How slow internet is massively hurting freelancers, and IT companies in Pakistan?

The recent internet disruptions in Pakistan have profoundly impacted the digital economy, with particular consequences for those who rely on mobile data for their day-to-day communications and business operations. These disruptions, possibly driven by the government's implementation of a new firewall system and increased surveillance measures, have affected the ability of millions of Pakistanis to use essential internet services: the most affected mediums WhatsApp and Facebook, both primary communication tools for many.

One of the most immediate effects of the slow internet on mobile networks has been the inability to send or receive voice notes, videos, and pictures on WhatsApp while using cellular data. This is a significant issue because a large portion of the population depends on mobile internet for communication, especially when they are on the move.

The problem is particularly acute for freelancers, small business owners, and e-commerce professionals who use WhatsApp to communicate with clients, share work updates, and manage transactions. For these individuals, the inability to send multimedia messages or even basic text messages on time can result in delayed work, missed deadlines, and ultimately, financial losses.

Moreover, while internet routers in homes and offices may still offer relatively stable connections (they are underperforming too at low speeds), the majority of Pakistanis do not spend their days tethered to these fixed locations. Many people are constantly on the move, whether they are commuting, working in field-based jobs, or managing businesses that require frequent travel. For these users, the slow mobile internet speed is more than just an inconvenience—it directly impacts their ability to work effectively. The financial implications are substantial, as delays in communication can lead to lost business deals, dissatisfied customers, and reduced income.

The broader economic impact is also alarming. According to industry estimates, the slowdowns could potentially cost Pakistan’s economy hundreds of millions of dollars. For instance, the Pakistan Software Houses Association (P@SHA) has warned that the disruptions could result in a loss of around $300 million for the digital and IT sectors​ (Profit by Pakistan Today). This figure highlights the critical role that fast and reliable internet plays in sustaining the growth of the digital economy in Pakistan.

The Importance of the Internet for IT Industry Growth

The IT industry is inherently dependent on high-speed internet to operate effectively. From software development and data processing to outsourcing services and digital marketing, every aspect of the IT sector requires uninterrupted and reliable connectivity. Slow internet speeds hinder the ability to perform real-time collaboration, access cloud services, and communicate with global clients—essential components for the IT industry.

For Pakistan, a country that has been striving to expand its digital footprint and increase its IT exports, these internet disruptions are a major setback. The country’s IT industry, though growing, is still in its developmental stages compared to global leaders. This growth is being hampered by inadequate infrastructure, where even basic services like mobile internet are not reliably available. The inability to use platforms like WhatsApp effectively on mobile networks further cripples communication, a vital part of any business operation in the IT sector.

Comparison with India’s IT Industry

To understand Pakistan's struggling economy we need to understand the prosperous Indian economy first. India offers a stark contrast to Pakistan when it comes to the IT industry. Over the past few decades, India has emerged as a global IT powerhouse, largely due to its extensive internet penetration, robust infrastructure, and supportive government policies. The IT industry in India contributes significantly to its GDP, with the sector expected to account for over $194 billion in revenues in 2024. This growth has been fueled by a high rate of internet penetration—over 50% of India’s population is online, providing a vast base for digital services.

One of the key drivers of India's tech boom was the liberalization of its economy in the 1990s, coupled with significant investments in education, particularly in engineering and IT. These factors, combined with the establishment of IT hubs like Bengaluru and Hyderabad, created a conducive environment for the tech industry to flourish. Moreover, the Indian government’s focus on digital initiatives, such as "Digital India," has further accelerated internet penetration and IT industry growth.

In contrast, Pakistan’s IT industry has struggled to reach the same heights due to a combination of factors, including inconsistent Government policies, inadequate infrastructure, and recently, significant internet disruptions.

The lack of a stable internet connection is a critical barrier to progress. While India’s IT sector has been a major contributor to its GDP growth, Pakistan’s digital economy remains constrained by these challenges. The difference in internet penetration is particularly stark—while India has rapidly expanded its internet access to rural and urban areas alike, Pakistan lags behind, with many regions still lacking reliable connectivity.

GDP Growth and Internet Penetration in India

India’s IT industry has been a substantial contributor to its GDP growth. The sector accounts for approximately 8% of India's GDP, and this figure is growing. The success of India’s IT industry has been closely linked to the country’s extensive internet penetration. By making the Internet widely available across the country, India has enabled its population to engage in digital services, creating a large internal market while also fostering a robust export-oriented IT sector.

The widespread availability of high-speed internet in India has been pivotal in supporting the IT industry's growth. It has allowed for the seamless operation of tech companies, the proliferation of startups, and the development of new technologies, all of which have contributed to economic growth. In contrast, the limited and often unreliable internet access in Pakistan poses a significant barrier to achieving similar success.

High-speed internet without disruption is critical for the sustainable growth of Pakistan's economy, especially within its digital and IT sectors.

A study by the World Bank indicates that a 10% increase in broadband penetration can lead to a 1.38% increase in GDP growth in developing countries​ (The Nation).

