Pakistan's Tech Exports Exceed $1.5 Billion in First 9 Months of Fiscal Year 2020-21

[Riaz Haq]

Pakistan's technology exports are continuing their growth trajectory, soaring 44% in the first 9 months (July-March) of the current fiscal year 2020-21 to reach $1.512 billion. March 2021 saw record exports of $3.2 billion with goods worth $2.612 billion and services worth $564 million exported during the month.  

Pakistan Exports July20-Mar21. Source: State Bank of Pakistan

Tech exports accelerated 55% in the month of March 2021 to reach monthly record $213 million ,according to data released by the State Bank of Pakistan.

Pakistan's Monthly IT Exports. Source: Pakistonomy

Information technology development depends mostly on available talent. Pakistan has seen significant increase in technology manpower since the massive expansion of higher education initiated by Dr. Ata-ur-Rehman and backed by huge increase in funding provided by President Pervez Musharraf's government. 

Higher education in Pakistan has come a long way since its independence in 1947 when there was only one university, the University of Punjab. By 1997, the number of universities had risen to 35, of which 3 were federally administered and 22 were under the provincial governments, with a combined enrollment of 71,819 students. A big spending boost by President Pervez Musharraf helped establish 51 new universities and degree awarding institutions during 2002-2008. This helped triple university enrollment from 135,000 in 2003 to about 400,000 in 2008, according to Dr. Ata ur Rehman who led the charge for expanding higher education during Musharraf years. There are 161 universities with 1.5 million students enrolled in Pakistan as of 2014. Pakistan now boasts 220 universities with 40,000 faculty members and 1.5 million students, according to Dr. Javaid Laghari, former chairman of Higher Education Commission of Pakistan. 

Pakistan is now producing over 25,000 information technology graduates annually, according to the Punjab IT minister Mian Aslam Iqbal. He says Pakistan has more than 2,000 IT companies and call centers, and 300,000 English speaking IT professionals. Pakistan Software Export Board (PSEB) says there are 2,826 IT companies have registered with the Securities and Exchange Commission of Pakistan (SECP) during this financial year alone. Dr. Umar Saif, ex chairman of the Punjab IT Board,  has told the media that the Indian IT exports stood at $100 billion, which is 30 times Pakistan's which he believes are actually closer to $3.5 billion, near double the figure reported by the State Bank of Pakistan. “This is because the Indian IT industry employs over 4.5 million people as compared to Pakistan which has only 125,000 persons in this sector.”  

Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets, reports  Payoneer, a global payments platform company based in Silicon Valley, in its latest report. Payoneer attributes it to government programs such as Punjab government's e Rozgaar program that has been offering free online courses in digital freelancing. The sudden rush to learn skills online boosted the demand for instructors. The Pakistan government filled this demand by hiring alumni of programs like e Rozgaar who were successfully participating in the gig economy.

Punjab government's e-rozgaar program logo

After a brief dip in January 2020, the demand for freelancers took off in February and increased by double digits each month starting in March until June when it surged 47% at the time the data was compiled by Payoneer for its report.“ Likewise, this response is reflected in the revenue figures where freelancing continued to grow year-on-year but temporarily slowing from 21 per cent growth in March to 16 per cent growth in May,” the report noted. e-Rozgaar’s latest group of graduates earned the highest ever income for a new class of the program--earning over Rs. 25 million in three months during the Covid-19 lockdown. PITB Chairman Azfar Manzoor told Profit magazine that e-Rozgaar was playing a pivotal role in curbing youth unemployment. 

Online Freelance Revenue Surge in Pakistan. Source: Payoneer

“One factor that goes a long way to explain this is that in April, local government authorities took the initiative to rapidly shut down educational institutes as a way to contain the spread of the virus,” the report said, adding that this led to the development of a new online education system and as part of this initiative, government training programs, such as e-Rozgaar, expanded its services throughout the country, offering people a new way to enhance their professional capabilities. “The mission was to help expedite freelancing skills for thousands and enable them to earn a living in the most in-demand fields and ultimately lead to a higher employment rate,” the report highlighted.

A global survey conducted by Payoneer, shows that Pakistani women freelancers are earning $22 an hour, 10% more than the $20 an hour earned by men. While Pakistani male freelancers earnings are at par with global average, Pakistani female earnings are higher than the global average for freelancers. Digital gig economy is not only helping women earn more than men but it is also reducing barriers to women's labor force participation in the country. The survey also concludes that having a university degree does not help you earn more in the growing gig economy. The survey was conducted in 2015.

