Microsoft shuts shop in Pakistan after 25 years: What triggered tech giant’s departure?

Microsoft has shut down its operations in Pakistan after 25 years, as part of a global layoff of 9,000 employees. The company's decision to pack up operations in Pakistan is not just a corporate move – it’s a reflection of a nation losing its competitive edge in the global digital economy. A mix of political upheaval, economic uncertainty, and missed opportunities have cost Pakistan dearly. And unless there’s a fundamental course correction, more companies may follow Microsoft’s lead.

Pakistan's former President Dr Arif Alvi took to X (formerly Twitter) to link the closure to Pakistan’s broader economic troubles. “Pakistan now spirals into a whirlpool of uncertainty. There is increasing joblessness, our talent is migrating abroad, purchasing power has reduced,” Alvi said, calling Microsoft’s departure a “troubling sign” for the country's future.

Political instability undermined momentum

Alvi also recounted a confidential conversation with Microsoft founder Bill Gates during his visit to Pakistan in February 2022. According to Alvi, Gates had arranged a call between then Prime Minister Imran Khan and Microsoft CEO Satya Nadella, with a major investment announcement reportedly “all set” to follow within months.

However, that plan was derailed after Khan’s ouster later that year. “By October 2022, Microsoft chose Vietnam for its expansion, a decision in which they had initially favoured Pakistan. The opportunity was lost,” Alvi wrote, suggesting that regime change had directly impacted Pakistan’s ability to secure global tech investment.

A shrinking economy, a fleeing market

Pakistan’s economy is mired in a crisis: currency volatility, depleted foreign reserves, crippling inflation, and IMF-dependent bailouts have become the norm. Amid these troubles, global companies have begun pulling back or scaling down operations. Microsoft’s exit is not isolated; it reflects a broader trend of multinationals avoiding or exiting South Asia’s fifth-largest economy.

Additionally, Pakistan’s tech sector has faced major headwinds, including internet shutdowns, inconsistent taxation, and policy hurdles that make it harder for global companies to operate smoothly.

Global layoffs added to the push

Microsoft’s move also comes in the backdrop of massive global layoffs. The company has cut over 9,000 jobs worldwide in 2024–25 as part of cost-saving measures. While most exits were from engineering and product teams, the Pakistan unit – a relatively smaller market – likely became expendable amid broader restructuring.

What this means for Pakistan’s tech future

The departure is not just symbolic. Microsoft was one of the few top-tier global tech companies maintaining an office in Pakistan. Its exit leaves a vacuum in terms of investment, talent development, and global partnerships. It also reinforces the perception that Pakistan is no longer seen as a stable or strategic hub for tech investment – a perception that could deter future entrants.

Tech professionals in Pakistan have expressed concern over the growing “tech brain drain” – with many skilled workers opting for jobs in Gulf countries, Europe or North America, further eroding local capabilities.