Pakistan’s IT Sector Sees Boost Amidst Middle East Conflict

Islamabad – Despite broader economic uncertainties stemming from the ongoing conflict in the Middle East, Pakistan’s information technology (IT) sector is experiencing increased demand, particularly for cost-effective services and cybersecurity solutions. The conflict, involving the US, Israel, and Iran, has disrupted key energy shipping routes and created economic instability in the Gulf region, prompting businesses to seek more affordable IT options.

Surge in IT Exports

Pakistan’s IT exports reached a record $3.8 billion in the 2024–25 fiscal year, according to official data. This momentum continued into the current fiscal year, with exports rising 20 percent to $2.98 billion during the July–February 2025-26 period compared to the same period last year.

Demand for Cybersecurity

Sajjad Syed, chairman of the Pakistan Software Houses Association (P@SHA), noted that the US and the Middle East collectively represent approximately 75 percent of Pakistan’s IT market. Whereas acknowledging economic uncertainty in both regions, Syed believes this downturn presents an opportunity for Pakistani IT firms. “Companies cannot shut down their IT systems, even during a recession,” Syed stated. “Instead, they look for more cost-effective service providers to maintain operations. This creates an opening for countries like Pakistan.”

A Shift in Client Needs

Freelancers, a significant component of Pakistan’s digital workforce, are similarly observing shifts in demand. Tufail Ahmad Khan, president of the Global Freelancers Union, highlighted that IT exports are more resilient to geopolitical disruptions than traditional exports due to their reliance on global talent and digital delivery. He noted a significant surge in demand, pointing to the 20 percent increase in the July-February period.

Khan emphasized that Pakistan is no longer simply a “back-office,” with professionals now leading high-value projects in areas like artificial intelligence (AI), cloud architecture, and digital resilience. He described the current Middle East tensions as creating a “mixed but important shift” for Pakistan’s IT sector.

Areas of Growth and Caution

While demand for critical services like cybersecurity, AI, and digital infrastructure is increasing, some non-essential services, such as paid advertising and experimental marketing campaigns, have slowed down as businesses adopt a more cautious approach. Khan added that the core IT and freelancing economy remains strong in certain areas, but segments tied to optional spending are experiencing “temporary pressure.”

Challenges and Recommendations

To further boost IT exports from the current $4 billion to $5 billion, Khan recommends focusing on upskilling the workforce and improving the ecosystem. Specifically, he advocates for transitioning more of Pakistan’s 2.3 million freelancers into high-tier domains like AI and cybersecurity. He also urged the government to continue improving the ease of doing business, simplifying cross-border payment flows, and maintaining the 50 percent foreign currency retention policy for exporters.

Syed also called for government action to improve the business environment, noting that while IT exports are taxed at 0.25 percent, many countries in the region offer zero tax. He also pointed out that companies in Pakistan face multiple additional taxes.

Key Takeaways

• The Middle East conflict is driving demand for cost-effective IT services.
• Pakistan’s IT exports are experiencing significant growth.
• Cybersecurity and AI are key areas of opportunity.
• Government support is crucial for continued growth.