Microsoft exits Pakistan after 25 years, country's ex-president warns of economic fallout

Global tech firm Microsoft has ceased operations in Pakistan after 25 years, according to its founding country head. Jawwad Rehman, who launched Microsoft in the country in 2000, revealed the closure on LinkedIn, writing, “Today, I learned that Microsoft is officially closing its operations in Pakistan. The last few remaining employees were formally informed and just like that, an era ends...” The company has not made any formal public statement on the matter.

The exit coincides with Microsoft’s global decision to lay off 9,000 employees. However, the shutdown in Pakistan is seen by many as a reflection of deeper economic and political instability in the country. Factors such as a weakening currency, high import barriers on tech, and ongoing political uncertainty have created an inhospitable environment for multinationals. All these made it nearly impossible for a global company like Microsoft to function efficiently.

Strained Ties with India

Pakistan’s bilateral trade with India has sharply declined, falling from USD 3 billion in 2018 to just USD 1.2 billion by 2024. Critical imports, including essential medicines, now face costly delays as they are rerouted through third countries due to strained diplomatic relations. The downturn in trade has further dampened investor confidence, with geopolitical tensions exacerbating an already fragile economic environment.

Former President Links Exit to Regime Change

Former Pakistani President Arif Alvi reacted strongly to the news, calling Microsoft’s decision “a troubling sign for our economic future.” In a detailed post on X (formerly Twitter), Alvi stated, “Pakistan now spirals in a whirlpool of uncertainty. There is increasing joblessness, our talent is migrating abroad, purchasing power has reduced, economic recovery in the ‘awami’ context feels like a distant & elusive dream.”

Alvi also recalled his February 2022 meeting with Microsoft co-founder Bill Gates, where they discussed potential investment in Pakistan. “I asked him directly, ‘Why isn’t Microsoft investing in Pakistan?’ He leaned in, sharing in confidence that he had just spoken with PM Imran Khan and arranged a call between the PM and Microsoft CEO Satya Nadella.” According to Alvi, Gates said a major announcement was planned within two months. However, “everything went rapidly downhill. Regime change upended those plans.”

Economic Indicators Reflect a Tough Climate

Microsoft’s exit comes at a time when Pakistan’s economy is under severe strain. The trade deficit for FY2024 reached USD 24.4 billion, while foreign exchange reserves fell to just USD 11.5 billion by mid-2025, directly impacting tech imports and investor sentiment.

Alvi argued that political dialogue is now essential. “Public opinion, as many know, reflects deep disillusionment with the current arrangement & the electoral process. Yet, a vast majority still believes that dialogue is the only way to navigate this crisis,” he said.

Microsoft’s departure marks a significant moment for Pakistan’s tech ecosystem and reflects broader concerns over its economic direction.