Sunday, May 26

ICT exports growth

Pakistan has been doing significantly well with its exports of Information and Communication Technology; reports released by the State Bank of Pakistan for the year ended June 30, 2021, justify this statement as the exports of ICT services seemingly surpassed the $2 billion barrier, this being an impressive accomplishment that raised confidence in the future growth of digital services and their export. Overall, ICT exports’ share in the overall goods and services exports had increased from 5 percent in FY20 to 7 percent in FY21 alone. Moreover, in FY21, the ICT exports tally showed remarkable growth as it came in with a notable $2.12 billion, around $683 million more compared to FY20.

Where most onlookers may be more concerned with the headline export numbers and statistics, it is also vital that we take a deeper look and assess which sections within ICT services seem to be having better progress in comparison to others. Based on SPB data, within FY21, The major share was of the computer services which led with a shocking 79 percent, followed by a 21 percent share for telecommunication services and a negligible share of 0.2 percent for information services. During the past few years, these shares have remained more or less stationary with little room for movement, however, computer services have seen a significant rise.

In fact, within the $683 million yearly gain in ICT exports during FY21, it was computer exports that made up 82% of the massive $683 million. Zeroing in on these particular services, the annual exports registered $1.66 billion in the period, showing a well-grounded growth of 50 percent over FY20. The computer services sector can be further broken down into three major portions: software consultancy services ($554 mn), export of computer software ($417 mn), and other computer services ($694 mn). The following respectively showed annual growth of 36 percent, 25 percent, and 84 percent.

Different sources and multiple discourses have led to the conclusion that since the ongoing Pandemic erupted last year, Pakistani software firms have seen impressive growth. The government had allowed the IT sector to remain functioning during the pandemic, and many IT companies were able to provide their deliverables and resources. This aided the local companies to lock into and fulfill the demands of both new and existing customers, during a time when numerous other countries were faced with complete lockdowns, which halted the movement and progress of their IT firms and companies. Furthermore, another likely conclusion justifying the growth of IT exports is the decision of distinguishable IT companies to bring more of their export profits and earnings back into Pakistan for further advancement during the pandemic time frame.

Based on SBP data, in FY21, the telecommunication services which had accumulated $452 million and were growing at an annual rate of 38 percent, managed to provide 18 percent of the gradational ICT exports for that same year (FY21). Within the given exports, the section which is call centers had exhibited an annual increase of 22 percent, leading it to reach $154 million. On the other hand, the elemental and main section, telecommunication services, which includes services offered by telecommunication operators to foreign operators, had expanded by 47 percent to achieve $299 million during FY21.

An apparent fact that has been established however is that the growth in overall ICT exports is positively led by computer services, or IT services, particularly in relation to software exports. Since FY19, the IT exports have shown an increase, and interestingly enough, from FY19 till FY21, the IT exports have approximately doubled. Previously, the exports took four years to double in FY19. At this rate, is assuming IT exports will double again soon a sensible thought? The government has been overseeing the setting up of Special Technology zones and has been smoothening business. Such developments are aimed at encouraging high growth in the technology sector. We can only wait and see what lies ahead in FY22.

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