Freelancers Hourly Rate by Gender. Source: Payoneer

An average Pakistani freelancer working 34 hours a week at $20 an hour earns $34,000 a year, or Rs. 5.7 million a year, a small fortune for a young Pakistani. This is one of the upsides of the online global labor market for skilled young men and women in developing nations like Pakistan. Sometimes freelancing experience leads to tech startups in Pakistan.

Another interesting survey finding is that freelancers with a university degree earn about 10% less on average than those with just the high-school diploma. This indicates that the freelancers skills matter more than the level of formal education.

Average Hourly Rate by Education. Source: Payoneer

Payoneer surveyed 23,000 freelancers worldwide, including emerging markets such as Pakistan, the Philippines and the Ukraine. Survey respondents comprise a random sample of Payoneer’s cross-border payment platform users, providing unique insights into how these globally-enabled freelancers operate, what makes them successful and what rates they command.

Freelancers Average Work Week. Source: Payoneer

Pakistani freelancers worked about 34 hours a week, a little less than the 36 hours global average. Indian freelancers log 37.4 hours a week and Bangladeshis 35.9 hours weekly. Freelancers from Kenya average the highest amount of hours per week (42.6) with Egypt coming in second (38.5). Professionals working in Morocco and Tunisia work the fewest hours per week, potentially as a high percentage of them are also working at companies as well

Pakistan's digital gig economy growth is the fastest in Asia and fourth fastest in the world, according to digital payments platform Payoneer.

Gig Economy Growth in Q2/2019. Source: Payoneer

United States led gig economy growth of 78% followed by the United Kingdom 59%, Brazil 48%, Pakistan 47% and Ukraine 36%. Asia growth was led by Pakistan followed by Philippines (35%) , India  (29%) and Bangladesh (27%).

The rapid gig economy expansion of 47% in Pakistan  was fueled by several factors including the country's very young population 70% of which is under 30 years of age coupled with improvements in science and technical education and expansion of high-speed broadband access.  Pakistani freelancers under the age of 35 generated 77% of the revenue in second quarter of 2019.

Growth in Freelance Work. Source: Payoneer

Mohsin Muzaffar, head of business development at Payoneer in Pakistan, has said as follows: "Government investment in enhancing digital skills has helped create a skilled freelancer workforce while blanket 4G coverage across Pakistan has given freelancers unprecedented access to
international jobs".

Global Freelance Revenue By Age. Source: Payoneer.

In Q2/2019, Asia cemented its status as a freelancer hub.  Pakistan, Bangladesh and India, Philippines made it to the  top 10 list, collectively recording 238% increase from Q2/2018.

Online Labor Index. Source: Oxford Internet Institute

Pakistan technology exports are on a rapid growth trajectory, thanks to the investment made in education during Musharraf years. Pakistan is now producing over 20,000 information technology graduates annually, according to the Punjab IT minister Mian Aslam Iqbal. He says Pakistan has more than 2,000 IT companies and call centers, and 300,000 English speaking IT professionals. 

Silicon Valley based global payments platform Payoneer has reported that Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets. A global survey results on freelancing show that Pakistani women freelancers are earning $22 an hour, 10% more than the $20 an hour earned by men. While Pakistani male freelancers earnings are at par with global average, Pakistani female earnings are higher than the global average for freelancers.   The survey also concludes that having a university degree does not help you earn more in growing gig economy. The survey was conducted in 2015. As of 2017, Pakistan freelancers ranked fourth in the world and accounted for 8.5% of the global online workforce, according to Online Labor Index compiled by Oxford Internet Institute. India led with 24% share followed by Bangladesh 16%, US 12%, Pakistan 8.5% and Philippines 6.5%.

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[Riaz Haq]

#Pakistan Aims to Double IT Industry in Two Years With #Tech Zones.Half a dozen global & 50 domestic firms have expressed interest in setting up in proposed zones. As much as $1.5 billion of private investment will pour into these projects in next 2 years. https://www.bloomberg.com/news/articles/2021-06-23/pakistan-aims-to...

New tech zones may double IT industry to $6 billion in 2 years
Pakistan has huge youth population, world’s No. 3 gig economy

Pakistan is looking to double its IT industry in two years by setting up dedicated tech zones across the country, after missing out on tech booms that helped nations like India and Philippines become back-end operators for the world.

