The ICT sector of Bangladesh is going through admirably fast-paced growth. Industry players are investing in the field of R&D to stay alive amidst fierce competition, increasing innovation at a rapid pace. The local ICT Market is sectorized as hardware, Software, IT Services, and telecommunication services. The market consists of both small and medium enterprises and large enterprises.
Bangladeshi software and IT-enabled services firms have clients in over fifty countries on four continents. The expeditious expansion of ICT-based services has led to an increase in efficient growth in the private sector. Nearly half of the country’s IT market is shared by various software development firms, which shows the significant impact of the software market in the overall IT sector. Experts in IT engineering are operating in the industry to meet the demand for customized software development and maintenance. There is a high demand for payment systems like HR and payroll software in the garment sector, hospitals, banks, and government projects.
According to BASIS, 25 local software companies are now developing integrated business applications and enterprise resources planning (ERP) instead of importing them.
However, local companies have never viewed software development as a core industry. The creative field is small, and companies rely on packaged programs sold by independent software vendors. Packaged programs are great for back-end systems like HR and financials but not good enough for customer-facing parts. To gain a competitive advantage and to signal the customers, the local Bangladeshi firms should consistently invest in unique program making.
Outlier companies build unique software systems for managing their sales and marketing. Business giants in global platforms like Amazon and Walmart earn more profit through software-controlled strategies than their rivals. This is something Bangladeshi IT companies can adopt, too. However, the local IT companies in Bangladesh must remember that this strategy may cause economic concentration and higher inequality. Proper policy regarding software development and visionary marketing strategy can balance it all.
The growing demand for digital transformation has influenced the government to initiate projects that boost the country’s telecom sector. The country’s transition to 3G, 4G, and 5G is still rising. The Bangladesh government’s Posts and Telecommunications Division expanded its initiative to offer 5G technology-based mobile services to the general public. Huawei and Nokia installed the nation’s first 5G network in limited areas of Dhaka in partnership with Teletalk. It will bring new growth opportunities for the Bangladesh ICT market. GSMA predicts that smartphone adoption in Bangladesh will grow almost 75% more by 2025. The growing population of Bangladesh is the reason behind an ever-increasing demand for ICT products and services. The rising adoption of broadband services in the country, specifically fixed broadband services, is another positive sign.
Bangladesh Data Center Company Limited (BDDCL) provides reliable and easy access by storing data through virtual storage for major organizations. It guides the companies in meeting government standards and safety regulations. BDDCL uses Oracle Cloud Infrastructure for the Bangladesh government to provide secure cloud services. Microsoft has opened a Startups Founder Hub in Bangladesh to provide technical tools and investment assistance to talented individuals or groups for expanding their businesses. Meghna Bank adopted a Huawei modular data center in Dhaka to provide better service to its clients. Besides, government investment in several technology development programs such as 5G, AI, and IoT will emerge into a digital transformation.
Tech market in Bangladesh blending with 4IR
The IT sector is predicted to grow at a CAGR of 1.83% over the next five years. The introduction of a 3G connection in 2013 has caused a boost in internet use in Bangladesh. Now, most smartphone users in the country have 4G networks available. Mobile web browsing has overtaken desktops along with mobile computing. Consumer preferences are advancing, and switching from Smartwatches to smartphones has already started among higher-class people.
Bangladesh is emerging as a freelance IT center. Currently, 500,000 regular freelancers and 2,500 agencies serve different freelancing platforms in the industry. BASIS says over 1,500 software and IT-related companies export their products to 35 countries. Currently, more than 120 call centers are operating in Bangladesh.
Tech Mahindra signed a contract with Axiata Group to co-develop 5G enterprise solutions for many countries, including Bangladesh. A Dell and Microsoft cloud service partner, Colocity, launched the Microsoft Azure stack hub hybrid cloud in Bangladesh to enhance assistance for local businesses to grow. A Project of Bangladesh Computer Council (BCC) under the ICT Division called iDEA signed a letter of intent (LOI) with Microsoft to accelerate domestic innovations and startups in Bangladesh. Besides, Bangladesh has established a data center in Kaliakoir, Gazipur. Initiatives like this will bring new growth opportunities for the Bangladesh ICT market.
The world is getting more digitized, and Bangladesh needs to adapt to great Artificial Intelligence (AI) facilities such as machine learning and automated data analysis to help achieve higher growth. The tools of AI have become highly useful in the area of customer service, such as chatbots and virtual assistants. AI can bring significant change in the field of finance and healthcare. Digital infrastructure development, R&D, data privacy, security, regulations, funding, and industrialization for newer technologies should be a core industrial objective while focusing on skilling and reskilling the workforce. With the advantages of AI, Bangladesh’s National Cybersecurity Strategy is working on cybercrime management for a safe, secure, and harmless IT sector.
