Cautious global IT spending hits local software cos hard
Monday, 25 January 2010
Mehdi Musharraf Bhuiyan
Recent conservative IT spending by the large multinationals at the global stage has started to hit the local software companies hard; as evident from the export performance of software and ITES during the first quarter of the current fiscal.
According to the latest data of the Export Promotion Bureau (EPB), export of software and ITES during the months of July and August of the FY 2009/10 amounted to merely US$ 4.50 million (45 lakh), which fell short of its original target of $ 9.37 million by 51.97 per cent, EPB statistics showed.
The latest figure also showed a clear decline of the export performance from the same time last year; as according to the official data, Bangladesh's IT export to the overseas during the same period of 2008/09 accounted for $ 4.69 million, which is 4.05 per cent less this time.
Although the data in some cases, did not take into account the figure of September this fiscal; even then, the overall export performance during the first few months of the current year appears quite gloomy, insiders said.
When asked about the potential reasons for this declining trend; leaders in this sector termed it a consequence of cautious spending by the big multinationals in IT build-up during the recent period.
"Lately, the big players in world business have taken a cautious approach in IT spending as they are yet to rise from the stagnancy of the recent global recession" Shameem Ahsan, director of export of Bangladesh Association of Software and Information Services (BASIS) told the FE.
"Not that they haven't recovered well from the crisis, but they are yet to get back to the lavish IT spending of the pre-recession era" he added.
Insiders in the sector also blamed the recent dip in software export on the lack of effective country branding as the local IT products are increasingly in competition with bigger major players of the global IT scenario.
"Country branding at this stage is critical as increasingly we are in head to head competition with countries like India in the outsourcing scene" said an IT industry specialist.
"Even with increasing investment and better quality of service, our software companies are struggling to cope with the hegemony of bigger players merely due to their lesser-known country of origin", he added.
The country earned a total of $ 30.48 million from export of software and IT-related services during the last fiscal of 2008/09, while the figure is expected to reach $ 38.10 million during the current fiscal.
According to World Bank estimates, Bangladesh's foreign exchange earning from IT sector could possibly reach $ 500 million by the fiscal 2013/14 if the major backlogs are overcome.
Recent conservative IT spending by the large multinationals at the global stage has started to hit the local software companies hard; as evident from the export performance of software and ITES during the first quarter of the current fiscal.
According to the latest data of the Export Promotion Bureau (EPB), export of software and ITES during the months of July and August of the FY 2009/10 amounted to merely US$ 4.50 million (45 lakh), which fell short of its original target of $ 9.37 million by 51.97 per cent, EPB statistics showed.
The latest figure also showed a clear decline of the export performance from the same time last year; as according to the official data, Bangladesh's IT export to the overseas during the same period of 2008/09 accounted for $ 4.69 million, which is 4.05 per cent less this time.
Although the data in some cases, did not take into account the figure of September this fiscal; even then, the overall export performance during the first few months of the current year appears quite gloomy, insiders said.
When asked about the potential reasons for this declining trend; leaders in this sector termed it a consequence of cautious spending by the big multinationals in IT build-up during the recent period.
"Lately, the big players in world business have taken a cautious approach in IT spending as they are yet to rise from the stagnancy of the recent global recession" Shameem Ahsan, director of export of Bangladesh Association of Software and Information Services (BASIS) told the FE.
"Not that they haven't recovered well from the crisis, but they are yet to get back to the lavish IT spending of the pre-recession era" he added.
Insiders in the sector also blamed the recent dip in software export on the lack of effective country branding as the local IT products are increasingly in competition with bigger major players of the global IT scenario.
"Country branding at this stage is critical as increasingly we are in head to head competition with countries like India in the outsourcing scene" said an IT industry specialist.
"Even with increasing investment and better quality of service, our software companies are struggling to cope with the hegemony of bigger players merely due to their lesser-known country of origin", he added.
The country earned a total of $ 30.48 million from export of software and IT-related services during the last fiscal of 2008/09, while the figure is expected to reach $ 38.10 million during the current fiscal.
According to World Bank estimates, Bangladesh's foreign exchange earning from IT sector could possibly reach $ 500 million by the fiscal 2013/14 if the major backlogs are overcome.