The world’s fifth most populous nation expects to open a dozen such zones by next year, said Amer Hashmi, who heads the government body responsible for developing science and technology zones. It’s offering a 10-year waiver on corporate tax and imports of any equipment or building material needed for the areas, which will give Pakistan’s IT industry a “catapult push” that could double its size to as much as $6 billion in two years, he added.

Pakistan is banking on the new tech zones to create employment for its masses of young people -- nearly two-thirds of its population is below 30. It’s already home to the third-largest gig economy globally after India and Bangladesh, according to Online Labour Index by Oxford Internet Institute. A flood of overseas capital into startups from fintech to e-commerce that began during the coronavirus pandemic is also creating demand for dedicated zones to serve these industries.

The initiative first emerged after Prime Minister Imran Khan sought answers at a meeting last year as to why Pakistan was missing out on the tech boom. Tapping on his own experience as an entrepreneur, Hashmi told the prime minister that the South Asian nation lacked a tech eco-system or an enabling environment.

Hashmi, who left his job with International Business Machines Corp. in Canada and moved back to Pakistan to open a technology company, had to grapple with people asking for bribes and faced delays with setting up his own fiber network and data centers. The new areas will not have such issues and will be a plug-and-play model, he said.

“How do you get a Google or Microsoft or Amazon? You attract them and for that you have to give special incentives, which well I think we would have probably been the last in the region to give,” Hashmi, now chairman of Special Technology Zones Authority, said in an interview. “Dubai Internet City gave them. They got all the big companies.”

Cash-strapped Pakistan has tried several times to start similar projects in the past. In 2006, it planned to spend $1 billion to build dozens of software parks, though that effort failed. This time, the government’s efforts will involve attracting global investment to ensure the project takes off.

[Riaz Haq]

#Pakistan reports 10-year high #exports in fiscal year 2021 despite #covid19 #pandemic. #Tech exports reached record $2 billion. #Textile exports increased 18.85% while #pharma exports increased 27%. Exports of #copper and copper derivatives increased 44%.

https://www.samaa.tv/money/2021/07/pakistan-reports-ten-year-high-e...

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Pakistan's exports increase to $31.3 bln in FY21: Razak Dawood


https://dunyanews.tv/en/Business/608729-Pakistan-exports-increase-to-$31.3-bln-in-FY21-Razak-Dawood

Adviser to Prime Minister on Commerce and Investment, Abdul Razak Dawood said Thursday that the country’s exports increased to 31.3 billion during the last fiscal year (2020-21), reflecting government’s successful trade policy.

As Compared to the previous financial year (FY2020), exports increased by 18 percent during 2020-21, despite the negative impact of Covid-19, the adviser said this while addressing a press conference here.

He said that during the outgoing financial year, country’s merchandize exports stood at $25.3 billion, while services exports reached to $ 6 billion. He said that during the last month of June 2020-21, domestic exports exceeded $2 billion.

Similarly, Information Technology (IT) exports remained above $2 billion in last Fiscal Year, he added.

He said that the government would sign a Preferential Trade Agreement (PTA) with Uzbekistan on July 7.

He said the government was working on ‘Tariff Rationalization’ and would rationalize 4,000 tariff lines in the next financial year 2022.

[Riaz Haq]

#Pakistan's #tech ecosystem is finally taking off. In 2021, Pakistani #startups are on track to raise more money than the previous 5 years combined. This capital is coming from investors from #Asia, #MiddleEast & top #SiliconValley VCs.
https://tcrn.ch/2TEwRR0 via @techcrunch

https://twitter.com/haqsmusings/status/1412922307438268416?s=20


Pakistan, the world’s fifth most populous country, has been slow to adapt to the internet economy. Unlike other emerging economies such as China, India and Indonesia, which have embraced digitization and technology, Pakistan has trailed the region in the adoption of technology and startup formation.

Despite this, investors have dreamed for years of the huge opportunities in unlocking Pakistan’s potential as a digital economy. As a country of 220 million people, almost two-thirds of whom are under the age of 30, Pakistan draws natural comparisons to Indonesia — which has rapidly emerged as one of the most vibrant technology ecosystems outside the U.S. and China.

