Tech: Aug-24 IT Exports up by 27% YoY to $298 million, exports up by 4% MoM

Pakistan recorded monthly IT exports worth $298 million, up by 27% YoY and by 4% MoM in Aug-2024. These monthly IT exports in Aug-2024 were higher than the previous 12-month average of $275 million.

YoY jump in IT exports has been due to the growing clientele of IT export companies globally, especially in GCC region, and relaxation in the permissible retention limit by the State Bank of Pakistan (SBP), increasing it from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, as well as the stability in Pak rupee encouraging IT exporters to bring higher portion of profits back to Pakistan.

According to Nasheed Malik, analyst, Topline Research, the MoM increase in IT exports is due to higher number of working days in August (21) compared to July (20). Export proceeds per day were recorded at $14.2 million for August vs. $14.3 million in July.

Recently, our local IT companies have been actively engaging with global clients and have attended London Tech Week 2024, Collision Canada 2024, and Black Hat, USA. According to Pakistan Software Houses Association (P@SHA) survey, 62% of IT companies were maintaining specialised foreign currency accounts.

A major development in Jul-24 was the SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilising up to 50% proceeds from specialised foreign currency accounts. This development will further boost confidence of IT exporters to remit proceeds back to Pakistan.

Net IT Exports (Exports-Imports) displayed monthly number of  $257million and increased by 26% YoY in Aug-2024. These net IT exports numbers in Aug-2024 are also higher than last 12-month average of $241million.

“We believe, IT sector will continue its growth trajectory and momentum with likely growth of 10-15% for FY25 to $3.5-3.7 billion, remarked Malik, adding that within the sector Systems Limited (SYS) was a preferred pick, trading at 2024E and 2025F PE of 12x and 9x, respectively.