Over the last few years, Pakistan’s economy has been hit by growing inflation, COVID, supply chain disruptions, and high energy prices. However, in a world of continuous upheavals, the country’s expanding tech sector is proving to be a silver lining.
Pakistan, the world’s fifth-most populous country, has been sluggish to adopt the internet economy. In terms of technology adoption and startup formation, Pakistan has fallen behind other developing economies such as China, India, and Indonesia. Despite this, investors have long fantasized about the immense prospects that exist in unleashing Pakistan’s digital economy. Pakistan has quickly established itself as one of the most vibrant technological ecosystems outside of the United States and China, with a population of 220 million people, nearly twothirds of whom are under 30. To keep up with the technological pace, the world will require 80 million software engineers by 2030. There will be a scarcity of 30 million technologists, and the war between Russia and Ukraine will exacerbate the problem. Pakistan is the only obvious destination for IT resource hiring, with India up to its neck in debt and talent being snatched up by larger corporations.
Pakistan has quickly established itself as one of the most vibrant technological ecosystems outside of the United States and China, with a population of 220 million people, nearly two-thirds of whom are under 30
There are 193 million mobile subscribers and 113 million 3G/4G in Pakistan as of April 2022. Pakistan also has a strong cable connectivity network comprising five submarine cables that provide efficient services to broadband subscribers with impressive 88 percent coverage. Although Optical fiber connections should ideally be stretched all the way up to the premises for substantial digitalization. However, this does not appear to be possible. In the near future, users’ last-mile access will continue to be wireless mobile. That means that, in order for digitalization to thrive, the mobile last mile must be improved.
Start-up culture and surge in the tech industry
A steady rise in internet penetration across Pakistan is also driving the new wave of startups. Pakistan is one of the last few untapped markets for startups and investors to offer internet-based services. There are more than 250 startups established since 2015, increasing internet penetration driven by low-cost smartphones – and affordable data. The success of Pakistan’s first startup wave, which began in 2012-13 with the launch of Foodpanda, Careem, and Daraz, has fueled the surge. Over the last five years, massive investments were made in tech startups.The startup funding received in 2020-21 was higher than the last five years combined, standing at 350 million dollars.
Startup Funding Breakdown
E-commerce: 62 deals were finalized during2015-2021 & over $300m in funding was raised. Fintech: 41 deals were finalized during 2015-2021 & over $100m funding raised. Edtech: 8 deals were finalized during 2015-2021 & $10m funding was raised. Logistics: 12 deals were finalized during 2015-2021 & $25m funding was raised. Healthtech:17 deals were finalized during 2015- 2021 & over $30m funding was raised.
The startup funding received in 2020-21 was higher than the last five years combined, standing at 350 million dollars
Growing Freelance Market
Pakistan is the 5th largest country with the 3rd largest English literate population and 3rd the largest Source of Digital Labor in the World. This has contributed to making Pakistan the 2nd Fastest-Growing Economy in South Asia by expanding Exports of IT Products & Services to 120+ Countries. Pakistan has a large freelancing workforce, with 63%of the population under the age of 30. This growth was aided by government-run programs such as Digi skills and E-Rozgar. Digiskills.pk is Pakistan’s largest training program, with over 500,000 training delivered in a year across the country.
Advance Tech Infrastructure
Pakistan has universities, advanced infrastructure, government policies, and existing 300,000 talent growing rapidly by multitudes. There are 300 IT/ITeS Organizations, 20 Data Centers, and 13 thousand registered IT/ITeS Companies. Advance Tech Infrastructure Recent reforms, such as the establishment of a legal framework for Electronic Money Institutions by Pakistan’s central bank, the State Bank of Pakistan, have allowed for the establishment of new firms and increased investment. The Digital Banking Regulation, which was completed in January allows digital banks to provide credit, investments, and other goods in addition to e-wallets was another policy that made investors happy.
Establishment of a legal framework for Electronic Money Institutions, the State Bank of Pakistan, has allowed for the establishment of new firms and increased investment
The Pakistan Securities and Exchange Commission, which regulates non-banking businesses, has defined legal criteria for startups, and the federal government has aided in the creation of Special Technology Zones
The New Digital Era
Our leaders frequently declare that Pakistan is on its road to digitalization. Artificial intelligence, blockchain, 5G, and other buzzwords are being bandied around. The government plans to create an enabling environment for tech entrepreneurs and drive economic growth to facilitate Pakistan’s digital revolution. The “Digital Pakistan” initiative, led by former Google executive Tania Aidrus, was launched in December 2019 with an ambitious goal to improve access and connection, improve digital education, and usher in a new era of e-governance.
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It also aims to become a strategic enabler of an accelerated digitalization ecosystem in order to enhance the knowledge-based economy and drive socio-economic growth. Other goals include fostering an environment that encourages entrepreneurship and innovation. The initiative’s consequences have yet to be seen.
Pakistan IT Exports
The IT industry in Pakistan is flourishing and the government is taking the right steps for its further growth, including enhancing the number of IT graduates from 25,000 to 50,000, setting up software technology parks in large to second-tier cities, improving access to capital by IT companies, reducing tax disputes, enhancing the financial structure of IT companies and listing them on the stock exchange. According to MoITT, Remittances from the IT exports, from July to March FY22 surged by 29.26 percent to $1.94 billion. Depicting a swift increase from $1.50bn during the same period of the previous fiscal year.
Boom in E-commerce
In the midst of the COVID pandemic, Pakistan has seen a surge in e-commerce. There has been rampant growth of e-commerce and digital businesses that has helped open up the region to new market opportunities over time.A remarkable increase in broadband internet subscribers and smartphone users has led to an increase in internet use and subsequent e-commerce growth. According to Satista’s e-commerce report, on Pakistani Market the ecommerce market is projected to reach US$7,666.00 million by the end of 2022. Revenue is expected to show an annual growth rate (CAGR 2022-2025) of 6.09%, resulting in a projected market volume of US$9,153.00m by 2025. Whereas, in the eCommerce market, the number of users is expected to amount to 65.1m users by 2025.
Opportunities and Future Trends
Technology in the current world is rapidly growing, allowing for speedier development and advancement.
Pakistani institutions are on a mission to produce world-class talent and will continue to do so with unrivaled talents and agility. All that you need is let Pakistani talent to grow into a multibillion-dollar IT company. Pakistan continues to develop high-tech sectors and enhance its cyber security, system integration, data Center, and IT outsourcing capabilities, including AI, IoT, Blockchain, Big Data Analytics, and Cloud engineering. It has world-class technology universities such as NUST, GIKI, FAST, LUMS, UET, NED, and others that offer IT and engineering degree programs and have graduated over 300,000 IT With an ever-increasing number of networked items connecting with one another, 5G technology will be at the forefront of the hyper-connected world.
With an average annual growth rate of 30%, Pakistan’s IT industry has enough potential to contribute much more to the overall economy
Pakistan’s IT industry generates approximately $2 billion annually for the country. With an average annual growth rate of 30%, Pakistan’s IT industry has enough potential to contribute much more to the overall economy. Given the apt support and facilitation from the government, the sector can generate up to $10 Billion in the next 2-to 3 years. The advent of technology has made it part of daily life such that it has become an inherent part of corporate as well as domestic life. Businesses worldwide have entered the digital age and success lies in the best use of it. Therefore, it has become the most fought upon frontier for competitive advantage. Surely, Pakistan is today’s top destination for finding tech talent.