After years of lagging behind, over the course of the past 18 months, Pakistan’s technology ecosystem has come to life in unprecedented fashion. In 2021, Pakistani startups are on track to raise more money than the previous five years combined. Even more excitingly, a large portion of this capital is coming from international investors from across Asia, the Middle East and even famed investors from Silicon Valley.

The rapid emergence of Pakistan’s technology ecosystem on the international stage has been no accident — it’s the result of a confluence of changing facts on the ground and shifting dynamics in the startup and investing world as a result of the pandemic.


The sudden emergence of Pakistan’s tech ecosystem on the international stage has been driven by three major factors: an improving security situation, quickly growing mobile connectivity, and critical legal changes and deregulation.

As a frontline state and coalition partner in the United States’ invasion of Afghanistan, Pakistan saw fatalities from terrorist violence soar from 295 in 2001 to a peak of over 11,000 in 2009. This climate of instability and violence scared away international business and investors from Pakistan for much of the first two decades of the 21st century.

[Riaz Haq]

Pakistan's DigiKhata raises $2 million seed to help small businesses digitize bookkeeping and start online stores

https://www.menabytes.com/digikhata-seed/

Faisalabad-based fintech DigiKhata has raised $2 million in a seed round, it announced in a statement today. The round was led by Chinese VC MSA Capital, and joined by Shorooq Partners, SOSV, +92 Ventures, and some angel investors.

Founded in 2020 by Adnan Aslam, DigiKhata enables micro and small businesses to manage their bookkeeping using its web and mobile app. The app replaces offline registers and diaries and helps merchants digitize their bookkeeping by recording financial transactions digitally. It also sends automated reminders to their customers for (due) payments, helping merchants recover debts.

The first user of the app was Adnan’s father who runs a wholesale business in Faisalabad. It claims to have grown the number of registered businesses to over 1 million since then. DigiKhata declined to share the details about their active userbase but told us that their retention numbers are excellent. Once a user has a large number of transactions recorded on the platform, it becomes difficult for them to switch to alternatives, said the startup, adding that in 2020 alone, its userbase has recorded over $1 billion worth of transactions on its platform.

“The MSME sector contributes significantly to the Pakistani economy in terms of GDP, exports and employment. If empowered with the right tools and resources, their value addition to the economy can grow manifolds. With this round of funding, we are looking to scale our team and continue building world-class utility solutions to help these MSMEs generate real economic value and grow,” noted DigiKhata’s founder and CEO in a statement.

Prior to starting DigiKhata, Adnan led finance and accounting functions at different companies in Pakistan, United Arab Emirates, and Africa. He’s a chartered accountant by profession and bootstrapped the business before raising this round, with his savings.

The startup has recently also launched its second product, DigiDokaan, a mobile app that helps MSMEs build and launch their online stores. Since going live three months ago, DigiDokaan has helped users set up 50,000 stores, claimed the startup.

On all fronts, DigiKhata faces competition from multiple players. In the digital ledger space, the local alternatives include CreditBook, Bazaar’s Easy Khata, and Uhdaar, and for building stores, there are options like Dukan and Chikoo. Adnan termed competition good for business, “It keeps you on your toes. We’re focused on serving our userbase by building the best-in-class products.”

[Riaz Haq]

Pakistan’s startup boom has triggered a “war for talent”
Flush with venture funding, tech companies are offering staggering salaries and perks, while recruiters struggle to hang on to candidates eager for the best deals.

https://restofworld.org/2022/pakistans-startup-boom-war-for-talent/

In the spring of 2021, Qatar-born edtech startup Stellic decided to hire a head of engineering in Pakistan. The company used LinkedIn and sought the services of two recruitment agencies to find a candidate. Ten months later, however, the role is still open. “We have been trying different channels, but we haven’t found the right candidate,” Sabih Bin Wasi, founder and CEO of Stellic, told Rest of World.

Stellic’s struggle reflects a broad trend in the Pakistani tech industry, where companies — startups as well as traditional IT firms — are struggling to attract the right talent. The tech boom in recent years has created a severe shortage of trained tech workforce in the world’s fifth most-populous country. Experts believe the industry must come up with innovative ways to overcome the shortage soon, if it wants to continue its impressive growth.

Pakistan’s IT exports increased at a compound annual growth rate of 17.8% between fiscal year 2016 (July–June) and FY 2021. The country’s tech startups raised a record $365 million in 2021 and have already banked at least $223 million in less than five months of 2022.

