KARACHI: Systems Limited (SYS), Pakistan’s largest listed technology company, has attributed the decline in its first-quarter margins to a combination of wage inflation, higher fuel costs, rupee appreciation and fewer working days, while expressing confidence in future growth through expansion in North America and recently completed acquisitions.
The management shared the outlook during a corporate briefing held on Tuesday to discuss the company’s financial performance for the quarter ended March 31, 2026, according to a report issued by Topline Research.
Systems Limited reported a consolidated profit after tax of Rs3.03 billion in the first quarter of 2026, translating into earnings per share (EPS) of Rs2.05, up 21 percent compared with the same period last year.
Despite strong earnings growth, the company’s gross margins declined to 25 percent during the quarter.
Management explained that profitability was affected by multiple factors, including rising employee costs, higher fuel prices, appreciation of the Pakistani rupee against foreign currencies, and a lower number of working days during the reporting period.
The company also highlighted a slowdown in collections, particularly from the Kingdom of Saudi Arabia (KSA), which contributed to an increase in trade receivables during the quarter.
Management warned that collections from Middle Eastern markets could face additional pressure if regional geopolitical tensions persist, reflecting the growing uncertainty surrounding business activity in the region.
To diversify revenue streams and reduce dependence on Middle Eastern markets, Systems Limited is increasingly focusing on growth opportunities in North America following the integration of Confiz, a strategic acquisition aimed at strengthening the company’s international footprint.
According to management, the acquisitions of Confiz and BAT SAA have collectively added between eight and ten enterprise-level clients to the company’s customer portfolio, providing opportunities for further revenue growth and cross-selling of services.
The company also addressed concerns regarding visa-related restrictions in the United Arab Emirates, which have periodically raised questions about the ability of Pakistani technology firms to deploy talent in the Gulf region.
Management stated that such restrictions no longer pose a significant threat to the company’s operations or hiring plans, noting that only 52 percent of its workforce in the region consists of Pakistani nationals, while the remainder comprises employees from other countries.
On the policy front, management disclosed that it had participated in pre-budget consultations with the government and advocated for the continuation of the existing 0.25 percent Final Tax Regime (FTR) applicable to IT exporters.
The company expressed optimism that the preferential tax framework would be retained in the upcoming federal budget, citing its importance for maintaining the competitiveness of Pakistan’s technology export sector.
Management also discussed proposals related to tax harmonization between freelancers and salaried employees, as well as reforms linked to the Export Facilitation Scheme (EFS), which were presented to policymakers during the consultations.
Analysts believe the company remains well-positioned to benefit from Pakistan’s expanding IT exports and increasing global demand for digital transformation services, despite short-term margin pressures and regional uncertainties.
Copyright Business Recorder, 2026
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