Pakistan’s IT sector targets AI-driven expansion after record $4.6bn exports
Pakistan’s information technology (IT) and IT-enabled services (ITeS) sector recorded its highest-ever annual exports of $4.6 billion in FY2025-26, marking a 21% increase from $3.814 billion in the previous fiscal year. While the sector narrowly missed the government’s $5 billion export target, industry experts say the next phase of growth will depend on artificial intelligence (AI), innovation, and high-value digital products rather than low-cost outsourcing.
The record performance cements ICT as Pakistan’s largest services export sector. Under the government’s Uraan Pakistan initiative, the country aims to increase IT exports to $10 billion by FY2028-29.
Industry expanding but below potential
Pakistan’s IT ecosystem continues to grow, supported by a young workforce, competitive operating costs, expanding broadband connectivity, remote work, freelancing platforms, and a favourable 0.25% final tax regime on export income.
The country now has more than 600,000 IT professionals and freelancers, over 26,000 registered software companies, and technology hubs across Karachi, Lahore, Islamabad, Rawalpindi, and several emerging cities.
Despite this progress, experts believe the sector remains fragmented and is growing below its true potential. Sustaining ambitions beyond $10 billion in exports will require annual growth of 25% to 30%, significantly above the current pace.
AI and high-value services seen as next growth engine
Industry leaders say Pakistan must move beyond traditional software development and business process outsourcing (BPO) toward higher-value services including artificial intelligence, cybersecurity, automation, enterprise software, cloud computing, and digital consulting.
The United States remains Pakistan’s largest export market, followed by the United Kingdom, the UAE, Europe, Canada, Saudi Arabia, and Singapore. Experts also identify strong untapped opportunities across the GCC, Europe, East Asia, Africa, and Central Asia.
Freelancers continue to play an increasingly important role, contributing around $1.1 billion, or roughly one-quarter of total IT exports, during FY2025-26.
AI strategy gaining momentum
Pakistan has accelerated efforts to build a national AI ecosystem through the National AI Policy 2025, the proposed National AI Fund, AI Centres of Excellence, regulatory sandboxes, and a target of training one million people in AI-related skills by 2030.
The government has also launched seven AI hubs to support startups and innovation, while Pakistan recently became a founding member of the China-led World Artificial Intelligence Cooperation Organisation (WAICO).
Industry experts stress that international partnerships should strengthen Pakistan’s own intellectual property, AI capabilities, and technology ecosystem rather than create long-term dependence on foreign vendors.
Challenges remain
Despite record exports, the sector continues to face challenges including policy uncertainty, foreign exchange restrictions, payment bottlenecks, data protection concerns, intellectual property enforcement, energy costs, internet reliability, and limited access to international investment.
Experts believe Pakistan’s next stage of IT growth will depend less on increasing the number of software developers and more on creating globally competitive AI-powered products, digital platforms, and proprietary technologies that generate higher-value exports.
