VPN ban to raise Pakistan IT sector costs by $150Mn
KARACHI, PAKISTAN — The information technology (IT) industry in Pakistan, which achieved $3.2 billion in exports during the fiscal year 2024, faces a significant challenge as government policies restricting virtual private networks (VPNs) and slowing Internet speeds threaten its growth.
The Pakistan Software Houses Association (P@SHA) warned that these measures could increase the sector’s operational costs by $100-150 million annually, potentially forcing closures and deterring foreign investment.
Internet slowdowns linked to national firewall
Internet speeds in Pakistan have declined by 30-40% in recent months, according to the Wireless and Internet Service Providers Association of Pakistan (WISPAP). The slowdown stems from the federal government’s nationwide firewall initiative, aimed at blocking malicious content and enhancing cybersecurity.
However, this has disrupted IT operations, with the VPN ban further complicating secure communication and data protection—a global standard for IT firms.
“Internet slowdown and blocking of virtual private network (VPN) services will certainly translate into an existential threat as it will result in unrecoverable financial loss, service disruptions, and reputational loss in the export of IT and IT-enabled Services (ITeS),” said P@SHA Chairman Sajjad Mustafa Syed.
Multinational companies eye relocation amid policy concerns
The Pakistan Business Council (PBC) has reported that frequent internet disruptions have already prompted some multinational firms to relocate operations out of Pakistan.
In August, P@SHA estimated that Internet disruptions caused by the firewall could cost the economy up to $300 million annually.
“If the VPNs are blocked, most IT companies, call centers, and BPO organizations will lose all the major Fortune 500 clients,” Syed warned. He added that secure VPN connections are essential for meeting international data protection standards.
Growth projections threatened by policy changes
Pakistan’s IT exports have been growing at an average annual rate of 30%, with projections exceeding $15 billion within five years if favorable policies persist. However, industry leaders caution that the current measures could derail this progress.
“Domestic and international IT companies will be forced to close or significantly restrict their operations in Pakistan,” Syed stated, emphasizing the ripple effects on freelancers, startups, and employment.
P@SHA has urged the government to collaborate with stakeholders to develop a balanced framework that ensures national security while preserving the operational needs of the IT sector. Without immediate intervention, one of Pakistan’s fastest-growing industries risks long-term damage to its competitiveness and reputation globally.
