IT and ITES Growth Key to Achieving Digital Bangladesh

IT and ITES Growth Key to Achieving Digital Bangladesh

July 17, 2016

With modest beginnings in the late 90s, the ITES industry has come a long way. Buoyed by strong internet and mobile infrastructure along with falling internet bandwidth costs, the ITES sector now has over 800 firms, along with 10,000 freelancers. With a current market size of 400 million USD, a significant portion of the ITES industry is export oriented. Enjoying strong government support and burgeoning private sector interest in tech startups, the IT and ITES industries are targeted to capture 1 billion USD worth of exports by 2018.

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Domestic IT Growth Maintaining Strong Pace

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Of the 800 IT companies currently registered in Bangladesh, majority of them are involved in customized application development and maintenance. This caters to the needs of firms in sectors like banking, telecom, pharmaceutics, RMG and Textile sectors, who have contributed to the increasing domestic demand for customized ITES solutions.

Manufacturing sectors including garment, textile and pharmaceuticals have created sustainable demand for IT solutions like ERP, HR and Payroll management systems, and production and financial management software. As a result, the domestic IT service industry has grown by 20 to 30 percent per annum over the last few years (Source: BASIS).

Fast Export Growth Backed by Government Support

Although most Bangladeshi market players initially offered their services and products predominantly on the domestic market, Bangladeshi software solutions and ITES are nowadays exported to other regions like Europe and Northern America.

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Around 200 Bangladeshi ICT companies are serving international markets offering outsourcing services and project delivery models. Total IT and ITES exports stand at 132.34 Million USD for FY 14- 15.

In terms of export destinations, North America (Canada and the US) dominates, whereas European countries like the UK, Denmark, the Netherlands and Germany have emerged over the last few years as major export destinations. Furthermore, with over 10,000 ICT freelancers active in Bangladesh as of 2015, the prospect of IT outsourcing is now brighter than ever.

The government’s Digital Bangladesh initiative has played an instrumental role in helping to boost IT exports through setting up infrastructure for enhanced connectivity, ICT based citizen service delivery and also an ICT based Education system.

Initiatives like Digital World and BASIS Softexpo are playing a positive role in building awareness and promoting IT sector to both domestic and the international market. Internet connectivity has been vastly enhanced over the country, with internet penetration standing at 23.03% as of 2015.

Vast Global Markets With Limitless Potential

Although it is still in its infancy, ITES industry’s robust growth rate (19.8% CAGR per annum) represents an opportunity to build the next thrust sector for Bangladesh exports. The global ITES market is vast (2.19 trillion USD), and with the right strategies, Bangladesh can become a key global player before long.

Sub-sectors such as BPO (93.4 billion USD) are sizeable in their own right. India, the market leader in BPO, currently has a BPO export earnings of 19 billion USD.

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At the moment the majority of ITES firms (62%) in Bangladesh cater only to the domestic market. In the long run, however, export-orientation is the only logical choice for using ITES as a major avenue for export-led growth.

Spotlight on Tech Startups

For the last few years, Bangladesh has seen the rapid rise of a vibrant startup community. This mostly informal but tightly connected private sector community, which consists of investors, mentors and startup evangelists, have worked closely with government initiatives such as a2i and Digital World. Startup events such as Innovation Xtreme have also attracted global attention to the exciting tech startup developments in Bangladesh.

Local ventures like BDJobs.com and NewsCred have raised international funds with many local tech companies like chaldal.com raising seed finance from local and international investor networks. In the last year, the startup community has become more organized with several incubators, mentorship and networking platforms and even accelerators appearing in quick succession.

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Notable stakeholders acting in this regards include the Founders’ Institute, Seedstars Dhaka, Startup Bangladesh, Startup Cup Bangladesh and most recently, GP Accelerator.

With the growth of such an extensive support structure buoyed by both public sector and private sector support, there is now more opportunity than ever for aspiring IT entrepreneurs to enter the market and contribute to the industry’s growth on both national and global levels.

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  1. Sazu
    #1 Sazu 21 August, 2016, 22:34

    Without govrnment support a freelancer work is dificult.

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