The purpose of this paper is to examine the Information and communication technology (ICT) challenges are being faced by the small and medium enterprises (SMEs) in the service sector of Pakistan. Quantitative research methodology is adopted by using the close ended questionnaire as a data collection tool. For the purpose of this study, nine challenges which are well documented in the literature being faced by the service industries in Pakistan are hypothesized. Out of these nine challenges, six are being accepted; however, three are rejected in the light of the responses received from the stakeholders. The accepted assumptions are unavailability, complexity of technology, limited speed of broadband, unskilled staff, frequent disconnection, and incomplete online payment process evaluated, those variables significantly influence to the performance & growth of SMEs in Pakistan. On the other hand, the results also indicate that affordability, lack of trust and cyber threats assumptions rejected. Since all these variables categorized in to three main factors i.e are ICT access, ICT infrastructure, and ICT securities. Additionally, the results indicate that these three factors are significant influenced on the performance of SMEs. Finally, findings of this study suggest that government need to empower ICT infrastructure on the basis of regional uniformity, and provide flexible policy regulations for creating strong bridge between SMEs and ICT, so that to minimize challenges and can contribute more in the development of country.