This report analyses the recent trendsin Pakistani Information Technologies (IT) andInformationTechnologies enabled Services (ITeS), as well asobstacles confronted by firms. The authors assess theimportance of trade costs as a barrier to services growthand development in Pakistan’s domestic market and to seizingthe opportunities of global trade. The report also aims tounderstand and examine the impact of obstacles (i.e., tradecosts) confronted by firms. These obstacles increase thecosts of selling services and may reduce capacity to competeboth in the local market (Pakistan) as well as overseas(exports). These obstacles include direct costs generated bypolicy barriers that limit market entry, but can alsoinclude infrastructure deficiencies, geographical location,and institutional capacities, and/or obstacles imposed byregulatory measures. Among the latter obstacles, examplesinclude difficulties in accessing the information necessaryto operate in a market, the predictability and stability ofthe business environment in a market, and the quality of thedecision-making process and administrative procedures ofcompetent authorities in the domestic and export markets.The focus of the report is the trade costs confronted by ITand ITeS firms. IT and ITeS operations are the backbone toprovide digital services, digital goods and depend ondigital technologies, conform an integral part of theoverall ecosystem. The report relies on a survey conductedon 782 IT and ITeS firms across different cities. Theobjective of the survey was to examine the importance ofthese factors for Pakistani firms and to provide advice topolicymakers. To complement the survey results, the mainfindings were discussed in focus group structuredinterviews. Firms interviewed covered different servicesactivities beyond software companies and included bothexporters (534 firms) and non-exporters (248 firms),reflecting the export competitiveness as well as domesticcompetitiveness of Pakistan's IT services sector. Theanalysis aims to improve our understanding ofPakistan's IT performance and the obstacles confrontedin this field.