Pakistan’s IT sector has achieved a remarkable milestone, recording monthly IT exports of US$324 million in November 2024. This marks a 25% year-on-year (YoY) increase and a slight 2% decline month-on-month (MoM). Notably, these exports exceed the last 12-month average of US$295 million, reflecting the sector’s consistent growth. This achievement represents the 14th consecutive month of YoY IT export growth, dating back to October 2023.
During the first five months of the fiscal year 2025 (5MFY25), IT exports have surged to US$1.53 billion, up by 33% YoY. This impressive growth is attributed to several factors: the expansion of IT companies’ global client base, especially in the GCC region; the State Bank of Pakistan’s relaxation of the permissible retention limit in Exporters’ Specialized Foreign Currency Accounts from 35% to 50%; and the stability of the Pakistani Rupee (PKR), which has encouraged IT exporters to repatriate a larger portion of their profits.
The MoM decline in IT exports can be attributed to the fewer working days in November (21 days) compared to October (23 days). However, export proceeds per day in November 2024 were recorded at US$15.4 million, up from US$14.3 million in October 2024.
Pakistani IT companies remain active in the global market, with leading firms recently participating in Oslo Innovation Week 2024 and the Pak-US Tech Investment Conference. According to a survey by the Pakistan Software Houses Association (P@SHA), 62% of IT companies are maintaining specialized foreign currency accounts.
A significant development in FY25 was the State Bank of Pakistan introducing a new category, Equity Investment Abroad (EIA), specifically for export-oriented IT companies. This allows IT exporters to acquire interest (shareholding) in foreign entities using up to 50% of proceeds from specialized foreign currency accounts, further boosting their confidence in remitting proceeds back to Pakistan.
Net IT exports (exports minus imports) for November 2024 were recorded at US$287 million, reflecting a 27% YoY increase. These net exports also surpass the last 12-month average of US$261 million.
Looking ahead, experts believe the IT sector will continue its growth trajectory, with expected growth of 10-15% for FY25, potentially reaching US$3.5-3.7 billion. Within the sector, Systems Limited (SYS) is highlighted as a preferred pick, currently trading at 2024E and 2025F PE ratios of 22.8x and 16.5x, respectively.