VPN ban to increase operational costs of Pakistan’s IT industry by $100-150 million annually

A ban on Virtual Private Networks (VPNs) could increase the operational costs of Pakistan’s IT industry by $100-150 million annually, said Sajjad Mustafa Syed, Chairman of the Pakistan Software Houses Association (P@SHA).

In a statement on Tuesday, he warned that internet slowdowns and blocking VPN services pose an existential threat, leading to significant financial costs, service disruptions, and reputational damage to IT exports, which reached $3.2 billion in FY24.

Even conservative estimates suggest the IT industry could suffer tens of millions of dollars in short-term losses, with longer-term reputational damage devastating the sector.

Sajjad emphasized that such a ban would force many domestic and international IT companies to close or reduce operations in Pakistan, severely impacting exports, skills development, and job creation.

He highlighted that ongoing initiatives by P@SHA, supported by the Ministry of IT & Telecom (MoITT), Special Investment Facilitation Council (SIFC), and Prime Minister’s Office (PMO), would be set back.

Sajjad stressed the need for a strategic approach, rather than an unplanned ban on VPNs, urging the government to work with P@SHA and industry leaders to find a balanced solution that protects national security without harming the IT sector.

Pakistan's IT and IT-enabled Services (ITeS) exports, heavily reliant on internet and VPNs, have been growing by 30% annually and could reach over $15 billion in the next five years if supportive policies continue.

Blocking VPNs would cause major clients to leave due to data protection concerns, leading to significant operational costs for IT companies and freelancers.

Sajjad urged the government to develop a secure framework to support the IT industry’s needs while safeguarding national security.