Pakistan’s information technology sector has reached a milestone that deserves appreciation.

During FY26, IT and information and communication technology export earnings reached a record $4.6 billion, rising 21 per cent from $3.8bn in FY25. The sector generated a trade surplus of $3.9bn in this sub-sector of services trade, according to Federal Minister for IT & Telecom Shaza Khawaja. It was the highest ever trade surplus among Pakistan’s services sectors.

IT exports now account for roughly 11.7pc of total exports, making it one of Pakistan’s most important sources of foreign exchange and a significant export industry.

The significance becomes clearer given Pakistan’s narrow export base. Traditional exports remain concentrated in textiles and food, while IT and IT-enabled services (ITeS) can expand without heavy dependence on imported raw materials, physical logistics or expensive infrastructure.

The real value of being a founding member of Waico depends on what Pakistan does with it

Under the Uraan Pakistan plan, the target is to raise IT exports to $10bn by FY29. According to Topline Securities, this requires a compound annual growth rate of 29.5pc through FY29, which is significantly higher than the 21pc growth recorded in FY26.

Achieving this objective will require not just more people entering the industry but a transformation in the quality and sophistication of services Pakistan sells.

The country urgently requires sustainable foreign exchange. Merchandise exports ($69.76bn) almost entirely consume combined foreign exchange earned through goods exports ($30.14bn) and remittances ($41.59bn). That is why external debt repayments often necessitate fresh borrowing and rollovers, resulting in a persistent external financing gap and keeping the country’s balance of payments out of shape. The State Bank of Pakistan recently reported a $1.83bn balance of payment deficit in FY26.

Digital services offer one of the fastest routes to earn foreign exchange without shipping containers, maintaining large inventories or importing heavy machinery. Freelancer earnings in FY26 grew 78pc to $1.76bn in the outgoing fiscal year, according to a recent Dawn report. Crucially, the sector creates high-value employment for a young population and converts human intelligence into an internationally tradable asset.

However, Pakistan cannot build a durable economy merely by increasing low-value exports. It must move towards higher productivity and value addition. IT and ITeS can bridge Pakistan’s youth population to the global economy, but only if the country develops companies capable of selling complete technological solutions, managing international projects, creating IP and building globally recognised brands. The objective should be a globally competitive digital economy.

The next phase of transformation will be determined by how quickly Pakistan adapts to AI. AI will transform agriculture, manufacturing, banking, healthcare, logistics and governance through analytics, automation and intelligent decision-making. Pakistani companies that ignore AI will compete against faster, cheaper, and more intelligent producers. The question is whether Pakistan will use AI to increase productivity or merely consume technologies created elsewhere.

This applies even more urgently to IT and ITeS. AI will replace some routine work but create greater demand for those using AI to deliver sophisticated services. An AI-assisted engineer can do what once required several engineers; an equipped BPO worker can serve more customers.

The opportunity lies in selling human-plus-AI capability. Pakistan produces tens of thousands of IT professionals annually — one of the region’s largest talent pools. We must teach AI across universities and workplaces, aiming to export not just digital labour but AI-enhanced solutions.

Against this backdrop, Pakistan’s decision to become a founding member of the World Artificial Intelligence Cooperation Organisation (Waico) deserves close attention. Domestic reforms alone will not suffice; Pakistan must participate in international institutions shaping AI’s future.

Waico is an intergovernmental body, headquartered in Shanghai and launched in July 2026, to advance AI governance, capacity-building and equitable access for developing nations. The agreement was signed on July 16 at the World AI Conference, with UN chief António Guterres attending.

Pakistan is among Waico’s 29 founding members, alongside China, Russia, Kazakhstan, Indonesia and several other Global South nations. Deputy Prime Minister Ishaq Dar signed the agreement. Islamabad pledged to bridge the global AI divide with fellow members. During Prime Minister Shehbaz Sharif’s May 2026 visit to China, Pakistan formally backed the Waico proposal, agreeing to deepen bilateral AI, digital economy and innovation cooperation.

The real value of founding membership depends on what Pakistan does with it. Membership alone won’t create an AI industry. Pakistan must use Waico to expand computing infrastructure, strengthen AI education, promote joint research, facilitate tech transfer, attract venture capital, and create international market access for local firms. Waico should be a platform to achieve the $10bn IT export target by FY29.

The country has already taken significant steps. The National AI Policy (2025) designates AI a national priority. In February 2026, the government committed $1bn by 2030 to expand sovereign computing and research.

The Sino-Pak Centre for AI at Haripur and the National Centre of AI (NCAI) at the National University of Sciences & Technology are advancing education, research and development. The Regulation of AI Act 2024 provides legal grounding, while the National AI Fund (NAIF) fuels industrial integration.

For Pakistan, Waico’s window is significant. The country possesses a large young population, a growing IT export sector and an expanding community of software professionals. What it still lacks is sufficient scale, advanced research capacity, computing infrastructure, investment and broader global market access. Waico can help address these constraints if Pakistan approaches its membership with ambition, preparation and clear strategic objectives.

Published in Dawn, The Business and Finance Weekly, July 27th, 2026