Unprecedented Boom in Pakistan’s Technology Sector
By Riaz Haq
CA

Pakistan's technology sector is in the midst of an unprecedented boom. It is being fueled by the country's growing human capital and rising investments in technology startups. Digital infrastructure has expanded with over 100 million smartphones and an equal number of broadband subscriptions.
Pakistan is churning out more than 30,000 information technology graduates every year. Over three-quarters of Pakistanis in the top three metros of Karachi, Lahore and Islamabad are regularly using the internet. Technology startups are on track to attract more than $230 million in venture capital investments this year, almost five times greater than vc investments last year. Technology exports are increasing by double digits every year, reaching $2.1 billion in the fiscal year that ended in June 2021. Pakistani freelancers' revenue grew 47% last year, the highest growth in Asia and the fourth highest in the world.

Pakistan has seen a phenomenal growth of 3,500% in broadband subscriptions over the last 8 years. Pakistanis now own more than 103 million smartphones with mobile broadband subscriptions. In a Youtube presentation of the report, Faraz Azhar, Industry Head, Performance, South Asia Frontier Markets, Google said: “With half of its population on the internet - Pakistan is now online!"
Google Search and YouTube are the most popular Internet applications in Pakistan, according to the study. YouTube is used by nearly 90% of all internet users in Pakistan for streaming music and watching video/TV, and 38% of Pakistan's internet users go to YouTube in the research phase of their shopping journey.
Pakistan has also experienced an e-commerce boom in the midst of the COVID pandemic. 71% of Pakistani shoppers find purchasing products or services online easy, while 66% find it convenient. Another 54% find that online shopping websites or apps give personalized product recommendations, which answer common questions. Two-thirds of consumers believe that online shopping is the way forward. They say they will continue to buy products or services online after the COVID-19 pandemic.
Faraz Azhar said: “With half of its population on the internet - Pakistan is now online! This is the first time Google and Kantar released a study to understand more about Pakistan’s internet population. But it’s not only about people getting online, this research has uncovered new insights and behaviors that show how COVID is impacting online behavior and the digital opportunities waiting to be unlocked.”

"More people are coming online in Pakistan, creating a great opportunity for eCommerce businesses - if they are ready to seize it. As we see more exploration of the internet beyond social, e-retailers can capture natural cross-category purchasing on its rise, but only if they have first established themselves and their product offering in an online marketplace," he said.

With expanding Internet infrastructure and rapidly growing user base, Pakistan is now seeing robust growth in venture money pouring into technology startups. Pakistani startups are on track to attract more than $230 million in funding in 2021, more funds than all the money raised by Pakistani startups in their entire history. A recent example is Kleiner Perkins, a top Silicon Valley venture capital investment firm, that led a series A round of $17 million investment into Pakistani start-up Tajir. The startup operates an online marketplace for small store merchants in Pakistan. The announcement came via a tweet by Mamoon Hamid, a Pakistani-American Managing Partner at Kleiner Perkins who led the investment. Last year, Tajir raised a $1.8 million seed round. The company's revenue has increased by 10x since its seed round.
Pakistan's technology exports are experiencing rapid growth in double digits over the last decade. Total technology exports jumped 47% to $2.1 billion in fiscal year 2020-21.
The foundation for Pakistan's digital transformation was laid with higher education reform starting in the year 2001 on President Musharraf's watch. With a huge increase in higher education funding, Higher Education Commission Chairman Dr Ata ur Rehman succeeded in establishing 51 new universities during 2002-2008. As a result, university enrollment (which had reached only 275,000 from 1947 to 2003) soared to about 800,000 in 2008. This helped build a significant human capital that drove the IT revolution in Pakistan.
Please watch the following video presentation for more details on Pakistan's technology startup ecosystem:
https://youtu.be/ePApXOM3vkQ
(Riaz Haq is a Silicon Valley-based Pakistani-American analyst and writer. He blogs at www.riazhaq.com)