Microsoft to cease local operations in Pakistan

Microsoft has announced that it will be closing its operations in Pakistan, marking the end of its 25-year presence in the country. The company, based in Redmond, confirmed to media outlets that it is planning on changing its operational model in the South Asian country.

According to reports, Microsoft will begin to serve its users in Pakistan through resellers and other closely located Microsoft offices. In a detailed statement by a spokesperson of the company, its customer arrangements and services will not be affected. The spokesperson also added that the company has always adopted this model in other countries and it has been successful. “Our customers remain our top priority and can expect the same high level of service going forward,” the spokesperson added.

Microsoft set to wind down its Pakistan operations

According to reports, the decision is expected to affect five Microsoft employees in Pakistan, with the report noting that the company did not set up any engineering base or resources in the country, unlike its bases in India and other growing countries. Instead, its employees in Pakistan were only tasked with selling Azure and Office products.

The development comes amid a broader restructuring move from the company. According to Pakistan’s Information and Broadcasting Ministry, Microsoft’s exit is part of a wider workforce optimization program. “This would reflect a long-signaled strategy, consolidating direct headcount and moving toward a partner-led, cloud-based delivery model, rather than a retreat from the Pakistani market,” the body said.

It also noted that it recognizes the value of having leading global technology providers active in the country. “We will continue to engage Microsoft’s regional and global leadership to ensure that any structural changes strengthen, rather than diminish, Microsoft’s long term commitment to Pakistani customers, developers, and channel partners,” the agency said.

Western firms struggle as Asian tech firms dominate

Earlier this week, Microsoft announced a reduction in its workforce, cutting it by 4% globally. Also, in preparation for its transition in Pakistan, the company had moved licensing and commercial contract management for Pakistan to its European hub in Ireland in the last few years, while certified local entities have been in charge of the handling of its day-to-day service delivery.

Former Microsoft executive and its first lead in Pakistan Jawad Rehman discussed the company’s exit in a recent post. “This is more than a corporate exit. It’s a sobering signal of the environment our country has created … one where even global giants like Microsoft find it unsustainable to stay. It also reflects on what was done (or not done) with the strong foundation we left behind by the subsequent team and regional management of Microsoft,” Rehman said.

The exit comes days after the federal government of Pakistan announced its plan to provide IT certifications from several tech companies, including Google and Microsoft to 500,000 youths. The announcement was in contrast to that of Google, with the company announcing a $10.5 million investment in the country’s public education last year and is also looking at Pakistan as a location to produce half a million Chromebooks by 2026.

The recent development reveals the broader challenges to the tech sector in Pakistan. Unlike India and other markets in the region, Pakistan has struggled to establish itself as a major engineering outsourcing destination for Western tech companies. Instead, the country has been dominated by two main firms, local companies that have developed their engineering capabilities and Chinese firms like Huawei, which has gained a considerable amount of market share by providing enterprise-grade infrastructure to communications firms and banks.

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