Atlantic Council SOUTH ASIA CENTER
REPORT
State of Pakistan’s Technology Landscape and Startup Economy OCTOBER 2022
HAMNA TARIQ and UZAIR YOUNUS
INTRODUCTION
The South Asia Center serves as the Atlantic Council’s focal point for work on greater South Asia as well as relations between these countries, the neighboring regions, Europe, and the United States. It seeks to foster partnerships with key institutions in the region to establish itself as a forum for dialogue between decision-makers in South Asia, the United States, and NATO. These deliberations cover internal and external security, governance, trade, economic development, education, and other issues. The Center remains committed to working with stakeholders from the region itself, in addition to partners and experts in the United States and Europe, to offer comprehensive analyses and recommendations for policymakers.
Pakistan’s startups and technology sector witnessed unprecedented growth during the COVID-19 pandemic. 2021 was a record-breaking year, with technology startups raising $350 million, while over $227 million was raised in the first half of 2022; Pakistani startups have raised $322 million in 2022 so far.1 Additionally, Pakistan’s information technology (IT) services sector has emerged as the largest net services exporter in the country, with IT exports more than doubling from $1.19 billion in fiscal year (FY) 2019 to $2.62 billion in FY 2022.2 Another key component of the country’s technology sector is freelance work, where individuals provide technology services to global clients through platforms such as Upwork and Fiverr. This talent pool has experienced a tremendous increase in their earnings during the pandemic. While exact data for cumulative freelance earnings is not available, Pakistan is ranked as one of the largest freelance markets in the world. The national government has set a target of earning over $3 billion from this sector by 2024.3 The ongoing growth of Pakistan’s technology ecosystem is not entirely unexpected. Pakistan is a young country with a growing middle class. Sixty-four percent of the population is below the age of thirty, an additional 2.5 million middle-income households are expected to be estab1
“Startups raise $104mn in Q2 amid VC funding slowdown,” Mettis Global Link, July 1, 2022. https://mettisglobal.news/startups-raise-104mn-in-q2-amid-vc-funding-slowdown/
2
Exports and Imports data, the State Bank of Pakistan. https://www.google. com/url?q=https://www.sbp.org.pk/ecodata/ExportsImports-Goods-Arch. xls&sa=D&source=docs&ust=1659034360198031&usg=AOvVaw0Nsjkst56zScnassOx6o2s
3
“Govt eyes $3bln from freelancing IT exports by 2024,” The News International, September 5, 2021. https://www.thenews.com.pk/print/887910-govt-eyes-3bln-fromfreelancing-it-exports-by-2024