Pakistan's information technology sector has surpassed US$4 billion in export earnings for the first time, marking a record performance despite internet disruptions and geopolitical uncertainties, and reinforcing the industry's growing role in supporting the country's external accounts and economic growth.
According to data released by the State Bank of Pakistan (SBP), exports of information technology and IT-enabled services-including earnings from software companies and freelancers-reached US$4.184 billion during July-May FY2025-26, compared with US$3.475 billion during the corresponding period of the previous fiscal year. The sector posted a 20 percent year-on-year increase, with export earnings rising by US$709 million, establishing a new record for the first eleven months of a fiscal year.
The milestone was achieved despite operational challenges faced by the industry during the year, including internet disruptions and geopolitical uncertainties. Analysts attributed the continued expansion to supportive government policies, tax incentives and sustained efforts to promote Pakistan's technology sector in international markets. Measures designed to facilitate foreign exchange inflows and attract foreign direct investment were also cited as contributing factors. Although monthly receipts moderated, export performance remained robust. IT export earnings stood at US$373 million in May 2026, compared with US$423 million in April 2026.
With one month remaining in the fiscal year, total exports are expected to approach US$4.5 billion, although they may remain below the government's target of US$5 billion. Commenting on the sector's performance, IT exporter Dr Noman Said said Pakistan possesses considerable untapped potential to expand technology exports and generate additional foreign exchange. However, he noted that structural challenges continue to constrain the industry's long-term growth.
He said the IT sector has become an important contributor to Pakistan's macroeconomic stability by supporting the current account, attracting investment and creating employment opportunities. Dr Said also called for a comprehensive roadmap to strengthen the domestic technology ecosystem, arguing that sustained export growth would require stronger education and training systems to equip the workforce with in-demand digital skills, alongside efforts to enter new international markets while expanding Pakistan's presence in existing ones.
The industry's outlook has also been supported by measures announced in the federal budget. Among the key initiatives is the extension of the 0.25 percent Final Tax Regime (FTR) for IT exporters for another three years, providing longer-term policy certainty for technology companies.
In addition, the government has reduced the withholding tax on international transactions made through payment cards from 5 percent to 0.5 percent. Industry stakeholders believe the measures will improve the ease of doing business, strengthen competitiveness and encourage higher foreign exchange inflows. Pakistan Freelancers Association (PAFLA) Chairman Ibrahim Amin said freelancers have made a significant contribution to the sector's growth, accounting for more than 20 percent of total IT export earnings, exceeding US$1 billion.
He added that the number of freelancers and digital workers in Pakistan continues to increase as awareness of freelancing opportunities and access to digital skills training expand among students and young professionals. Looking ahead, Amin said the growing adoption of artificial intelligence and AI-related skills is expected to create new opportunities for Pakistani freelancers, further strengthening export earnings and enhancing Pakistan's position in the global digital economy.