Pakistan Digital Landscape and Job Opportunities

Introduction:

Pakistan's digital landscape is undergoing revisions to the 2018 Digital Pakistan Policy, with an assessment of milestones and targets achieved thus far. The recently released State of Pakistan's Economy report for 1HFY23, particularly the SBP's special section on IT exports and startups, sheds light on various aspects such as digital connectivity, fintech, e-government, and the need for digital literacy, cloud computing, cybersecurity, and a dedicated digital transformation secretariat. However, several challenges remain, notably the scarcity of skilled talent and the limited scope of digitalization in key sectors.

 Insufficient Talent Pool:

According to industry surveys conducted by Pasha, the software houses association, Pakistan's local academia fails to meet the industry's demand for technical skills and soft skills. This shortage of talent poses a significant challenge for IT exports and startups that rely on efficient operations and skilled employees. Despite the industry's need for nearly 40,000 new employees annually, universities produce only 20,000-25,000 graduates each year, highlighting a substantial shortfall.

 Stagnant Growth in IT Graduates:

It is surprising that over the past decade, the number of IT graduates entering the job market has remained stagnant at 20,000-25,000 per year. This raises questions about the responsiveness of universities to the growing demand or the lack of comprehensive statistics compiled by the Higher Education Commission (HEC) regarding graduates in IT and other fields, including sub-disciplines, gender distribution, and university rankings.

 Limited Digital Transformation:

While software exports and startups have experienced notable growth in recent years, Pakistan's overall economy is still far from achieving broad-based digitalization as a pathway to development. The SBP report reveals that startup deals and funding primarily focus on e-commerce and fintech sectors, leaving critical areas such as health, education, e-government, logistics, and agriculture lagging behind.

 Barriers in E-commerce and Fintech:

Challenges persist even within the concentrated sectors of e-commerce and fintech. Fintech startups mainly focus on payment solutions, neglecting broader financial challenges such as low savings, investments, insurance, and financial literacy. In the case of e-commerce, public trust in service providers remains low due to a lack of supportive regulations, quality control, timely returns and refunds, and customer data privacy. These factors reflect a significant gap in digital literacy within the country.

 Low Domestic Software Usage:

The domestic market's utilization of software is minimal, primarily due to the poor state of e-government, low levels of documentation, and an informal economy. The lack of software usage is further reflected in the export data, where more than 80 percent of firms export less than $0.1 million per year, and over 90 percent export less than $0.5 million. Encouraging domestic software usage through improved e-government services and formalization of sales receipts can contribute to the growth of small firms.

 Untapped Potential of Pakistani Diaspora:

The revised Digital Pakistan policy should consider leveraging the networking effect of the Pakistani diaspora, similar to the role played by Indian expats in India's IT exports and startup growth. Policy measures should be explored to engage non-resident Pakistanis and harness their expertise and networks for the country's digital development.

 Market Diversification and International Promotion:

To enhance market diversification, organizations such as TDAP, PSEB, and commercial counselors abroad should actively promote Pakistani software houses in foreign countries. While Pakistan's IT exports to the USA have grown, attention should be directed towards other leading IT importing countries such as EU countries, China, Singapore, and Japan.

 Addressing Policy Constraints:

Revised digital policies must address the restrictive policies of the State Bank of Pakistan (SBP) and the Federal Board of Revenue (FBR) regarding foreign exchange flows, USD availability, retention of FX accounts, and volatile fiscal policies. These constraints hamper the growth of the digital sector and need to be addressed for a conducive business environment.

Encouraging Local Investment in Startups:

Efforts should be made to persuade local industrial and financial elites, typically inclined towards rent-seeking behavior, to invest in digitalization. Despite the hype, local investors have made inadequate investments in the startup sector, which may deter foreign investors in the future.

 Conclusion:

Pakistan's digital landscape presents both challenges and opportunities. While revisions to the Digital Pakistan policy are underway, addressing the shortage of skilled talent, broadening digitalization across sectors, enhancing digital literacy, and fostering local and international investment are crucial steps. By leveraging the potential of the Pakistani diaspora, exploring new markets, and overcoming policy constraints, Pakistan can pave the way for sustainable digital transformation and economic development.