Pakistan’s Information Technology (IT) sector is incurring massive financial losses of over $1 million per hour due to frequent internet shutdowns, according to Sajjad Mustafa Syed, Chairman of the Pakistan Software Houses Association (P@SHA).
Speaking to the media on Tuesday, Syed emphasized that achieving the government’s target of $15 billion in IT exports hinges on stable infrastructure, open market access, supportive tax policies, and a skilled workforce. “For every dollar the government invests in market access, the sector has historically returned $49 over the past three years,” he stated.
Despite challenges, the IT sector has experienced remarkable growth, with exports increasing by 40%, reaching $3.2 billion. The United States remains the top destination, accounting for 55% of IT exports, followed by Europe with 20%. However, Syed stressed that better branding is essential to unlock the sector’s full potential.
Impact of Internet Disruptions
Syed highlighted the devastating effects of internet outages, revealing that 99% of IT companies reported service interruptions, while 90% faced financial losses. He cited a recent internet blackout that resulted in a $2 million penalty for a call center, underscoring the sector’s vulnerability.
Taxation and Policy Concerns
Syed also raised concerns over the tax burden on IT companies, noting that revenue-based taxes significantly hinder growth. He urged the government to introduce tax incentives to boost the sector, enhance remittances, and attract foreign investment.
Data Security Risks
Addressing data security, Syed warned of the risks associated with free Virtual Private Networks (VPNs) and called for a more secure, industry-friendly VPN model. He urged the government to adopt regulations that prioritize security while supporting IT businesses.
Lastly, Syed emphasized the importance of aligning the IT sector’s growth with broader national policies, advocating for harmonized policies that integrate the sector’s development with Pakistan’s overall economic framework.
