55 Startups Gone in 3 Years, Microsoft Out Now: Is Pakistan Tech Sector Doomed?
Experts Blame Flawed Government Policies for the Shutdown of 55 Start-ups in Three Years Affecting Badly Pakistan Tech Sector
10,000 Tech Professionals Left the Country in 2023
The withdrawal of technology companies from Pakistan tech sector has accelerated, with Microsoft—the world’s largest software company—also announcing the closure of its operations in Pakistan. Startups are relocating their operations to Singapore and other countries, while IT professionals are also going abroad, prompting concern among experts.
In 2022, $355 million was invested in Pakistani start-ups, but this figure dropped by 88% to just $43 million in 2024.
Experts say that the exit of companies will hinder the country’s progress in the technology sector, along with causing job losses and a reduction in foreign exchange earnings and tax revenues for the government. According to reports, the American tech giant Microsoft has shut down all its operations in Pakistan, a move experts have called alarming for the country. Microsoft had previously established liaison offices in Pakistan, offering services to government institutions, businesses, the education sector, and consumers. The company had already shifted the management of licensing and commercial contracts for Pakistan to Ireland.
Jawad Rehman, former Country Manager of Microsoft Pakistan, said, this is not just a corporate exit, but a clear indication of the environment we have created in the country—an environment where even global companies like Microsoft find it unsuitable to operate.
Meanwhile, Habib Khan, founder of the Design Studio, Penumbra, posted on X that the decision is not surprising, given that Microsoft’s revenue from Pakistan was only $50 million—just 0.018% of its global revenue. Microsoft’s services were supplied from Turkey and Ireland, and its staff in Pakistan had already been significantly reduced.
In response, the Ministry of IT released a statement saying that authorities are in contact with Microsoft. The company is reviewing the future of its liaison office in Pakistan as part of a global workforce restructuring plan. The company is shifting toward cloud-based and partner-driven models while reducing local staff.
At the same time, Pakistan’s start-up app sector—once seen as an emerging digital innovation hub in South Asia—is also facing a severe crisis. Several reputed companies have either exited the country or suspended their operations.
In June, ride-hailing company Careem announced it would completely shut down its services in Pakistan by July 18. In the past 18 months, many major companies have closed or paused their operations. These include Airlift, which had raised $85 million in funding, SWVL, which exited Pakistan at the end of 2022, and VavaCars, which withdrew in 2023. Truck It In closed in 2024, and MedznMore and Jugnu also shut down. While start-up investments totaled $355 million in 2022, they plummeted to just $43 million in 2024. In contrast, India attracted $7.5 billion and Bangladesh $140 million in start-up funding last year.
According to Bloomberg, between 2021 and 2024, more than 55 funded start-ups in Pakistan either closed down or significantly changed their business models.
Experts attribute the decline in Pakistan tech sector due to poor government policies, rupee depreciation, policy uncertainty, regulatory hurdles, inconsistent tax regulations, frequent internet shutdowns, power outages, and weak infrastructure. The rupee has lost 30% of its value since 2022. Experts say that in a country where internet services are frequently suspended and six separate approvals are required to send money to investors, the outflow of capital is unsurprising.
The report indicates that more than 5,000 software developers migrated to Canada, the UAE, and Germany in the past year. In 2023 alone, 10,000 tech professionals left the country. Similarly, freelancers’ remittances dropped from $400 million in 2023 to $290 million in 2024.
Experts warn that unless immediate reforms are made to address policy, taxation, and IT infrastructure, Pakistan risks losing more global capital and skilled talent.