“There’s literally a war for talent these days,” Salman Shahid, CEO of recruitment startup Kamayi, told Rest of World. “The situation has perhaps been the worst for local software houses, who cumulatively employ some 70% of the human resource, as they train fresh graduates only to lose them to well-funded startups.”

Over 57% of the respondents in a survey of 150 Pakistani entrepreneurs in 2021 cited the availability of top managers to be a “major” challenge. “The emergence of a growing number of venture-backed startups has led to companies competing for a limited talent pool by offering salaries way above market rate, along with other perks,” Invest2Innovate, the Pakistani startup accelerator that conducted the survey, said in its report. “The technology sector witnessed one of the steepest pay increases in 2021, as companies gave higher-than-usual increments in order to retain their resources.”

After graduating from a prestigious college in Karachi in June 2019, Ali Hasan took up his first job at a salary of 20,000 rupees ($128 at the time) per month — not much higher than the minimum wage — at a small software firm in Karachi. Three days later, he quit, lured by a well-known tech company that was offering double the salary. Hasan, who asked to be identified by a pseudonym because he does not want potential future employers to doubt his intentions to commit to an offer, signed the contract with the second employer. But a day before joining, he took up another offer that would pay him three times the initial salary. Since his graduation, Hasan has appeared for “hundreds of interviews” and signed at least seven offer letters, he told Rest of World.

Only two years later, Hasan was making 50 times his original salary as a staff software engineer for a global travel tech company.

[Riaz Haq]

Pakistan’s startup boom has triggered a “war for talent”
Flush with venture funding, tech companies are offering staggering salaries and perks, while recruiters struggle to hang on to candidates eager for the best deals.

https://restofworld.org/2022/pakistans-startup-boom-war-for-talent/

Only two years later, Hasan was making 50 times his original salary as a staff software engineer for a global travel tech company.

This kind of steep career growth was unheard of in Pakistan until a couple of years ago.

A few years ago, a software engineer in Pakistan who had work experience of around three years would make about 150,000 rupees ($1,000 at the time) a month, according to Shahid of Kamayi. Now, someone with the same skills and experience earns double that. More than 40% of Pakistani tech companies gave over 30% increment raises to their employees in 2021, while 41% of firms gave hikes of between 15% and 30%, according to a survey by the Pakistan Software Houses Association (P@SHA). Yet, the annual turnover rate for the industry shot up to 30% in 2021 from 18% the year before.

There are over 500,000 people working in the IT and business process outsourcing (BPO) sectors in Pakistan. The country produces around 25,000 fresh computer science graduates every year, which is growing by 5% each year. Most of these graduates cannot be put on jobs immediately. “Only 20% of those graduates are actually employable. Very few local universities are actually training their students on newer technologies, like Javascript and Python, which account for almost 80% of our exports,” Mustafa Najoom, vice president of growth at Gaper.io, a recruitment startup that helps Pakistani engineers find jobs with U.S. companies, told Rest of World.

To navigate the situation, Pakistani tech companies are coming up with unique solutions.

Salesflo, a supply chain software catering to consumer goods companies, has launched a structured graduate program, which recruits recent college graduates and trains them across a range of business functions. “In our first year of Salesflo, we hired four fresh graduates because that’s all we could afford at the time. But the results were so encouraging that from next year onwards, we developed it into a structured graduate program,” Yasir Suleman Memon, co-founder of Salesflo, told Rest of World.

Salesflo has also chosen an unlikely destination to set up its engineering hub: Hyderabad, the eighth largest city in Pakistan. “There’s a lot of wonderful talent in cities like Hyderabad, Multan, Bahawalpur, etc., who have to move to metropolises for jobs, so why not take the jobs there?” Memon said.

Several tech companies are also trying to tackle the problem of talent shortage via coding camps and open-source courses.

One of the largest export-oriented IT services companies in Pakistan, 10Pearls, has set up “10Pearls University,” which offers free training and online courses in different technical disciplines. “To double our IT exports, we need to increase our workforce by two times,” Zeeshan Aftab, managing director and co-founder of 10Pearls, told Rest of World. “To address this, we need to combine multiple strategies: provide software development training to graduates of other engineering disciplines who haven’t secured jobs, incentivize women with professional IT qualifications who have become homemakers to rejoin the workforce, and adjust the current degree programs so students can join the workforce after two to three years of studies and complete the final year while working.”