Digital Growth Accelerates in Pakistan: IT Exports Hit $2.825B, Yet Startup Ecosystem Faces Capital Crunch

ISLAMABAD — Pakistan’s digital and technology sectors have demonstrated strong forward momentum in the fiscal year 2024–25, according to the newly released Pakistan Economic Survey. Buoyed by record-breaking IT exports, a dynamic startup landscape, and increasing global recognition, the digital economy is positioning itself as a key pillar of national growth. However, critical gaps in infrastructure, regulatory clarity, and AI readiness continue to present formidable challenges.

Information Technology: A Leading Economic Driver

Pakistan’s Information Technology and IT-enabled Services (ITeS) sector emerged as a major contributor to economic performance. IT exports grew by 23.7%, reaching US$ 2.825 billion during July–March FY 2025. The sector maintained the highest trade surplus among all services—US$ 2.429 billion—highlighting its strategic significance in stabilizing Pakistan’s external account.

Freelancing also showed impressive results. With approximately US$ 400 million in remittances, Pakistan remains the second-largest supplier of digital labor globally, according to the International Labour Organization. It is also ranked among the top global outsourcing destinations in Kearney’s Global Services Location Index.

Startup Ecosystem: Foundations Laid, Challenges Remain

The government’s flagship “e-Rozgaar” initiative aims to establish 250 entrepreneurship and freelancing centers by 2027, with 50 planned for FY 2025. National Incubation Centers (NICs) across the country have supported over 1,900 startups, generated more than 185,000 jobs, and facilitated over Rs 30.8 billion in investment.

Despite these gains, the startup ecosystem continues to grapple with limited access to venture capital, inconsistent tax policies, and underdeveloped digital infrastructure, especially outside major urban centers.

AI and Emerging Technologies: Ambition Versus Readiness

While the government has outlined its National Economic Transformation Plan, with a vision to integrate Artificial Intelligence across governance, agriculture, health, and education, Pakistan’s readiness remains low. According to the IMF’s AI Preparedness Index, the country still faces major deficiencies in digital infrastructure, skills development, and institutional support.

Pilot initiatives and policy announcements are encouraging, but scalable implementation will require a synchronized effort involving academia, industry, and government.

5G and Connectivity: Approaching the Next Frontier

The Pakistan Telecommunication Authority (PTA) has finalized regulatory and technical groundwork for the introduction of 5G services by mid-2025. The National Fiberization Plan—backed by the World Bank—is central to this effort, aimed at expanding fiber optic infrastructure nationwide.

However, uneven access to 4G services in rural and remote areas continues to pose a significant barrier to digital inclusion, raising concerns about a widening digital divide.

Broadband and Digital Inclusion: Expanding Access

Broadband users have increased significantly, reaching 147.2 million by March 2025—a 151% rise since 2018. Despite this growth, the digital revolution has largely been urban-centric. In response, the government has introduced the first-ever Digital Gender Inclusion Strategy and continues to expand the scope of its “Digital Pakistan” vision to ensure equitable access across all demographics.

International Collaboration: China-Pakistan Innovation Corridor

A Joint Working Group on Information Technology (JWG-IT) under the China-Pakistan Economic Corridor (CPEC) has been established to foster cooperation in AI, cloud computing, cybersecurity, and semiconductor development. The proposed Innovation Corridor is expected to accelerate knowledge transfer and attract investment in high-tech sectors.

Pakistan’s digital economy is transitioning from a support function to a central growth engine. The fiscal year 2024–25 marks a pivotal moment, characterized by policy clarity, rising exports, and international engagement.