Pakistan’s IT sector loses $1 million per hour due to internet shutdown

Pakistan’s Information Technology (IT) sector has suffered significant financial setbacks, with losses exceeding $1 million per hour due to frequent internet shutdowns, according to Sajjad Mustafa Syed, Chairman of the Pakistan Software Houses Association (P@SHA).

In a conversation with media personnel on Tuesday, Syed highlighted that achieving the government’s ambitious target of $15 billion in IT exports depends heavily on market access, infrastructure stability, a supportive taxation policy, and a skilled workforce. “If the government invests just one dollar in market access, it results in a return of $49, as shown by the pattern over the last three years,” Syed explained.

He pointed out that the IT sector has shown impressive growth, with exports rising by approximately 40%, reaching a total of $3.2 billion. Currently, 55% of Pakistan’s IT exports are directed to the United States, followed by 20% to Europe. However, Syed stressed the need for increased focus on branding to unlock the sector’s true potential.

Regarding the impact of repeated internet shutdowns, Syed shared alarming statistics, revealing that 99% of companies in the sector reported service disruptions, and 90% faced financial losses. He provided an example of a recent internet blackout, during which a call center incurred a penalty of $2 million due to the outage.

Syed also addressed the taxation policies affecting the sector, noting that taxes on revenue impose a significant burden. He urged the government to provide tax incentives to help the IT sector thrive, boost remittances, and attract foreign investment.

In addition, Syed discussed concerns over data security, particularly the risks posed by free Virtual Private Networks (VPNs). He called on the government to adopt a more secure, industry-friendly VPN service provider model to mitigate these risks. Lastly, Syed emphasized the role of P@SHA in policy harmonization, asserting that the sector’s growth should not be isolated but integrated with broader policy frameworks.