Export of Software and ITES from Bangladesh
According to a recent study by the Oxford Internet Institute (OII), Bangladesh is the second largest producer of IT freelancers in the world, with a labor share of 16%.
The local IT companies have started to export to EU countries and East Asian countries along with its top export customer, the US. Many of these companies export through joint ventures with overseas companies or with full foreign capital investment.
According to BASIS, global tech giants like Google and Apple are now looking for an alternative to India for low-cost IT services. During the last two or three years, the engagement with overseas venture capitalists indicates that the Bangladesh IT industry has finally been able to grab the attention of global IT importers. Bangladesh has nearly 650,000 IT service exporters, freelancers, and almost 1,600 freelancing organizations, earning over USD 500 million in the 2021-22 fiscal year. Tiger IT, DataSoft, Dohatec, eGeneration, REVE Systems, and Southtech are some of the top Bangladeshi companies that have set up their offices in India, Nepal, Bhutan, Malaysia, Japan, the UK, the US, and even in the African continent.
E-commerce
E-commerce service has a high engagement rate in Bangladesh. Now, people can shop for groceries at home and compare the prices of daily necessities through various apps like Chaldal, Panda Mart, daraz, etc. Customers are more active in Social Media Shopping, using Payment methods like bKash, Nagad, and Upay. More availability of global shopping platforms like Amazon and Lazada will increase Shipping.
Job opportunities
The IT servicing sector of Bangladesh has a large number of skilled and well-educated entrepreneurs. The career opportunities in Bangladesh’s IT sector are centered in the capital city. The outsourcing of tech services of different multinational corporations to Dhaka has been the primary cause of diverse opportunities here, making it almost a rival to the city of Bengaluru, India. Most of the experts involved in the IT sector are computer science or software engineering majors with high proficiency in developing programming languages.
Room for improvement
The world is progressing, and AI and other modern technical tools will reduce the demand for low-cost labor. In manufacturing, for example, robots and automation have improved efficiency and reduced costs. As a Developing country, we must solve the ‘AI-unemployment trap’ many countries are stuck on. Promotion and sponsorship of IT skill training courses and scholarship programs will create a spontaneous IT industry.
Many companies still stick to the business motto of an exclusive product-developing model strictly controlled and authorized. Maintaining barriers to avoid entry of new companies into the market will destroy healthy competitiveness. Corporate giants must think expansively about moving from ‘products to platforms. Firms can include suppliers and consumers from all streams to create a large platform and analyze how each part of the value chain integrates into the new platform.
Global software and Internet companies have gone beyond simplistic marketing models to create several ways to earn more revenues. They created an audience always there to boost revenues by believing they were benefiting themselves. Crowdsourcing is an example of co-creation with customers. Companies can utilize social media and websites to reach customers for opinions and suggestions on product design to justify consumer demand. For instance, companies like Kickstarter provide a platform for entrepreneurs to presell product ideas.
Domestic IT companies must find their unique style while maintaining a company to survive in the market and stand in the global platform. Android has the biggest overall install base, but Apple owns the high-income market. Cloud storage services provided by Apple, Google, and Microsoft as part of other products are available in the market, and yet Dropbox still managed to double its revenue to USD 1.2 billion from 2015 to 2018. This is why the thriving IT companies of Bangladesh need to find their x factor.
Payment complications
Bangladesh needs to formulate a legal framework to encourage new entrepreneurs. There is an entry barrier for new and small firms in the industry, with policies favoring large producers. IT firms with more than 200-bit data storage have to bear a lesser tax burden than firms with lower data storage. Banks and financial institutions need to have access to borrowers’ credit information for safe and secure transactions. Investors in this industry should receive borrowing and loan benefits like in the RMG sector. Investors should get a reduced high interest rate to get benefited from it. Through foreign direct investment, the growth of new IT firms will generate more foreign currency.
The cross-border payment system in Bangladesh operates through international bank transfers. Many companies prefer not to use these services as it is a time-consuming and costly option. Payment systems like PayPal and Xoom can be a proper replacement or substitute for other conventional payment systems like bank transfers.
Local investors can attain corporate income tax exemption if they invest from BIDA and Hi-Tech Park authority for the first 10 years. However, In the initial stages, the private banks do not agree to their requests for loans due to the high risks associated with the sector. Proper mechanisms to quantify the value of IT work in Bangladesh are often absent.
The IT industry in Bangladesh shows a bright future in terms of growth potential and endless probabilities. The increasing demand to explore and adopt digital technologies and IT infrastructure has motivated the recent competitiveness of this sector. The nation is relatively new in the global online outsourcing market and has a long way to go.
Mashkura is a free bird and an intuitive thinker who has made content writing part of her lifestyle. To be an unbiased writer she lets her senses analytically deal with emotions.
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