Pakistan Proves That Outsourcing Is Still A Lucrative IT Strategy

Pakistan has solidified its reputation as a leading country for outsourced IT services. In the current financial year, the country has so far earned $958 million through its myriad IT companies. Its computer service programs have surged in value by 44%, inflating to a $753 million predicted market share from $522 million in the same period last year. Metrics from the State Bank of Pakistan show that remittance under IT services also grew 37% along this timeline. The country is poised to exercise further domination of the IT outsourcing industry, as the Ministry of Information Technology and Telecommunication (MoITT) aims to reach $5 billion in IT export remittance by the 2023 fiscal year.

Following the trends, it’s a cinch that Pakistan will master the market. Technavio’s IT Outsourcing Market Forecast covering 2019-2024 projects international market growth of $97.5 billion during the next three years. The World Economic Forum has ranked Pakistan as one of the top countries for ICT service and cost reduction. An official from MoITT is confident that heightened demand is imminent and will prove invaluable to the country’s economy. Higher payer rates, productivity, employment, and quality of life are bound to accompany a satisfied international customer base.

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The Pakistani government has, in fact, installed a variety of incentives to support the continued growth of its IT outsourcing industry. Foreign investors are allowed 100% repatriation of investments and dividends. Startups are given the luxury of 3-year minimum and withholding tax exemptions. A tax holiday also accompanies venture capital funding until 2024. All IT exports are protected by forgiveness of income tax. Being that it’s the biggest net service export industry in the country, Pakistan’s government is wise to foster its domestic IT powerhouses.

Outsourcing IT remains a go-to for many companies, and even in more xenophobic countries, it’s taken for granted that a modern business solution might draw expertise from across the globe. Nevertheless, a foreign dream team of service providers might draw the same collective salary as a single U.S. operator. While a software engineer in India speaking fluent English earns an annual salary of $19,000, an American working in the states with equivalent training and education can make an average of $90,000 per year. Lower labor costs and higher proficiency of employees will keep outsourcing in the IT budgeting conversation for a long time to come.