ICT outsourcing and Bangladesh
Thursday, 4 December 2008
Ahmed Hafiz Khan
THE global outsourcing business has seen a tremendous growth in past years. The outsourcing in software and information & communication technology (ICT)-enabled services (ITES) created an immense interest in Bangladesh seeing the success of the developing countries like India, Philippines and Vietnam. The factors for the growth of ICT industry from modest start in the successful countries ranged from government support, infrastructure roll-out, financial support and availability of human resource.
A industry experience report by Rob Kommeren & Päivi Parviainen titled, 'Philips experiences in global distributed software development', discussed the Philips experience of over 10 years of distributed development through outsourcing involving dozens of projects. The outcome is an aggregate of experience and lessons learnt of a long-term and large-scale development activity. Since the experience and lessons learnt discussed here have been found repeating in several projects over time, in different settings and observed by different people, they can be seen as general, common issues occurring in, and because of outsourcing.
The report, in its opening statement states, that -- 'The highly competitive business environment -- with the ever increasing functionality of the products implemented in software -- places intense demands on delivering higher quality software faster. Companies need to use their existing resources as effectively as possible, and they also need to employ multiple development teams on a global scale. The ability to collaborate amongst these teams has become a critical factor in software development life cycle'.
The report also states in its conclusion that -- 'The general lesson learnt from this experience is that the reality of distributed software development is significantly deviating from the theoretic hypothesis: the efficiency of distributed software development is perceived to be disappointingly low, whereas increased efficiency was expected. First measurements indicate that up to 50% of the development effort is spent on overhead (such as extra project management and team coordination) and communication. This has lead to that global distributed development which has in practice been two to three times more costly compared to one-roof development. Preliminary conclusion is that, in general, distributed software development should be avoided as far as possible'.
In February of this year, US President-elect Barack Obama proposed that he would stop providing tax breaks for companies that were shipping jobs overseas through outsourcing activities and instead give tax breaks to companies that invested in the United States. This was an ominous sign of a possible protectionist attitude that the US could adopt to curtail outsourcing activities of US firms.
These information are important for Bangladesh to take appropriate measures to develop into outsourcing destination. The main reason for the outsourcing is 'delivering higher quality software faster'. This means higher productivity and efficiency, which translates to requirement of highly skilled manpower backed by appropriate copyright act and technical infrastructure. The ICT industry in Bangladesh today is more vocal on the issues of access to finance and the price of the bandwidth whereas in the light of the evolving global scenario after the current recession requires the industry to proactively ponder on the actual needs for the development of the industry.
Globally outsourced software development allows organisations to benefit from access to a larger, qualified resource pool with the promise of reduced development costs. Another potentially positive impact of global outsourcing is innovation: mixing of developers with different cultural backgrounds may trigger new ideas. On the other hand, several studies have indicated problems in outsourcing software development, including Damian et al. 2004; Boland and Fitzgerald 2004; VA Software 2005). Such problems are:
- Poor visibility and control of remote activities,
- Inadequate communication, collaboration and coordination across individuals, teams, time-zones and projects,
- Insufficient (or lacking) knowledge and asset management capabilities,
- Language and cultural differences,
- Trust factors, and
- Lack of shared contextual awareness.
The growth of the ICT industry in Bangladesh has been very slow due to the above challenges. This is visible from the number of software professionals' employment in these companies. Baring a handful of ICT companies, most others have remained less than ten programmers' company even though a considerable time has elapsed after their inception. The capability and technical competence of these programmers are also not accredited which is a barrier to winning client's confidence. The government's initiative to build qualified pool of ICT professionals initiated a six month internship programme for ICT industry. Under this programme, a qualified graduate on employment in ICT Industry gets 60% (@Taka 3000/month) from government and 40% (@Taka 2000/month) from the employer. The industry failed to absorb the desired 500 ICT Professionals per batch leading to 1000 professionals per annum even after the government subsidy on salary due to the quality of these graduates. That has resulted in very slow growth of the local ICT industry. The industry insiders point that the intake is falling due to the quality of the graduates.
The following data obtained from Bangladesh Association of Software & Information Services (BASIS) gives the picture of employment under ICT Internship programme.
After detailed discussion and analysis of this unfortunate situation with the industry, academia and the government, it was observed baring a few, most of the graduates lack the pre-requisites for employment. To overcome this bottleneck and to ensure growth of our ICT industry, a programme to develop the human capacity under ICT Professional Skill Assessment and Enhancement Programme (IPSAEP) was designed and was formally approved in the ICT Task Force meeting, chaired by the Chief Adviser. Unfortunately, the Ministry of Science & ICT is sleeping with the proposed IPSAEP.
We have missed the industrial revolution because of the various constraints and now the golden opportunity to enter the ICT revolution is being hampered by the delays from within the government. The new global environment emerging out of the recession in the developed world will mean stricter cost control in ICT outsourcing similar to the measures seen after the dot com burst.
