Pakistan's IT exports crossed $2.6 billion in FY2023-24, with some estimates suggesting the actual figure—including freelance earnings through informal channels—could be closer to $5 billion. The country ranks among the top freelancing nations globally, with over 2 million registered freelancers on platforms like Upwork, Fiverr, and Toptal. On paper, this looks like a success story. In practice, it's more complicated.
Having built and run a software company here, I've seen both sides: the genuine advantages that make Pakistan competitive, and the structural issues that prevent the industry from reaching its full potential.
The Unfair Advantages
Cost Arbitrage That Actually Works
A senior software engineer in Pakistan earns between $1,500 and $4,000 per month. The equivalent role in the Bay Area commands $15,000 to $25,000 monthly. This isn't just about lower costs—it's about the ratio of skill to price. Pakistani developers aren't cheaper because they're worse; they're cheaper because of currency dynamics and cost of living differences.
For startups and SMBs in the West, this creates a genuine opportunity. You can hire a full engineering team for less than the cost of a single senior developer in San Francisco. And unlike some outsourcing destinations, the timezone overlap with Europe (4-5 hours) and even the US East Coast (9-10 hours) allows for real-time collaboration during significant portions of the workday.
English Proficiency
Pakistan's colonial history left one lasting advantage: English is the medium of instruction in most universities and the language of business. Unlike some competing markets where language barriers create constant friction, Pakistani developers can read documentation, participate in code reviews, and communicate with clients without translation overhead. This matters more than people realize—miscommunication is the silent killer of outsourced projects.
A Young, Hungry Workforce
Pakistan's median age is 22. Over 60% of the population is under 30. This demographic bulge means a constant influx of young engineers entering the workforce, many of whom grew up with smartphones and are digital natives in a way that older workforces aren't. There's also a cultural hunger to prove oneself on the global stage—a chip-on-the-shoulder mentality that, channeled correctly, produces exceptional work ethic.
Growing Technical Education
Institutions like NUST, LUMS, FAST, and GIKI produce thousands of CS and engineering graduates annually. The curriculum at top universities is rigorous and internationally benchmarked. Many faculty members have PhDs from American and European universities. The talent pipeline exists.
The Structural Issues
The Payment Problem
This is the elephant in the room. Pakistan's banking system makes receiving international payments unnecessarily difficult. PayPal doesn't operate here. Stripe only recently became available and with limited functionality. Wire transfers involve paperwork, delays, and fees that eat into margins.
The result? A massive grey economy. Freelancers route payments through Dubai, use cryptocurrency, or rely on informal hawala networks. Companies maintain offshore entities just to receive payments that should flow directly. This isn't tax evasion by choice—it's survival. The friction of legal payment channels pushes people toward workarounds.
For a founder, this means spending disproportionate time on treasury management instead of building product. It's a tax on doing business that competitors in India, Poland, or the Philippines don't pay.
Infrastructure Gaps
Power outages remain common outside major cities. Internet connectivity, while improving, is inconsistent. The average broadband speed in Pakistan is around 15 Mbps—functional, but not the fiber-to-the-home experience that developers in Seoul or Singapore take for granted. When your deployment pipeline breaks because the power went out mid-push, it's hard to compete on reliability.
Brain Drain
The best developers leave. This is the uncomfortable truth that industry boosters avoid. Top talent from Pakistani universities gets recruited by Google, Meta, Microsoft, and Amazon. They move to the US, Canada, UK, or Gulf countries. The ones who stay often do so because of family obligations or visa issues, not because Pakistan is their first choice.
This creates a hollowing out of the middle. You have junior developers and you have people who couldn't leave, but the senior technical leaders who should be building the next generation of companies are in Mountain View or Dubai. The mentorship gap compounds over time.
The Outsourcing Trap
Here's the deeper issue: Pakistan's software industry is predominantly service-based. We build software for others. Outsourcing, staff augmentation, agency work—these are the dominant models. Very few Pakistani companies build products that they own and sell globally.
This matters because services scale linearly. To double revenue, you roughly need to double headcount. Products scale exponentially—the same team can serve 10x more customers without proportional cost increases. The wealth creation potential is fundamentally different.
Why does this happen? Partly it's the payment infrastructure—selling SaaS globally requires payment processing that doesn't exist smoothly. Partly it's risk aversion—services have guaranteed revenue while products are speculative. Partly it's a lack of venture capital—the funding ecosystem that enables product companies to operate at a loss while growing barely exists here.
What Needs to Change
The path forward isn't mysterious. It requires:
- Payment infrastructure reform: Make it trivially easy to receive international payments. This single change would unlock billions in economic activity.
- Venture capital development: Local funds that understand local context and can write checks that let founders take product risk.
- Retention incentives: Tax breaks, stock option frameworks, and quality of life improvements that make staying competitive with leaving.
- Product company role models: Success breeds success. Pakistan needs its Atlassian or Shopify—a globally successful product company that proves it can be done from here.
The Optimistic Take
Despite everything, I'm building here. The talent exists. The cost structure is real. The hunger is genuine. The problems are solvable—they're policy and infrastructure issues, not fundamental limitations.
Pakistan's software industry is at an inflection point. It can continue as a low-cost services provider, competing on price in a race to the bottom. Or it can level up, building products and companies that compete on quality and innovation. The next decade will determine which path it takes.
I'm betting on the latter. But it requires being honest about both the advantages and the issues. Sugar-coating the problems doesn't help anyone.