Improving Pakistan’s IT Services Trade Model: A Step Toward Success

  • Khurram Akhtar - Co Founder of PF

  • Dec 20, 2023

Improving Pakistan’s IT Services Trade Model- A Step Toward Success

While other countries were advancing in the tech industry, Pakistan was battling poor broadband infrastructure, inadequate human resources and deteriorating security issues. These issues kept Pakistan’s tech and IT industries from advancing.

Pakistan cannot be called an untapped market for the IT sector as it already has a lot of IT firms and startups in the cycle, but it can be referred to as a country of untapped individuals with remarkable potential. Possessing an outrageous population of 230 million people, around 64% of the individuals out of this are youth and a large portion of it still remains untapped.

Pakistan’s Economic Crisis: Why We Fell Behind

Pakistan has been experiencing backbreaking inflation and political instability, which has led to an economic meltdown. Pakistan’s external debts exceed its federal government’s total revenue. This is a pressing issue for Pakistan behind its current recession.

People often miss that to facilitate this youth bulge, Pakistan needs an updated economic infrastructure that can actually support the youth. Without the needed facilities, the youth will only burden the economy.

America’s Self-Sufficient Economic Model

America is the world’s largest and most integrated market with reasonable tax rates. The U.S. tech industry is the largest tech market in the world, representing one-third of the $5 trillion global IT market. For years, America has been a hot spot for startups and business owners wanting to grow their businesses. Their model suggests that America focused on empowering and enabling its people and utilized their potential for its own growth rather than offshoring them as a workforce to gain short-term benefits.

India’s Services Trade Blueprint

It is common knowledge that India and Pakistan started on the same ground but are now worlds apart. Beginning with the same economic models, Pakistan chose to stick to that old economic model, whereas India took the path of advancement. Currently, India has a well-established and thriving tech industry with a strong presence in software development and IT services. India’s IT exports are expected to reach $194 billion in 2023, and it is to be noted that this does not include hardware exports. This figure accounts solely for its software-based IT services.

India provides outsourcing services at a larger scale than Pakistan. Many tech giants such as Microsoft, Amazon and Google outsource their processes to India’s skillful workforce. India seized this opportunity and created a working economic model that could leverage this outsourcing to improve its IT and tech sector. Now, India receives direct foreign funding from these tech giants and is home to a booming tech industry Currently, there are 108 estimated unicorns operating in India at a global level. Startups in India have been gaining global attention and are now attracting wealthy venture capital and equity firms.

A Lesson From India: Shaping Pakistan’s Tech Sector

In my opinion, Pakistan won’t be able to create a globally recognized tech and IT sector with its current model. Like India, Pakistan needs to focus on its services trade as it will utilize Pakistan’s workforce for its own benefit rather than wasting its potential working for foreign IT firms.

Unfavorable Infrastructure

Currently, Pakistan needs a better digital infrastructure as it is very uncertain. The broadband services are unreliable; on top of that, a massive chunk of Pakistan’s land with significant population densities does not even have access to the internet. Power outages are another pressing issue; nationwide electricity blackouts are a common thing in Pakistan now. Unless a better, reliable infrastructure is provided, Pakistan won’t be able to progress in its IT sector.

Pakistan is not investing in infrastructure despite available capital. This is a capital reallocation problem where the generated or available money is not directed to the right channels. Business leaders can aid the mobilization of capital in local markets, which will, in turn, benefit Pakistan’s IT market. Moreover, business leaders must closely coordinate with the government to aid Pakistan’s IT exports.

Progressive Government Policies

The government of Pakistan needs to develop sound policies and aid its youth in growing the IT sector. Currently, registering a business alone is a hassle in Pakistan. Entrepreneurship and freelancing are also catching the attention of Pakistan’s youth, but the challenges they face in performing due diligence and financial tasks are a hurdle that needs to be resolved.

To streamline the due diligence procedures that can often impede progress, business leaders need to turn toward fintechs instead of completely relying on the physical financial institutions that take days to complete a single task.

Empowering The IT Sector

Following in India’s footsteps, providing outsourcing services and then utilizing the capital generated by it to develop software services is what Pakistan should do. Venture capitalists in Pakistan must identify this pressing issue and invest in entities that have the potential to create services that can be traded across borders. This can put Pakistan on the global IT map and pave a smooth path for future advancements.

Promoting Education And Mentorship

Pakistan’s government needs to provide proper and up-to-date learning to its youth. Pakistan has a lot of people with valuable skills, but these people have no direction. They should receive appropriate mentorship and education to help them harness their true potential. Software companies can utilize these skilled people to create competitive services in the global market.

Nowadays, it is common to have access to learning materials. Despite that, Pakistan already has many tech mentors and firms developing programs for the youth. What Pakistan really needs right now is job opportunities. Business leaders can significantly improve Pakistan’s IT infrastructure by creating practical opportunities for the youth.

Fostering A Healthy Ecosystem For A Bright Future

Overall, Pakistan has tremendous untapped potential. If the business leaders along with the government succeed in implementing a new, growth-oriented financial model for the IT and tech sector, Pakistan can reach great heights in this industry and prove to be a great global player. I believe there is a considerable lack of coordination between the government and the private sector, which must be closed. Healthy communication and cooperation are necessary for creating a working services trade model.

Note: Originally posted on forbes