Pak IT sector growth phenomenal; to provide 18,000 new jobs in 2019: survey

KARACHI: The IT industry in Pakistan has witnessed phenomenal growth in the past 10-12 years during which its contribution reached 3.5 of total exports in 2018 from 1.3% in 2006, while it currently employs over 65,000 skilled labour force of the country.

The Pakistan Technology Industry survey 2018 has answered several important queries policymakers and investors need to know by using data from 94 participating technology companies across the country. The focus of the survey was on companies engaged in software and IT enabled services exports from Pakistan.

According to the technology industry survey conducted by a group of industry professionals in October and November 2018, 58% of the companies in the survey earned less than US$ 800,000 a year. 63% generated average revenues of US$ 23,000 per year or less per employee. 86% of the businesses employed less than 180 individuals of which on average 26% were women. Using survey data on a projected basis the community plans on hiring between 12,000 to 18,000 employees in 2019.

Although, the survey authors were excited about the industry profile that emerged from the survey but statistics need to be read with the correct context.

When asked to comment on the results the study has produced, they noted that the local IT sector has great potential to grow and can provide stimulus to the national economy.

“We thought the numbers would be higher, but in our space, especially software exports smaller is better. Bigger companies grow at slower rates. Smaller businesses grow at a significantly faster clip. While the number of larger companies has increased compared to the studies done in 2004 and 2007, we are still very much a young industry and the numbers show that. The numbers show that there is a lot of young blood at work and there is room for tremendous growth in coming years.”

In terms of official SBP figures, the study finds, ICT exports have grown from 1.3% of total exports in 2006 to 3.5% of total exports in 2018. When compared to services exports it has jumped from 7% of services exports to 20% of services exports in 2018. Every 5th dollar in services exports today comes from the technology industry. It will be every 4th dollar next year.

The results also show how far the sector has come as a community. In 2007-8 when the last formal industry survey was run the estimate of total technology industry employment was 12,000 employees. In 2019 as a whole the IT industry will hire 18,000 employees in just a single year. That is 1.5 times our total employment in 2007-8.

“In 2004 we were a 4,000 strong professional community. 14 years later in 2018 we are somewhere in the 60,000 – 75,000 employee range. That is a 15-20 times growth in employment. All this based on a small informal sample of the industry. The numbers are likely to be higher for an industry wide study,” the authors opined.

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Jawwad Farid is a 26 year veteran of the technology industry in Pakistan. He is the CEO of Alchemy Technologies, a Fellow Society of Actuaries and a Columbia Business School alumni. He tweets regularly as @rebootdude and can be reached at jawwad@financetrainingcourse.com.