Pakistan’s emerging position in the global gig economy

Enterprising young men and women are making a killing working for foreign clients. But could this become a major export for Pakistan?

By Abdullah Niazi

Every morning, Muhammad Akram

Khan sets out from his house in Lahore’s cantonment for a small office suite in Defence phase V. From the outside, the building that houses his office is plain. Close to the area’s central market, the rent for the place isn’t cheap.

“We pay just over Rs 200,000 a month to rent the office space. It isn’t a very big area, but there are just three of us and it suits us very well,” he explains. “Of course we have to pay on top of this for maintenance, basic office staff and a lot of amenities but we manage to do this pretty comfortably.”

For Akram and the two other people he shares the space with (one man and one woman) this is very much a luxury. But it is a luxury they can afford. All three of them are freelancers that have developed skills in different fields and exclusively work for foreign clients. They earn money in dollars, and as a result have been able to beat out inflation. “We don’t really need the office space. There aren’t clients coming to visit us, we don’t have a lot of guests, all of our employees work remotely and this is really just so we can emulate a workplace environment and increase our productivity. Otherwise all of our work can very easily be done from home,” he says nonchalantly.

Akram and his two associates all have separate work. They met through online forums where freelancers discuss their trade, share ideas, and help each other with leads. “We didn’t know each other before we opened the office. It just so happened that on one of our Whatsapp groups it was being discussed how some of us miss working from an office. The three of us expressed how it would be nice to have a space and that idea sort of snowballed into this little office,” explains one of the two people that work with Akram.

This, of course, poses a question. Pakistan’s economy is in deep shock. Inflation has skyrocketed close to hyper-inflation rates, the country is in the middle of a protracted dance with default that has gone on for a few songs too many, and most salaried individuals are finding it hard to keep up with the increasingly bleak situation that the country finds itself in. So why on earth do three people that have no need for an office space find themselves renting one in an expensive part of town? Akram gives a wry smile when we pose the question. “God has been kind. We are making enough and since we are earning in dollars it isn’t so difficult to keep up.”

These three men and women are part of a rising group of young Pakistanis that are finding themselves an integral part of the global ‘gig’ economy. Through platforms such as Upwork and Fivver they have built entire careers for themselves that pay far better and offer more security than most salaried positions in Pakistan.

The gig economy, as it is called, is that segment of the labour market which is characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. It is not altogether a new concept. This working framework has existed since businesses started hiring temporary or seasonal workers. In essence, every person that works as part of the gig-economy is a small firm or company in and of themselves. They look for clients, do the work, submit it, collect the money and move on to the next project or the next client.

“I am a doctor by qualification,” says Akram much to our surprise. “I finished my degree in medicine and was making just over Rs

40,000 a month during my house job. It was a depressing existence if I’m being honest. At one point I needed money so a friend recommended I look for content writing work online. I’ve always had a clean copy so I thought I’d give it a whirl and there has been no looking back.”

Today, Akram has moved out of content writing and has specialised his skill-set towards search engine optimization. Last month he pulled in $3500 from his work online. That translated to a whopping monthly income of just under Rs 1 million. At the age of 28, Akram says he is making more money than anyone in his batch of medicine. In fact, he reckons he is probably in the top two or three earners among everyone he did his A levels with — including the people working in consulting for international firms and for multinational companies and large banks. On top of this, the income in dollars means that they have been safe from the worst of inflation.

The gig-economy is an emerging sector in Pakistan. Freelancers in the country earned around $400 million in both 2021 and in 2022 which accounts for about 15% of Pakistan’s total $2.6 billion ICT (information-communication-technology) exports. At the recently held 16th edition of the annual ‘Managing Pakistan’s Economy’ hosted by the Lahore School of Economics (LSE), Dr Theresa Azam Chaudhry presented a paper titled “The Global Gig Economy: Pakistan’s Opportunity to Become a Leader in Service Exports.” The paper offered keen insights into the kinds of jobs these freelancers are doing, the mediums they are using, and the shifting trends in what is in-demand in the gig economy.

This much has been apparent for a while that the gig-economy is very much a reality in a country like Pakistan. As a report in The News International pointed out last year, for a devel- oping country like Pakistan, with unemployment being a concern and with 64 percent of its population under the age of 30 (the youth, aged 15-29 make up 41.6 percent of the country’s total labour force, according to the Pakistan National Human Development Report (NHDR) by the UNDP), the gig economy model may be a welcome solution. An Oxford Internet Institute (OII) report ranks Pakistan 4th in the global digital gig marketplace, with about 8% of the total freelance work in 2017. The same report points out how in 2021, Pakistan generated an amount of $500 million entirely from freelancing and has ranked as the 4th fastest growing markets in the world for freelancers.

