AI threatens Pakistan's $521m software export model as experts urge shift from hourly billing
Pakistan's software exporters earned $521 million in the first quarter of FY27, up 19% year on year — but the billing model behind much of that income is under threat from artificial intelligence, industry experts have warned.
Software consultancy generated $364 million in export receipts from July to September, while software exports contributed $157 million, according to State Bank of Pakistan data. In the same period last year the two segments earned $293 million and $143 million respectively, a combined increase of about $85 million. Software and consultancy together account for 41% of the country's IT exports, which exceeded $1.2 billion in the quarter.
Abdullah Rashid, co-founder and chief technology officer of Sweden-based AI data firm ClearTraced, said continuing to bill by the hour will shrink revenues as AI tools boost developer efficiency, and firms should move to value-based pricing while building proprietary software accelerators and micro-IP. He said Pakistani companies can expand by developing expertise in specific industries — fintech, healthcare and logistics — and building AI solutions around customers' operational needs, rather than offering basic web or app development. A system that extracts information from company reports, for example, should show where each figure came from and let users correct errors, he said, adding that details such as the reporting year and measurement units must be right if the information is to support business decisions.
Rashid said firms must move up the value chain into enterprise AI integration, autonomous agentic workflows, data engineering and cybersecurity, and restructure from large teams of junior coders to lean teams of AI-augmented solution architects. Exporters should upskill developers on AI-assisted workflows and international compliance standards such as SOC 2 and the General Data Protection Regulation to win enterprise trust, he said. Beyond the United States and the United Kingdom, he called for a physical sales presence in the Gulf Cooperation Council, particularly Saudi Arabia and the United Arab Emirates, where large digital transformation budgets are seeking cost-effective, specialised AI implementation partners. Taking responsibility for integrating and maintaining systems after deployment would help firms build longer-term export relationships, he added.
Saad Shah, chief executive of Hexalyze, said faster AI adoption in Pakistan depends on equipping the workforce with skills aligned with emerging industry requirements. He called for regular updates to technology curricula at universities and colleges, alongside stronger in-house training, and stressed closer collaboration between industry and academia with a long-term roadmap for workforce development. The experts also said Pakistan should use its growing international engagement to promote locally developed technology products and services, helping IT companies move beyond conventional outsourcing towards higher-value exports. Freelancers generated $333 million in export receipts during the quarter, call centres $101 million and telecommunications services more than $75 million, according to the State Bank.
