Information Technology- enabled Services (ITES) hold enormous potential in the industrial diversification efforts of Bangladesh.
The Information Technology (IT) sector in Bangladesh is considered by both the public and private sectors as having high growth potential. The industry employed an estimated 30,000 people and generated an estimated US$ 250 million in annual revenues in 2011 (World Bank, 2013). Apart from its export potential, Bangladesh has a strong domestic demand for IT-enabled services (ITES). It has laid down a solid base for information technology (IT) through catering to local needs over the last two decades. The local market is a major player for the business constituting 63 per cent of the companies registered with the BASIS (Bangladesh Association of Software and Information Services) and growing at 20-30 per cent per year. This has honed the skills of IT professionals, who are capable of meeting global demand by increasing IT-enabled services exports from the country. Bangladesh has recorded positive growth in IT exports since 2008-09, leading to export of US $ 101.36 million in 2012-13 and US$ 120 million in 2013-14 financial years. It is now one of the top 15 export sectors in the country.
The majority of IT firms report software development and maintenance to be their core business. However, the outsourcing of IT-related business processes generates more revenue in the industry than software development. Such outsourcing is formally known as information technology-enabled services (ITES)/business process outsourcing (BPO), or ITES-BPO.
Currently, development of ITES in Bangladesh is relatively low compared to other countries of the South and Southeast Asia region. However, exports are on the rise and multinational corporations are investing in research and development centres of the country. In the light of these advances, the sector needs to make numerous adjustments to address relevant issues based on an extensive value chain analysis. The key impediments to success have already been acknowledged by the Government of Bangladesh in its ICT Policy 2009. While the policy addresses all the major issues plaguing the sector, the government needs to prioritise them and undertake concrete follow-up actions (World Bank, 2013).
KEY CHALLENGES: One of the reasons for the limited growth of ITES vendors in Bangladesh has been inadequate branding and marketing. Most vendors have grown in the existing client contacts, but have shown limited success in signing up new clients. The marketing function of most Bangladeshi enterprises is handled by non-resident Bangladeshis (NRBs). It is thus difficult for multinational sourcing managers to find appropriate Bangladeshi vendors offering services readily (EPB, 2014).
Limited market presence has overshadowed the advantages Bangladeshi vendors enjoy in terms of skills and costs. Bangladesh also has a deficiency in management skills and expertise. This needs to be compensated by allowing management roles to European or North American partners or clients, or by bringing experts from abroad, including those from the Bangladeshi Diaspora. This has cost implications, but is required to bring more successes to the outsourcing industry in Bangladesh.
Bangladesh also suffers from a negative image regarding poverty, corruption and natural disasters, which needs to be countered and portrayed in a positive light. A well-coordinated strategy and integrated approach should be adopted for IT branding of Bangladesh and there should be concerted efforts instead of disparate measures.
There are also doubts regarding the infrastructure and business climate in Bangladesh. Infrastructure has a major part to play for development of this sector. IT villages and hi-tech parks, uninterrupted power supply, hi-speed internet bandwidth, nationwide internet backup and flexible payment gateways are needed for rapid growth of this sector.
GOVERNMENT MEASURES AND REQUIRED SUPPORTS: According to a recent study by the Global IT consulting firm 'Gartner', Bangladesh is now one of the top emerging destinations for IT-enabled services worldwide. 'Brand Bangladesh' needs to be promoted by the government and it should adopt a holistic approach to develop the IT-enabled industries covering areas such as investment climate, taxation, remittances, legal framework and working hours (EPB, 2014).
IT has been identified as a top priority sector in the present Export Policy (2012-15) as well as the Industrial Policy, 2010 of the Government of Bangladesh (GOB). The government has introduced need-based IT syllabus from high school to university levels and a good number of IT-skilled human resources are entering the market to meet the demands of this sector. One IT Park has been set up in the middle of Dhaka city with a good network of fibre-optics and submarine cables providing opportunities for operating B-to-B and B-to-C business with the outside world. Hi-tech parks and IT villages are also in the pipeline across the country.
One priority area for the government should be to provide quality internet services at affordable rates. Uninterrupted connectivity with low latency and high bandwidth are essential for competing in the global market, particularly for high value-added ITES-BPO services. As stated in the government's strategic plan for a Digital Bangladesh, two additional submarine cables should be installed to ensure a minimal amount of redundant capacity in case of failure of one of the three cables (GOB, 2010; cited by World Bank, 2013). Access to finance is very important and policy support can help improve access to existing fund.
Addressing the skills gap is another priority for the sector. Action should include increasing the number and quality of IT graduates. International experts can be instrumental in developing curricula and leading courses that will be relevant for multinationals requiring ITES-BPO services. Training should also cover management practices, marketing techniques, and English language skills. The government has an important role to play in all these matters.
A focused and sustained promotion campaign - both country branding and sector branding - and high-profile networking events that proactively address the main concerns of the industry players in target markets would help better position and promote IT-enabled services of Bangladesh. Bringing an anchor investor in the captive BPO segment could have a major spill-over effect for the industry as a whole. Demonstrable and long-term commitment of the government is also a must for boosting investor confidence in both the domestic and foreign markets.
Dr. Helal Uddin Ahmed is a
senior civil servant and a former
editor of Bangladesh Quarterly.
© 2024 - All Rights with The Financial Express
