ISLAMABAD: Pakistani firms and freelancers said this week they were eyeing fresh opportunities in the information technology sector, noting that the ongoing Middle East conflict, despite economic uncertainties, has driven the demand for cost-effective services higher.
The war in the Middle East involving the US, Israel and Iran has disrupted key energy shipping routes, driven global oil prices higher and created general economic uncertainty in the Gulf region. Sajjad Syed, chairman of the Pakistan Software Houses Association (P@SHA), said that despite the broader economic slowdown in Gulf nations, demand for cybersecurity services in the region has surged.
Pakistan’s IT exports surged to a record $3.8 billion in the 2024–25 fiscal year, according to official data, with the momentum carrying into the current fiscal year. Exports rose 20 percent to $2.98 billion during the July–February FY2025-26 period compared with the same period last year.
Syed noted that the US and the Middle East together account for around 75 percent of Pakistan’s IT market, including software houses and freelancers. He said that while both regions face economic uncertainty, the impact on Pakistan’s IT industry, particularly larger firms, was “expected.” However, he said the downturn also presents another opportunity.
“Companies cannot shut down their IT systems, even during a recession,” Syed told Arab News on Wednesday.
“Instead, they look for more cost-effective service providers to maintain operations. This creates an opening for countries like Pakistan,” he explained.
The P@SHA chairman said budgetary cuts often push firms to explore new vendors. He said Pakistan’s current IT exports stand at around $4 billion, compared to India’s $200 billion.
“As companies reassess spending, there is potential for new business to open up, though it is still too early to quantify the gains,” he said.
The P@SHA chairman said that while Pakistani firms have begun outreach efforts, he did not have “concrete numbers” to share.
“That said, cybersecurity companies are already seeing new business and Pakistan has a strong and growing segment in this area,” he said.
Pakistan’s IT ministry did not respond to a request for comment.
‘MIXED BUT IMPORTANT SHIFT’
Freelancers, who make up a large share of Pakistan’s digital work force, are already seeing shifts in the demand for tech services.
Tufail Ahmad Khan, president of the Global Freelancers Union, said that unlike traditional exports that depend on logistics, shipping routes and physical supply chains that are directly impacted during geopolitical disruptions, IT exports are driven by global talent and digital delivery, making them far more “resilient” to obstacles.
He noted a significant surge in demand for Pakistan’s IT exports, pointing to the 20 percent increase in the July-February period.
“We aren’t just a ‘back-office’ anymore; our professionals are leading high-value projects in AI, cloud architecture, and digital resilience,” Khan said on Wednesday.
He said Pakistan has the fourth-largest workforce of freelancers worldwide, noting that the industry is witnessing a structural shift where clients are seeking out Pakistani tech service providers for specialized technical expertise rather than just saving on cost.
“I would say the current Middle East tensions, including the US–Iran situation, have created a mixed but important shift for Pakistan’s IT sector,” Khan said.
He said that while the demand for critical services such as cybersecurity, artificial intelligence and digital infrastructure is increasing globally, some non-essential services such as paid advertising, experimental marketing campaigns, or discretionary digital spending have slowed down as businesses adopt a “cautious approach” during times of uncertainty.
Khan added that while the core IT and freelancing economy remains “strong” in certain areas, segments tied to optional spending are experiencing “temporary pressure.”
“Overall, this crisis reinforces that Pakistan’s strength lies in its global digital workforce, which remains less vulnerable compared to traditional export sectors,” Khan said.
Khan said that if Pakistan wants to increase its IT exports from $3 billion to $5 billion, it needs to focus on two fronts: upskilling and ecosystem stability.
“We need to transition more of our 2.3 million freelancers into high-tier domains like AI and Cybersecurity, where global demand is peaking,” he said.
“Crucially, the government must continue improving the ease of doing business, specifically by simplifying cross-border payment flows and maintaining the 50 percent foreign currency retention policy for exporters,” he added.
Syed also urged the government to improve the ease of doing business.
“Although IT exports are taxed at 0.25 percent, several countries in the region offer zero tax,” Syed said. “Companies in Pakistan also face multiple additional taxes.”
