Bangladesh – The Next Global ICT Destination

Bangladesh – The Next Global ICT Destination

December 24, 2015

By Shameem Ahsan, President, BASIS & CEO, Akhoni.com

“Recognized as one of the Next Eleven (N-11) – a list of eleven countries having strong potential for becoming the world’s largest economies along with BRICs (Brazil, Russia, India and China), with highly promising outlooks for investment and future growth – Goldman Sachs”. “One of the `Frontier Five’ (along with Vietnam, Kazakhstan, Kenya and Nigeria), having promising macroeconomic performance and demographic trends-JP Morgan”, “One of the top 20 IT Outsourcing destinations –European Commission”, “Enlisted as one of the top 30 IT Outsourcing Destination -Gartner’s report”. Yes you have guessed it right we are talking about “Bangladesh- the Land of the Golden Opportunities”.

The IT sector in Bangladesh is now more than three decades old and has been serving dedicated clients both globally and in domestic market. Bangladesh is gradually growing and emerging as top-favorites for countries looking for reliable vendors for their business functions outsourcing and is outwitting the countries already established in this sector such as India, Philippines, and China. The factors that the decision makers primarily take into account for deciding outsourcing destinations are cost, availability of skilled manpower both current and prospective, improved flexibility, longer flexible operating hours, low cost of production in terms of labor, reduced time to complete the work due to the advantage of the time difference between different regions around the world and across all these areas. Bangladesh scores well in these salient features and hence becomes a flaming selection for a perfect hub for the worldwide IT industry.

Population Demography

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Bangladesh has the 5th largest economically active population in the world

Bangladesh offers a vast pool of young, trained and English speaking resources – available at costs almost 40% lower than established destinations like India and Philippines. Government authorities have demonstrated a determination to promote ICT services industry in the country – providing cheaper bandwidth and alternate international cables, setting up Technology parks and providing tax holidays for export oriented industries. Almost half of the population is youth and are capable of getting involved in economic activity and earning thereby increasing productivity, output and tax revenue.

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Why Bangladesh

  • Cost effective compared to India, China, and Philippines.
  • Huge Number of talented, young and energetic engineers.
  • Familiarity with new & updated technology
  • Attractive government incentives and facilities.
  • Internet connectivity has been enhanced vastly over the country.
  • The government has made ICT as a focus area, and has extended favorable policies for the further growth of the sector.
  • Subsidies towards technology imports and tax breaks were provided to the industry.
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International IT firms which are already in Bangladesh

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Bangladesh Association of Software and Information Services (BASIS) has been playing an instrumental role in the growth of ICT sector in Bangladesh. It has been facilitating the ICT and ICT-enabled service provider companies to flourish both home and abroad. Since its inception in 1997, BASIS has been working relentlessly for the overall development of the ICT sector in the country. Currently the BASIS membership stands at 700. We have achieved a milestone export revenues of US $ 100 million in the year 2012-13. The export growth of this sector is now among the top 15 of the country and we plan to excel further in terms of revenue, development, digitization and growth in terms of GDP.

BASIS have crafted out a roadmap for the next five years with specific milestone, targets, appropriate detailed vision and plan to earn US $ 1 billion from software/ITES export, to train and employ 1 million IT skilled professionals, to make internet available to 1 crore new users yearly and to contribute 1% in GDP from software and IT sector by 2018 under “One Bangladesh” campaign. Collectively their next major challenge is to ensure the same growth in the use of the internet and access to the world wide information sources and communities through “One Bangladesh”.

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BASIS has Target and set goal to increase the Current Workforce to 1 million by providing New Entrants and Professional with adequate, updated and employment centric training courses and skill development program. Enhanced and skilled training to be given to freelancers and outsourcing experts to further increase their skills. The 5 years plan has a target to create 200 thousand skilled professionals per year in accordance to reach the $1 billion milestone. As per the Next 5 years plan and with adequate resources and aide, it would be possible to increase the Gross National Income through IT revenues by 33 %.