According to the same OII report, Pakistan generated $1 billion in revenues entirely from freelancing gigs as early as 2017. The report pointed out that Pakistan contributed to over 8% of the global gig economy. Pakistan stands at 4th position due to a rising number of qualified graduates who are working by freelancing their expertise. “Higher education institutes produce a humongous count of 600 thousand graduates annually from varying fields of business, computer science, and software engineering. Thus, this pool is lured towards freelancing jobs due to their better wage rate,” it reads.

“There are many different kinds of gig-workers. The most well paid ones are software engineers and people that can code. For that, however, a lot of people have set-up entire companies in Pakistan. They hire talented graduates at a competitive salary range and get them to work for many clients that they have. The graduates doing the work barely get a cut,” explains one person that worked at one such software house before becoming a freelancer. “I am making much more money freelancing now, but it took me time to build a profile and gain the trust of regular clients.”

That is generally a problem. The research paper presented at LSE was based on data scraped from the popular freelancing website Guru.com. The data of Pakistanis on the platform revealed that out of the 85,314 freelancers that were members of this platform only about 1100 (1.3%) ever completed a transaction. This means that almost 99% of the people that sign up for these websites do not end up finding clients. Now put this into context. As mentioned before, freelancers are accounting for about 15% of Pakistan’s total ICT exports — and these are just individual freelancers. On top of this, IT services like web development, logo design, graphic designing, and developers of mobile apps and java actually fell while non-IT services such as content writing, translation, and virtual assistantship rose. This means that there is a growing demand for gig-work among young individuals that are not able to meet their needs from the job market in Pakistan.

That is not surprising.

According to the Pakistan National Hu- man Development Report (NHDR), Pakistan needs to create 4.5 million new jobs over the next five years, in order to be able to absorb its youth (15-29 year olds who make-up 41.6% of the total labour force) at the current participation and unemployment levels. This can not be achieved if we are “fixated on upskilling coal-miners into data miners” as Louis Hyman, assistant professor at Cornell University and author of Temp: How American Work, American Business and the American Dream Became, notes in his medium article on fixing the Gig Economy.

This essentially tells us two things. The first is that Pakistan’s population is increasingly young and is looking for opportunities to earn foreign money through the gig economy. The second part is that those wanting to find this kind of employment are having a hard time at it — because of the alarming figure that only 1% of people ever really find work.

According to the Organisation for Economic Co-operation and Development (OECD) estimates from 2018, Pakistan has approximately 2% of its labour force engaged in the platform economy through online and location-based services. Experts continue to ponder as to how Pakistan can increase this abysmally low number with its significant youth bulge.

According to the United Nations Development Programme (UNDP), approximately four million young people enter the working age in Pakistan every year. However, only one million are able to secure employment.

According to the Organisation for Economic Co-operation and Development (OECD) estimates from 2018, Pakistan has approximately 2% of its labour force engaged in the platform economy through online and location-based services. Experts continue to ponder as to how Pakistan can increase this abysmally low number with its significant youth bulge.

It is an avenue more than worth explor- ing. Remember, all of the money coming in is in dollars. That means Pakistanis are essentially exporting this labour and in a cash-strapped economy that is desperate for exports it is vital to encourage such enterprising individuals. In the presentation of the paper on the gig economy at LSE, Dr Theresa Chaudhry, Professor of Economics at the Lahore School, co-Director of the Innovation and Technology Centre and Hamna Ahmad discussed whether Pakistan can look to the service economy, specifically to the gig economy, as a source of dynamic export growth.

The paper uses unique data from IT services offered online to foreign companies to understand the types of jobs that are being demanded, the characteristics of those offering IT services and the remuneration offered to those offering services. They also discussed the potential for IT exports and also discussed government policies to promote IT exports.

Yet there are many problems that plague freelancers. The lack of access to payment gateways such as PayPal have made life difficult for freelancers for example, who find it difficult to collect their earnings. On top of this, the banking system also incentivises this kind of work when it should in fact be doing the opposite.

The paper presented at LSE actually does provide some hopeful data. For example, while the majority of freelance workers are in Punjab, Sindh and Islamabad there are a handful of extremely active workers in the Northern Areas and Azad Jammu and Kashmir. And while a majority of the profiles are of men, nearly a third belong to women. Annual earnings are highest in search engine optimization, e-commerce, and customer services.

All of this data gives us insights into the world of the gig economy and how it operates in Pakistan. While there is still a long way to go, with the right policies and encouragement the gig economy and services could very well become Pakistan’s next big export sector. n