In Pakistan, where the IT sector contributed over 2 billion to the economy in 2022, stable and fast internet is essential for enhancing productivity, reducing operational costs, and supporting the growth of e-commerce​ (Profit by Pakistan Today). Moreover, the country’s digital transformation hinges on reliable internet, which would help attract foreign investment and bolster the strength of the Pakistani rupee by increasing foreign exchange reserves.

By investing in high-speed internet infrastructure, Pakistan can position itself competitively in the global digital economy, leading to significant economic benefits.

The Role of Freelancing in Economic Growth

Freelancing has become a cornerstone of Pakistan's economy, with the country ranking among the top five globally in terms of freelance earnings, generating over $1 billion annually.

This sector offers a flexible and accessible way for many Pakistanis, particularly the youth and women, to participate in the global economy.

Statistics show that over 1.5 million freelancers in Pakistan are working across various platforms like Upwork and Fiverr​.

The influx of foreign earnings through freelancing has been instrumental in increasing Pakistan's foreign exchange reserves. However, to fully leverage this potential, Pakistan must ensure that its freelancers have access to uninterrupted, high-speed internet. This would enable them to compete more effectively on international platforms, further boosting their contributions to the economy.

Training Skilled Resources for Human Capital Development and Remote Jobs

Training skilled resources are essential for Pakistan to harness its human capital and tap into global job markets. The IT industry in Pakistan, though still growing, accounted for 1% of the GDP in 2022, compared to India's 8% contribution from its IT sector. By investing in education and vocational training, Pakistan can equip its workforce with the necessary skills to secure high-paying remote jobs.

The global demand for remote work, which has increased by over 30% since the pandemic, presents an opportunity for Pakistan to export skilled manpower.

As these workers bring in foreign earnings, the increased reserves can strengthen the Pakistani rupee, ultimately contributing to overall economic stability and poverty alleviation.

In 2023, the IT and ITeS exports of Pakistan brought in approximately $2.6 billion, showcasing the potential of skilled manpower to boost the economy.

The ongoing internet issues in Pakistan are not just a technical problem—they are a significant economic concern that affects millions of people, particularly those who rely on mobile data for their livelihoods. The inability to use services like WhatsApp efficiently due to slow mobile networks exacerbates the challenges faced by freelancers, IT professionals, and small business owners, contributing to financial losses that ripple through the broader economy.

Pakistan's tech industry is grappling with a significant challenge as ongoing internet disruptions take a toll on freelancers and IT companies. The situation, marked by frequent outages and restricted access to various platforms, has left many within the sector considering drastic measures to safeguard their operations and livelihoods.

IT Companies Contemplate Relocation

The internet disruptions have created a difficult environment for IT companies that rely heavily on stable and high-speed internet. According to a recent survey by the Pakistan Software Export Board (PSEB), approximately 65% of IT companies in Pakistan reported significant delays in project delivery due to unreliable internet connectivity (PSEB Survey on IT Sector). Additionally, a study found that 40% of IT companies are considering relocating their operations abroad due to the ongoing disruptions (State Bank of Pakistan Report on IT Sector Challenges).

Countries like the UAE, Malaysia, and Singapore are becoming attractive destinations for Pakistani IT firms. These countries not only offer stable internet connectivity but also provide a business-friendly environment with robust legal frameworks. For instance, the World Bank’s Ease of Doing Business Index ranks the UAE 16th globally, compared to Pakistan's 108th position (World Bank Ease of Doing Business 2024).

Freelancers Hit Hard by Fiverr Bans

Freelancers in Pakistan have also been severely impacted by the internet disruptions. Many have turned to Virtual Private Networks (VPNs) to bypass firewalls and maintain access to global freelancing platforms like Fiverr. However, this workaround has backfired for many, as Fiverr’s security protocols have flagged accounts accessing the platform from multiple VPN IP addresses.

According to Fiverr's internal data, over 1,200 Pakistani freelancers have had their accounts suspended in the past three months due to this issue (Fiverr Account Suspension Report).

For freelancers who rely solely on platforms like Fiverr, these bans are devastating. A report by Dawn News estimates that many Pakistani freelancers have lost a significant portion of their income due to account bans (Freelancers Union Survey 2024). Many have built successful profiles over the years, and losing their accounts means starting from scratch if they can even gain access to the platform again. The situation has sparked a debate within the freelancing community about the risks of using VPNs and the need for better infrastructure and policy support from the government.

The Need for Urgent Solutions

The internet disruptions in Pakistan are more than just a technical issue; they are threatening the future of the country’s growing IT sector. Without urgent action to stabilize internet access, the country risks losing a significant portion of its IT talent and businesses to foreign markets. Moreover, the situation highlights the need for freelancers to have access to secure and reliable internet connections without resorting to VPNs that could jeopardize their livelihoods.

The government must recognize the critical role that the IT sector plays in the economy and take immediate steps to address the infrastructure challenges. This includes ensuring uninterrupted internet access, updating cybersecurity laws, and providing support to those affected by the disruptions.

As IT companies weigh the option of moving abroad and freelancers scramble to recover from account bans, the broader question remains: can Pakistan’s tech industry survive this crisis, or will it lose its competitive edge in the global market? The answer depends on the actions taken in the coming months.