Pakistan’s information technology sector has emerged as one of the country’s strongest export performers, but a new study warns that the sector’s rapid growth remains vulnerable due to its heavy reliance on low-value outsourcing and freelance work.
According to the Pakistan Business Council (PBC) study Expanding Pakistan’s IT Footprint, Pakistan’s computer services exports nearly doubled from $1.67 billion to $3.24 billion over five years to FY2025. Total information and communication technology (ICT) exports reached $3.81 billion, accounting for 45% of the country’s services exports and generating a $2.4 billion trade surplus, the highest among services categories.
However, the report estimates that official export figures may not fully capture the size of Pakistan’s IT industry. When IT-related earnings received through personal remittance channels and revenues generated by Pakistani-founded companies registered overseas are included, the sector’s actual earnings could be $5 billion or more.
Freelancing Growth Raises Concerns
Despite strong growth in IT exports, the composition of the sector has raised concerns. Freelance transactions represented 90.8% of recorded IT export entries in FY2025, but accounted for only 24.1% of their total value.
The report also found that the median value of freelance transactions fell 41%, from $106 in 2021 to $63 in 2025, even as total freelance exports increased by 114.6%. The decline suggests growing commoditisation of technology services and increasing exposure to artificial intelligence-driven disruption.
The study argues that Pakistan cannot sustain long-term IT export growth simply by expanding its pool of software developers and freelancers. The country needs to move towards higher-value technology services, innovation, artificial intelligence, research and development, and specialised digital industries.
Pakistan Needs to Move Beyond Low-Cost Outsourcing
Industry experts believe Pakistan can learn from countries such as India and Poland, which are increasingly shifting from traditional service provision towards AI, innovation and research and development.
Badar Khushnood, former chairman of P@SHA and lead investigator for the PBC report, said Pakistan now needs to build the infrastructure, skills, financing and institutional capacity required to transform its growing IT sector into a major export industry.
China-Pakistan Cooperation Could Boost Digital Economy
The report also highlights opportunities for greater China-Pakistan cooperation in technology. Pakistan’s participation in the China-led World Artificial Intelligence Cooperation Organisation could provide a platform for deeper collaboration in artificial intelligence, digital infrastructure and technology development.
China could support Pakistan not only through investment and hardware but also through technology transfer, skills development, infrastructure development and access to international markets.
One major opportunity is the development of large-scale data centres. Pakistan’s growing digital economy requires reliable computing and data-storage infrastructure, while Chinese technology companies have extensive experience in building and operating such facilities.
The report suggests establishing data centres in dedicated technology zones where land, connectivity, taxation and electricity supplies can be provided under predictable conditions. With the right infrastructure, Pakistan could potentially provide cloud and digital services to regional and international markets.
Reliable Power Crucial for Data Centres and AI
A reliable electricity supply remains essential for Pakistan’s digital ambitions. Large data centres and AI facilities require uninterrupted power, making dedicated technology clusters with redundant grid connections, backup capacity and long-term power contracts increasingly important.
China’s expertise in solar power, batteries, energy storage and energy-efficient cooling systems could also help Pakistan develop reliable and potentially renewable-powered digital infrastructure.
Focus on AI, Cybersecurity and Advanced Skills
Pakistan also needs to expand its computing capacity and develop a stronger domestic AI ecosystem. Joint AI laboratories, computing centres and applied-AI programmes involving Pakistani and Chinese companies, universities and startups could help develop solutions for sectors such as agriculture, healthcare, logistics, manufacturing, banking, energy and public services.
At the same time, Pakistan’s technology workforce needs to move beyond routine software development and business-process services. Greater emphasis should be placed on artificial intelligence, cloud engineering, cybersecurity, semiconductor design, robotics, embedded systems and advanced software development.
The report also identifies cybersecurity as a potential export industry as businesses in developing markets increasingly require affordable cloud security, threat intelligence and secure digital systems.
Pakistan Eyes Regional Digital Hub Status
China could also help Pakistani technology companies access international markets by integrating them into global supply chains and technology networks. Collaboration could include software development, engineering, cybersecurity, animation, gaming and business-process services.
However, the objective should not be to turn Pakistan into a low-cost back-office destination. Instead, the country should aim to become a regional digital-services and technology hub capable of producing intellectual property and high-value technology solutions.
The report recommends linking incentives for technology companies to measurable outcomes, including export growth, skilled employment, research and development, intellectual-property creation and foreign-exchange earnings.
For Pakistan’s IT sector to sustain its rapid expansion, the next phase will require a shift from low-cost outsourcing towards AI, innovation, advanced skills, reliable digital infrastructure and higher-value technology exports.
