Mehmood ul Hasan Qadir — Economist & Financial Analyst | Dubai, UAE

The Pakistan Ledger | Opinion

Pakistan’s officially recorded IT and IT-enabled services exports stand at approximately $3 billion annually as of the mid-2020s. The number is frequently cited by government ministers and trade promotion officials as evidence of Pakistan’s digital economy emergence — and it is, in itself, a genuine achievement that represents a sector that barely registered on the national economic radar twenty years ago. But the $3 billion figure is almost certainly not the true size of Pakistan’s technology export economy. And the gap between the official number and the actual number reveals something important about both Pakistan’s economic potential and its policy failures.

The Remittance Underreporting Problem

Pakistan has between 100,000 and 150,000 registered freelancers on major international platforms — Upwork, Fiverr, Toptal, and others — making it one of the largest freelancer economies in the world by registered user count. Industry estimates, incorporating unregistered freelancers and direct client relationships, suggest the actual number of Pakistanis earning income from international technology clients may be three to five times the PSEB registered figure. The foreign exchange earnings from this workforce are substantially underreported in official statistics.

The mechanism of underreporting is straightforward: freelancers receiving international payments through informal channels — cryptocurrency conversions, hawala transfers, digital wallet services that do not route through the Pakistani banking system — do not appear in the SBP’s foreign exchange earnings data. The incentive to use informal channels is rational: official bank transfers require documentation, are subject to FBR inquiry on source of funds, and attract withholding tax obligations that reduce take-home earnings. The result is a significant foreign exchange inflow that the country benefits from in terms of household consumption but does not officially capture as an export.

Brain Drain vs. the Diaspora Digital Dividend

Pakistan’s technology talent emigration has accelerated sharply since 2020. Estimates from industry associations suggest that tens of thousands of Pakistani software engineers, developers, and IT professionals have relocated to Canada, the UAE, Australia, and Europe in search of better compensation, professional infrastructure, and quality of life. This outflow is frequently framed as a brain drain — and the loss of human capital is real. But the diaspora digital economy creates a partially offsetting dynamic that is underweighted in the policy analysis.

Pakistani technology diaspora maintain business relationships with Pakistan. They outsource work to former colleagues. They establish offshore development centres. They provide referral channels to international clients. India’s IT export success from the mid-1990s onward was substantially built on the Indian diaspora in the US — particularly in Silicon Valley — that channelled software contracts to Indian firms through personal networks. Pakistan has a comparable diaspora in the Gulf, the UK, and increasingly in North America. Policy that treats emigration purely as loss misses the network dividend that comes from Pakistanis working within the global technology economy and maintaining economic linkages with the home country.

The Bandwidth Problem — Building a Digital Economy on Dial-Up Infrastructure

Pakistan’s internet infrastructure is a significant constraint on technology sector scaling. Bandwidth costs in Pakistan remain high relative to India and other regional competitors. Undersea cable connectivity — Pakistan connects to international internet infrastructure primarily through cables landing at Karachi — is limited and has experienced periodic disruption. The distribution of reliable, affordable broadband across Pakistan’s second and third-tier cities — where significant untapped technology workforce potential exists — remains inadequate for serious technology work by international standards.

India’s IT export trajectory from 1995 to 2005 was accompanied by deliberate, large-scale infrastructure investment: dedicated technology parks with reliable power and high-bandwidth connectivity, educational institution expansion in computer science and engineering, and a regulatory framework that treated IT export earnings with favourable tax treatment for an extended period. Pakistan’s equivalent policy suite has been partial, under-resourced, and inconsistently implemented. The Pakistan Software Technology Parks — PSTP facilities in major cities — are a step in the right direction at a scale that is a small fraction of the requirement.

The $10 Billion Horizon

Pakistan’s IT export sector could reach $10 billion — in formally captured, banking-system-routed foreign exchange earnings — within five to seven years with the right policy environment. The workforce talent exists. The international market demand for software services from cost-competitive locations is growing. The diaspora network is expanding. What is required is a regulatory environment that makes formal remittance routing more attractive than informal channels, investment in bandwidth and power infrastructure in technology-intensive districts, educational system alignment with technology industry requirements, and consistent, credible tax treatment of IT exports that removes the incentive to minimise official earnings reporting. The $3 billion official number is real. But it is almost certainly the floor of Pakistan’s digital economy, not its ceiling.

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Mehmood ul Hasan Qadir is an Economist and Financial Analyst based in Dubai, UAE. He writes on Pakistan’s economic structure, policy failures, and reform pathways for The Pakistan Ledger.