between Pakistan and the world’s leading technology economies.
Pakistan Is Lagging in IT Investment
Pakistan’s investment culture remains heavily focused on real estate rather than productive and innovative industries.
Digital products have become some of the most valuable commodities of the 21st century. However, many local investors continue to avoid investing in technology-based projects and businesses.
According to Pakistan Today, the government decided to spend approximately $283 million on the IT sector. By comparison, India’s IT spending during the same period was approximately $138.6 billion.
In 2021, private investment in India’s technology sector alone reached around $23 billion. Private investment of this scale is almost non-existent in Pakistan.
The lack of investment restricts innovation, startup development, employment generation and Pakistan’s ability to compete in the global digital economy.
Limited Technology Education and Skills Development
Pakistan is also struggling to produce enough qualified IT professionals.
To reach even 10% of the size of India’s technology industry, Pakistan would need to produce approximately 250,000 IT professionals every year.
However, the PASHA 2022 report presented a concerning picture. Pakistan produces around 25,000 IT graduates annually, and only approximately 20% possess the skills required to compete in the global technology industry.
Technology education is also inaccessible to large sections of the population. Quality IT education and training remain concentrated in a limited number of major cities.
This prevents young people in smaller cities and rural areas from participating in the digital economy.
Unicorns: Billion-Dollar Technology Ventures
Unicorns are privately held companies valued at more than $1 billion. They are considered important indicators of technological growth, innovation and investor confidence.
Such companies can create employment, attract foreign investment and generate large-scale economic activity.
The article identifies Imarat Group as Pakistan’s first unicorn company in 2023. However, Pakistan continues to have very few billion-dollar technology ventures.
By comparison, Israel, a country significantly smaller than Pakistan, is home to around 95 unicorn companies.
The limited number of major technology ventures shows that Pakistan remains far behind leading innovation-driven economies.
Absence of a Research and Development Culture
Countries that lead the technology industry invest heavily in research and development.
Research and development form the backbone of technological innovation and long-term economic progress.
According to the National Science Foundation, the United States spent approximately $885.6 billion on research and development in 2022.
Pakistan, however, spends only a very small proportion of its budget on research and development.
The research environment in Pakistani universities is also limited and receives insufficient support from private industry.
Without strong cooperation between universities, businesses and research institutions, it becomes difficult to develop new technologies, products and solutions.
Since the IT industry depends heavily on continuous research and innovation, Pakistan’s weak research culture remains a major obstacle.
A Monkey on Pakistan’s Back: Hindrances to IT Growth
Infrastructure Deficit
Pakistan has poor broadband coverage and relatively slow internet connectivity.
While many countries are already experimenting with 6G technologies, Pakistan has yet to introduce 5G internet services on a broad scale.
This technological delay limits the growth of software companies, digital businesses, remote workers and technology-based services.
Internet penetration also remains low in many remote areas, where reliable connectivity is either unavailable or unaffordable.
Frequent restrictions on social media platforms, internet shutdowns, the installation of firewalls and proposals to ban virtual private networks further damage the IT sector.
Such policies create uncertainty for businesses and reduce the confidence of international clients.
Inadequate Government Policies and Incentives
The services sector generates a major share of government revenue, yet it does not receive the same level of support and incentives provided to sectors such as agriculture and textiles.
Recent taxes have also created difficulties for the IT industry.
Although freelancers receive certain incentives, freelancers and small software houses generally have limited capacity and deal with smaller international clients.
Larger services companies, including firms such as SOFTOO and CXO mentioned in the article, face greater challenges when competing in global markets.
Pakistan needs policies that encourage the development of large technology corporations rather than focusing only on freelancers and small businesses.
Brain Drain of IT Professionals
Qualified IT professionals can earn significantly better salaries and receive stronger career opportunities in international markets.
As a result, many skilled professionals leave Pakistan.
This brain drain creates a serious skills gap in the local technology industry.
Companies are forced to repeatedly recruit and train new graduates, who may also leave once they gain experience.
This increases business costs, weakens institutional knowledge and limits the ability of Pakistani companies to grow.
Excessive Focus on Freelancing and Startups
Pakistan’s technology policies continue to focus heavily on freelancing and small startups.
Although freelancing creates income and employment, it cannot replace the economic impact of large technology corporations.
Major global technology companies employ thousands of people, attract substantial investment and generate billions of dollars in revenue.