Bangladesh has no dearth of human resource but delay in appropriate measures quickly to tap the resource will mean failure of our dream with ICT. In contrast to our effort, the Philippines government is creating 'Next Wave Cities' to increase its share in the ICT and ITES outsourcing business. So-called "next wave cities" are areas around the country outside Metro Manila and Metro Cebu which offer the best potential to support the growing outsourcing sector. The 30 cities considered for the list were scored on talent (50%), infrastructure (30%) business environment (15%) and cost of doing business (5%). The Philippines outsourcing industry is targeting to expand its market share to 10% of the global outsourcing market, which is expected to grow to be worth $130 billion by 2010. The Philippines currently corners 9.0% of the global outsourcing market - a far second to the worldwide leader, India which has around half of the global market. These cities are an important ingredient in the Roadmap 2010 initiative of the Philippines. Late last year, the Philippines industry group launched its Roadmap 2010, which projects the industry to grow to 900,000 to a million employees by 2010, from 300,000 in 2007. Export revenues are also expected to grow to $12 billion by 2010 from under $7.0 billion by yearend. However, unlike the proposed ICT Roadmap for Bangladesh this Roadmap 2010 of the Philippines does not prescribes anything against its national integrity.
The Indian government, industry and academia are working together to enhance the skill-sets to match the global demand. The growth of Software Finishing School ensures India remains the number one choice for ICT outsourcing whereas our Bangladeshi bureaucrats working in the Ministry of Science & ICT are ensuring that IPSAEP fails to take off. IPSAEP which bears contribution of over eight months of hard work from our academicians like Dr. Jaffar Iqbal, Dr. Lutful Kabir and Dr. Lutfur Rahman as well as ICT Industry and government and approval of the Chief Adviser is not given appropriate importance because of the programme brings no extra benefits to the bureaucrats. The Philippines experience shows that it has given highest consideration on talent by putting 50% weightage on building 'Next Wave Cities' and has created many institutions to nurture and shape the talent for national growth. The whole ICT-based business requires appropriate skill sets and knowledge attained through high standards of education and training program to supplement industry requirements.
In this month of December we snatched independence in great odds through determination and leadership. Will this December bring the same victory for the ICT industry? The answer is yes if the industry can show its determination and leadership quality.
This will surely wake our ICT leaders from their slumber to be proactive and tackle the odds with the same determination taught by our valiant freedom fighters.
THE global outsourcing business has seen a tremendous growth in past years. The outsourcing in software and information & communication technology (ICT)-enabled services (ITES) created an immense interest in Bangladesh seeing the success of the developing countries like India, Philippines and Vietnam. The factors for the growth of ICT industry from modest start in the successful countries ranged from government support, infrastructure roll-out, financial support and availability of human resource.
A industry experience report by Rob Kommeren & Päivi Parviainen titled, 'Philips experiences in global distributed software development', discussed the Philips experience of over 10 years of distributed development through outsourcing involving dozens of projects. The outcome is an aggregate of experience and lessons learnt of a long-term and large-scale development activity. Since the experience and lessons learnt discussed here have been found repeating in several projects over time, in different settings and observed by different people, they can be seen as general, common issues occurring in, and because of outsourcing.
The report, in its opening statement states, that -- 'The highly competitive business environment -- with the ever increasing functionality of the products implemented in software -- places intense demands on delivering higher quality software faster. Companies need to use their existing resources as effectively as possible, and they also need to employ multiple development teams on a global scale. The ability to collaborate amongst these teams has become a critical factor in software development life cycle'.
The report also states in its conclusion that -- 'The general lesson learnt from this experience is that the reality of distributed software development is significantly deviating from the theoretic hypothesis: the efficiency of distributed software development is perceived to be disappointingly low, whereas increased efficiency was expected. First measurements indicate that up to 50% of the development effort is spent on overhead (such as extra project management and team coordination) and communication. This has lead to that global distributed development which has in practice been two to three times more costly compared to one-roof development. Preliminary conclusion is that, in general, distributed software development should be avoided as far as possible'.
In February of this year, US President-elect Barack Obama proposed that he would stop providing tax breaks for companies that were shipping jobs overseas through outsourcing activities and instead give tax breaks to companies that invested in the United States. This was an ominous sign of a possible protectionist attitude that the US could adopt to curtail outsourcing activities of US firms.
These information are important for Bangladesh to take appropriate measures to develop into outsourcing destination. The main reason for the outsourcing is 'delivering higher quality software faster'. This means higher productivity and efficiency, which translates to requirement of highly skilled manpower backed by appropriate copyright act and technical infrastructure. The ICT industry in Bangladesh today is more vocal on the issues of access to finance and the price of the bandwidth whereas in the light of the evolving global scenario after the current recession requires the industry to proactively ponder on the actual needs for the development of the industry.
