The country’s digital exports have been responding well. As per latest data from the SBP, the exports of ‘Telecommunications, Computer and Information services’ (or ICT exports) stood at $830 million in Jul-Oct period of FY22, showing year-on-year growth of 39 percent. In that pie, the purely Information Technology (IT) exports – e.g. export of computer software, software consultancy services, other IT services – stood at $650 million in this period, also up 39 percent year-on-year.
During FY21, the overall ICT exports had recorded 47 percent yearly growth to reach $2.1 billion, as per central bank data. At the current pace, the fiscal-year-end ICT exports will easily cross $2.5 billion mark, and purely-IT exports will exceed $2 billion. While those projections look significant (they will provide essential additional forex at a critical time), there will be few among the relevant stakeholders who will doubt that the IT sector is vastly under-performing, considering its potential in Pakistan.
The government, meanwhile, continues to project optimism that the pandemic-era growth in IT exports will keep on giving. Last week, the federal IT Minister reportedly predicted that the country’s IT exports would grow to $3.5 billion next year (2022), and reach $8 billion the following year (2023) when the current government’s term ends. Those are lofty estimates. Unless the minister is privy to major inside developments, quadrupling IT exports between FY21 and FY23 looks near impossible.
What often gets lost in the export-promotion debates is “firm-level economics” around producer choices and behaviors under given circumstances. While large firms have been able to capitalize on export opportunities arising out of the pandemic-induced race for digital transformation, the leading feedback from local IT industry concerns a severe human resource shortage, which complicates small & medium-sized IT firms’ capability to level up and meet bigger-ticket export opportunities.
IT firms work in a knowledge economy and without large numbers of adequately-trained human resource, they will be unable to grow their footprint. Local IT firms complain about the quality of IT graduates, whereas IT workers complain about limited training and development opportunities afforded to them by their employers. The government also gets its fair share of blame, having failed to include local IT firms in public procurement or provide sufficient incentives to expand IT talent base.
To meet imposing export targets, IT firms require more trained human resource, and they need them today. In the absence of sufficient, qualified talent pool, exports may grow around 20 to 30 percent, but there won’t be a major step-change in growth trajectory. The government has to take measures that encourage private players to set up rigorous training platforms (e.g. boot camps). The market needs to be flooded with youth at the cutting-edge of IT services. It’s time to go beyond the rhetoric!