By contrast, small businesses and freelance operations generally employ fewer people and earn limited annual revenue.
Pakistan must support freelancers and startups while also developing policies that encourage them to grow into larger technology companies.
Shortage of Highly Skilled Teaching Faculty
Pakistan’s universities face a serious shortage of experienced and highly qualified technology teachers.
In many cases, skilled professionals prefer to work in the private sector because salaries are significantly higher than those offered by universities.
The president of FAST University reportedly stated that qualified faculty members leave academia when the technology industry offers packages that are eight to ten times higher.
If one of Pakistan’s leading IT universities faces this challenge, conditions in lower-ranked institutions may be even more difficult.
Weak teaching quality directly affects the skills of graduates, who serve as the raw material for the technology industry.
Poor Digital Infrastructure
Pakistan lacks a reliable and advanced digital infrastructure.
Major weaknesses exist in:
- Internet availability
- Network connectivity
- Cybersecurity
- Cloud services
- Data centres
- Software as a Service
- Platform as a Service
- Digital payment systems
The limited infrastructure that is available is further weakened by policies restricting VPNs, social media platforms and internet access.
This environment prevents local companies from scaling rapidly, accelerating innovation and competing with international technology markets.
Holding Out Hope: Recommendations for Making Pakistan a Global IT Player
Policy and Regulatory Support
Simplify Tax and Regulatory Frameworks
Pakistan should introduce simple, predictable and business-friendly tax policies for technology companies.
Tax incentives can encourage both local and foreign investors to invest in Pakistan’s digital economy.
Recent tax measures have created difficulties for technology companies and reduced incentives for skilled professionals to remain in the country.
A stable tax system would help businesses plan for long-term growth.
Improve the Ease of Doing Business
Bureaucratic hurdles should be reduced for technology startups, established companies and foreign investors.
Lengthy procedures and excessive red tape discourage investment and create difficulties for young entrepreneurs.
A one-window system should be introduced so that registrations, permissions, taxation and other essential processes can be completed quickly through a single platform.
Implement Strong Data Protection Laws
Pakistan needs effective cybersecurity and data privacy regulations.
Data protection is extremely important for technology companies, particularly those working with international clients.
Strong laws would increase investor confidence, protect users and improve Pakistan’s reputation as a secure destination for digital services.
Infrastructure Development
Expand Broadband and 5G Networks
Pakistan must improve internet access in both urban and rural areas.
The IT industry cannot grow without reliable, affordable and high-speed internet.
The government should rapidly expand broadband coverage and introduce modern mobile internet technologies.
Better connectivity would allow more Pakistanis to participate in the global digital economy.
Establish Technology Hubs
Pakistan should establish special economic zones dedicated to information technology.
These technology parks should offer:
- High-speed internet
- Reliable electricity
- Modern office facilities
- Tax incentives
- Research laboratories
- Startup incubation centres
- Access to investors
- Collaboration opportunities
Technology hubs can bring together professionals from different fields and become centres of innovation, research and entrepreneurship.
Skills Development
Introduce Coding and IT Education at an Early Stage
Programming, digital literacy and basic technology skills should be included in school curricula.
Many developed countries teach coding and digital skills to children from an early age.
Pakistan should modernize its education system so that students can participate in the technology industry before entering universities.
Upskill the Existing Workforce
The government should support training programmes in emerging technologies, including:
- Artificial intelligence
- Machine learning
- Blockchain
- Data science
- Cloud computing
- Cybersecurity
- Software development
- Digital marketing
Public-private partnerships can help training institutions use modern tools and align courses with international technology trends.
Women’s participation should also be promoted through scholarships, remote employment opportunities and flexible working arrangements.
University-Industry Collaboration
Align Academic Programmes with Industry Requirements
Universities should design their curricula in consultation with technology companies.
This collaboration would help ensure that graduates possess the skills required by employers.
According to the PASHA 2022 report, only around 20% of Pakistani IT graduates currently have the skills demanded by the industry.
Universities and companies should jointly develop:
- Updated curricula
- Internship programmes
- Practical training
- Research projects
- Industry-led workshops
- Employment pathways
Research and development projects involving both universities and private companies should also receive greater funding.
Focus on Emerging Technologies
Develop Artificial Intelligence and Machine Learning Capabilities
Pakistan should encourage investment in artificial intelligence startups, research institutions and training programmes.
Artificial intelligence is not merely a temporary trend; it is becoming the foundation of future technology.
