Every day, Pakistanis depend on their mobile phones in a way that is impossible to imagine for people in other countries. With the digital economy set to grow by an estimated $126 billion USD by 2020 and with more than 100 million smartphones users online, there’s no denying that internet penetration has grown rapidly. The report tracks the progress of this rapid growth from 2010 through today but looks ahead at what’s next.,
Release of Information Google and AlphaBeta released a report titled “Unlocking Pakistan’s Digital Potential: The Economic Opportunities of Digital Transformation and Google’s Contribution,” which estimates the potential economic value of technology applications for Pakistan and identifies key actions required to take advantage of the opportunity.
Points to remember
Pakistan’s thriving technology industry has seen rapid development in recent years and is well positioned for future expansion.
Since 2010, the nation has fostered over 700 digital start-ups and has the fourth-highest-earning IT workforce in the world, with over 300,000 IT professionals, over 25,000 IT graduates yearly, and the fourth-highest-earning IT workforce in the world. Pakistan’s technology industry also includes a significant export component, with yearly revenue from IT and IT-enabled Services (ITeS) exports exceeding USD2.1 billion in 2021 – up roughly 15% every year since 2010.
Exports of IT and ITeS have surged by 47% in the last year, owing to the COVID-19 pandemic, which increased dependence on technology. Exports are predicted to increase further in 2022, reaching USD3.5 billion. Furthermore, the government has highlighted the establishment of a complete digital environment as one of the main drivers of economic growth – most notably in its “Digital Pakistan Policy.”
Despite these tremendous accomplishments, the nation still has a long way to go in its digital transformation.
From 2016 to 2019, Pakistan’s online population grew at a pace of 68 percent each year, with Internet penetration reaching 54 percent in 2021. However, the nation confronts a number of roadblocks on its way to complete digital transformation. For example, Pakistan was placed 73rd out of 141 nations in the World Economic Forum’s “Global Competitiveness Index 2019” when it came to the capacity of the active working population to hold and utilise digital skills.
Given that micro, small, and medium companies (MSMEs) account for 90% of all businesses in Pakistan, employ 80% of the non-agricultural workforce, and contribute 40% of the country’s GDP, ensuring that all businesses benefit from digital skills is critical.
Furthermore, for Pakistan to confront the long-term consequences of the COVID-19 epidemic and acquire long-term resilience, digital transformation will be critical.
In the post-pandemic age, digital transformation will be critical to Pakistan’s economic recovery efforts and to firms’ long-term resilience in adjusting to future “black swan” occurrences. For example, the pandemic has severely disrupted MSMEs’ operations, had a significant influence on the tourist industry, and fueled Pakistan’s quick expansion of digital freelancing.
These consequences may be mitigated by implementing digital technology applications that enable companies to interact consumers digitally, such as e-commerce platforms, or apps that provide tailored experiences for tourists, such as big data analytics and virtual reality technologies.
Accelerating Pakistan’s digital transformation comes with a hefty financial reward.
Digital technologies might generate up to PKR9.7 trillion (USD59.7 billion) in economic value if fully utilized by 2030. In 2020, this will equate to almost 19% of the country’s GDP. Agriculture and food, consumer, retail, and hospitality, as well as education and training, are expected to benefit the most.
Machine learning algorithms, for example, have demonstrated to be advantageous in the agricultural and food industries, where AI-powered technology can monitor ecological conditions to decide if crops need irrigation or not, hence lowering water consumption.
To fully realize Pakistan’s digital advantage, three areas of activity are required:
- build infrastructure to assist the local tech scene;
- establish an atmosphere that is favorable to IT exports, and
- Encourage innovation and the development of digital skills.
The Pakistani government has already implemented a number of initiatives to speed up digital transformation, including the “Right of Way” policy, which expedites telecom infrastructure growth, and the “Brand Pakistan” campaign, which promotes the country’s exports through digital platforms.
However, there are other options for Pakistan to consider, such as expanding Internet access through infrastructure investments, particularly in rural areas (e.g., Thailand’s “Net Pracharat” program to expand the national broadband network), establishing a more accommodating tax framework and loosening restrictive data policies, and forming close public-private partnerships to improve the relevance of skills training (e.g., the “Philippines Talent Mapping Initiative”).
Google contributes to Pakistan’s digital transformation journey via its programs and products, bringing advantages to companies, consumers, and society as a whole.
In its contributions to the three areas of action, Google has been crucial in furthering the country’s digital transformation path. Google has invested in programs, people, and partnerships to assist Pakistan’s “Digital Pakistan Policy” and continues to do so. These include anything from digital skills training for MSMEs to machine learning training for Pakistanis.
Through the “Nest I/O” technology incubator and assistance for Pakistani start-ups, Google is forming strong ties with government organizations and industry organisations to foster innovation.
Google also assists in the development of jobs in the nation. For example, Google indirectly supports approximately 410,000 employment in Pakistan by helping companies to unlock new income sources and develop their enterprises via the usage of Google Ads, AdSense, and YouTube.
These employment are produced as a result of firms extending their client bases and rising income, resulting in the hiring of extra workers to fulfill the increased demand.
Notes for the report
All of the data in this study comes from AlphaBeta’s analysis, which includes both private and publicly accessible data. The report’s Appendix section has detailed information on the approach.
Google commissioned this research, which was written by AlphaBeta. AlphaBeta (www.alphabeta.com) is a strategy and economic advising firm that works with customers all around the world. AlphaBeta works with the public sector, enterprises, non-governmental organizations, not-for-profits, and investors to discover opportunities and build strategies for growth, improved service delivery, economic success, and measurable impact.
This article is based on a corporate press release and does not represent the company’s viewpoint or advice.