Globally outsourced software development allows organisations to benefit from access to a larger, qualified resource pool with the promise of reduced development costs. Another potentially positive impact of global outsourcing is innovation: mixing of developers with different cultural backgrounds may trigger new ideas. On the other hand, several studies have indicated problems in outsourcing software development, including Damian et al. 2004; Boland and Fitzgerald 2004; VA Software 2005). Such problems are:
- Poor visibility and control of remote activities,
- Inadequate communication, collaboration and coordination across individuals, teams, time-zones and projects,
- Insufficient (or lacking) knowledge and asset management capabilities,
- Language and cultural differences,
- Trust factors, and
- Lack of shared contextual awareness.
The growth of the ICT industry in Bangladesh has been very slow due to the above challenges. This is visible from the number of software professionals' employment in these companies. Baring a handful of ICT companies, most others have remained less than ten programmers' company even though a considerable time has elapsed after their inception. The capability and technical competence of these programmers are also not accredited which is a barrier to winning client's confidence. The government's initiative to build qualified pool of ICT professionals initiated a six month internship programme for ICT industry. Under this programme, a qualified graduate on employment in ICT Industry gets 60% (@Taka 3000/month) from government and 40% (@Taka 2000/month) from the employer. The industry failed to absorb the desired 500 ICT Professionals per batch leading to 1000 professionals per annum even after the government subsidy on salary due to the quality of these graduates. That has resulted in very slow growth of the local ICT industry. The industry insiders point that the intake is falling due to the quality of the graduates.
The following data obtained from Bangladesh Association of Software & Information Services (BASIS) gives the picture of employment under ICT Internship programme.
After detailed discussion and analysis of this unfortunate situation with the industry, academia and the government, it was observed baring a few, most of the graduates lack the pre-requisites for employment. To overcome this bottleneck and to ensure growth of our ICT industry, a programme to develop the human capacity under ICT Professional Skill Assessment and Enhancement Programme (IPSAEP) was designed and was formally approved in the ICT Task Force meeting, chaired by the Chief Adviser. Unfortunately, the Ministry of Science & ICT is sleeping with the proposed IPSAEP.
We have missed the industrial revolution because of the various constraints and now the golden opportunity to enter the ICT revolution is being hampered by the delays from within the government. The new global environment emerging out of the recession in the developed world will mean stricter cost control in ICT outsourcing similar to the measures seen after the dot com burst.
Bangladesh has no dearth of human resource but delay in appropriate measures quickly to tap the resource will mean failure of our dream with ICT. In contrast to our effort, the Philippines government is creating 'Next Wave Cities' to increase its share in the ICT and ITES outsourcing business. So-called "next wave cities" are areas around the country outside Metro Manila and Metro Cebu which offer the best potential to support the growing outsourcing sector. The 30 cities considered for the list were scored on talent (50%), infrastructure (30%) business environment (15%) and cost of doing business (5%). The Philippines outsourcing industry is targeting to expand its market share to 10% of the global outsourcing market, which is expected to grow to be worth $130 billion by 2010. The Philippines currently corners 9.0% of the global outsourcing market - a far second to the worldwide leader, India which has around half of the global market. These cities are an important ingredient in the Roadmap 2010 initiative of the Philippines. Late last year, the Philippines industry group launched its Roadmap 2010, which projects the industry to grow to 900,000 to a million employees by 2010, from 300,000 in 2007. Export revenues are also expected to grow to $12 billion by 2010 from under $7.0 billion by yearend. However, unlike the proposed ICT Roadmap for Bangladesh this Roadmap 2010 of the Philippines does not prescribes anything against its national integrity.
The Indian government, industry and academia are working together to enhance the skill-sets to match the global demand. The growth of Software Finishing School ensures India remains the number one choice for ICT outsourcing whereas our Bangladeshi bureaucrats working in the Ministry of Science & ICT are ensuring that IPSAEP fails to take off. IPSAEP which bears contribution of over eight months of hard work from our academicians like Dr. Jaffar Iqbal, Dr. Lutful Kabir and Dr. Lutfur Rahman as well as ICT Industry and government and approval of the Chief Adviser is not given appropriate importance because of the programme brings no extra benefits to the bureaucrats. The Philippines experience shows that it has given highest consideration on talent by putting 50% weightage on building 'Next Wave Cities' and has created many institutions to nurture and shape the talent for national growth. The whole ICT-based business requires appropriate skill sets and knowledge attained through high standards of education and training program to supplement industry requirements.
In this month of December we snatched independence in great odds through determination and leadership. Will this December bring the same victory for the ICT industry? The answer is yes if the industry can show its determination and leadership quality.
This will surely wake our ICT leaders from their slumber to be proactive and tackle the odds with the same determination taught by our valiant freedom fighters.