Some recent initiatives of BASIS include National Portal Framework (25000 government websites for ministries and departments developed in support of BASIS), Union Information Centers (UIC), and separate ministry for ICT, Bangladesh Hi-Tech Park Authority formation and Janata Tower STP. Over recent years, Bangladesh has made major strides in laying the groundwork for a diverse and successful outsourcing market.

Bangladeshi freelancer community has further supplemented the ICT exports by close to US$ 40.00 million – with Bangladesh appearing consistently in top freelance work locations on sites like oDesk, eLance and the likes.

Bangladesh has a strong domestic demand for its ICT services. It has laid down a solid base through catering local needs over the last few decades. Local market still is major player of the business constituting of 63% BASIS registered companies growing at 20-30% a year. This has honed the skills of ICT professionals who are capable of meeting global demand increasing the ICT enabled services export of the country. Bangladesh has a positive growth since 2008-09 in ICT export leading to $ 32.91 million export in 2012-13 which is US $ 101.36 which is milestone achievement in the country’s history and one of the top 15 export sectors. The total industry size is approximately $250 million. 

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Because of the sustained growth trend in Bangladesh, Moody’s and S&P have maintained Ba3 and BB- ratings respectively with stable outlook for four consecutive years now.

Bangladesh is preferable over other countries in Asia due to Low wage Expenses, low entry barriers for exports and IPR waivers provide competitive edge in Software and IT enabled services. Thus Software and IT service exports of Bangladesh are growing sharply, (55 percent y-o-y during July-January FY13). Major upgrading of IT infrastructure like high speed broadband connectivity, automated clearing and settlement, interlinking of all settlement platforms in a National Payments Switch have hugely facilitated expansion of IT enabled services. Around 80 thousand science and technology graduates join the work force every year. Around 150 active registered software and IT enabled service export firms are already established, many of them with CMMi2 and 3 certifications. Seventy thousand freelancers are already active in online IT service exports.

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Foreign investors have the same access as local investors to working capital and foreign exchange current external transactions in local market, term borrowing from abroad with prior BOI approval, tax holiday for specific sectors as allowed from time to time by the Government (up to June 2015 on earnings from IT enabled services), Retention of part of export earnings in foreign exchange retention quota accounts, depending on local value addition content. Expatriates working in Bangladesh can repatriate up to 75 percent of post-tax salaries on a regular basis. Foreign investors can invest savings in Bangladesh government securities, and can convert accumulated savings for repatriation in foreign exchange while leaving Bangladesh

Bangladesh Education & IT Outlooks

Students

  • 23M in Higher Education
  • Consistent growth in Women Education

IT Companies

  • Software/ITES and BPO
  • Online Support Portals

IT Revenue

  • 56% YOY growth
  • Target: 7% to GDP by next 7 years

Mobile

  • 110 Million Active Mobile Users
  • Mobile Finance is booming business
  • Remote Health Service started with Japanese Tech                                                                                                                                                                                        

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What you can do in Bangladesh

The vision to firmly accomplish Bangladesh as an IT hub worldwide is not far away with appropriate policies to overcome obstacles and innovative minds to flourish the IT industry. The IT liberation Era has started and the limit is an unending horizon. We hope the heartiest efforts and enthusiasm within the minds and people involved and going to get involved with this sector would wipe out the hindrances and Bangladesh’s IT sector shall prevail as one the Leaders in the future. Through this campaign we will firmly realize the vision 2021-“Digital Bangladesh”. We believe in “one Bangladesh” and also believe that the 100 million youth of our country will work together to make Bangladesh not only a middle income country but a high income country in the next 15 years.”

*This article was first published in Bangladesh Now, 2014.

*The featured image is collected from BASIS initiative One Bangladesh‘s website.

About the Author

2b730e4Shameem Ahsan is an ICT entrepreneur and co-founded Akhoni.com Ltd., eGeneration Ltd., Benchmark-eGeneration Ltd. & Element 5 Fashion. He is General Partner of Silicon Valley based Fenox Venture Capital. Shameem is the President of Bangladesh Association of Software & Information Services (BASIS), the national association for Software and IT enabled services companies in Bangladesh. He is the Director of Federation of Bangladesh Chamber of Commerce & Industry which is the apex trade body in Bangladesh.

 

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