Pakistan must train its young population in AI and machine learning so that professionals can export their expertise and participate in the global technology revolution.
Invest in Blockchain and Financial Technology
The growth of e-commerce and digital financial services has increased the demand for blockchain and fintech solutions.
Pakistan should support technology companies working in:
- Digital payments
- Blockchain systems
- Financial applications
- Online banking
- Secure digital transactions
- E-commerce platforms
Pakistan should also expand its mobile gaming and application development industries.
Encouraging young people to enter these profitable sectors could provide a major boost to the country’s IT economy.
Better Late Than Never: Realizing Pakistan’s IT Potential
Modern economies can use the IT revolution to improve productivity, create employment and earn foreign exchange.
For Pakistan, the technology sector can provide a stable and promising source of dollar-based income.
Pakistan possesses several advantages that can support the development of a strong IT economy.
Pakistan Has a Large Youth Population
Pakistan has one of the largest youth populations in the world.
With proper education, internet access, training and incentives, this young population can become the foundation of an IT-based economy.
Pakistan’s youth have the potential to establish major technology companies and create future equivalents of leading global firms.
IT Can Increase Women’s Economic Participation
A large proportion of Pakistani women do not currently participate in the formal economy.
The IT sector can provide women with remote employment and home-based earning opportunities.
Technology-based work is not always tied to a physical office. Remote jobs can allow women from conservative households to earn an income, support their families and contribute to the national economy.
Exchange-Rate Differences Can Provide an Advantage
The difference between the value of the US dollar and the Pakistani rupee can provide a competitive advantage to Pakistan’s technology sector.
Pakistani professionals and companies can offer services to international clients at more affordable rates than competitors in several other markets.
Traditional industries may require years to convert exchange-rate differences into meaningful revenue. Digital services, however, can benefit more quickly because they can be delivered internationally without major transportation or manufacturing costs.
Pakistan’s Emerging Startup Culture
Pakistan’s growing startup culture provides hope for the future.
Business incubation centres are supporting young entrepreneurs, while government programmes offer interest-free loans of up to Rs. 500,000.
Organizations such as PASHA and PSEB also provide technology graduates with opportunities to learn from leading Pakistani companies.
Programmes such as Shark Tank Pakistan can further support emerging entrepreneurs by providing investment opportunities, mentorship and public exposure.
The IT Gig Economy
The IT industry has no geographical boundaries.
Success depends mainly on skills, creativity, coding ability and problem-solving.
Pakistan’s gig economy has significant potential, which PSEB has repeatedly estimated at approximately $10 billion.
The government should develop platforms that solve international payment problems, connect professionals with foreign clients and protect the interests of freelancers.
With the right strategy, the gig economy can make a major contribution to Pakistan’s exports.
IT Is Relevant to Every Field
Information technology is no longer limited to computer science and IT graduates.
It has become an essential part of engineering, medicine, natural sciences, social sciences and the humanities.
For example, Large Language Models require language professionals who understand artificial intelligence, machine learning and basic technology.
The energy sector increasingly requires physicists and engineers with AI expertise to analyse data, develop software and produce faster solutions.
Healthcare professionals use digital systems, artificial intelligence and data analysis to improve diagnosis, research and patient care.
The Higher Education Commission and educational boards should introduce basic IT and AI knowledge across different academic disciplines.
They should also organize workshops with industry representatives to understand changing business requirements.
Such reforms could become a turning point for Pakistan’s economy.
Conclusion
Information technology has transformed the global economy and created enormous opportunities for countries willing to invest in digital skills, infrastructure, research and innovation.
Pakistan has a young population, a growing freelancing community, an emerging startup culture and the ability to provide competitively priced technology services.
However, the country continues to face major challenges, including poor internet infrastructure, limited investment, weak policies, low-quality education, brain drain and insufficient research and development.
Pakistan must introduce stable policies, expand internet access, improve technology education, support large IT corporations and strengthen cooperation between universities and industry.
It must also invest in artificial intelligence, blockchain, financial technology, cloud computing, cybersecurity, gaming and software development.
With coordinated action from the government, private sector, universities and investors, Pakistan can increase IT exports, create employment, empower young people and women, and become a competitive participant in the global digital economy.
Pakistan already possesses the human potential required for success. What it now needs is a clear strategy, consistent policies and the determination to convert that potential into sustainable economic progress.