Software industry of Bangladesh in international market

Software industry of Bangladesh in International Market

Software industry in Bangladesh is relatively new in comparison to other business sectors. However, the unlimited potential of the software sector has commended inquisitive interests from all concerned. The impact of global hype of this sector is clearly visible in Bangladesh as well and in the recent years, the local software sector has grown enviably. The success of the software industry has prompted many relevant associations to evolve to provide focal points for entrepreneurs and foreign investors. The government of Bangladesh has declared the IT sector as thrust sector. The creation of a separate Ministry for ICT (Ministry of Science and Information and Technology), formulating favorable laws and initiating government software projects are encouraging steps for the local/international investors in the Bangladesh software industry. In addition to the policy development, the government is keeping close interactions with various industry associations. BASIS, BCS, BCC and ISPAB are some of the apex bodies working for the improvement of the software industry in Bangladesh.

Industry profile
According to BASIS survey, there are over 800 registered and ITES companies in Bangladesh. There are another few hundred of small and home-based software ventures doing business for both local and international market.

800+ Enterp rises

250 million US$ 250 million US$ Revenue Revenue

30000+ Professionals

The software segment is relatively new in the market; however, the segment is showing healthy growth in terms of export earnings. According to Bangladesh Bank sources, export earnings from Software and ITES was 250 US$ million in 2009-10. The software companies in Bangladesh mainly focus on servicing the IT/ITES needs of the local

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Software industry of Bangladesh in international market leading sectors like Garments, Banks and Government. At the same time, leveraging the global nature of the software business, the local entrepreneurs are always looking for international opportunities. Thanks to these efforts, Bangladesh now has become one of the most potential outsourcing destinations in the world.

Export
According to the Bangladesh Bank source, export earnings from Software was 27.01 million US$ in the fiscal year 2005-06, registering a high growth of 113 per cent from year (2004-05). The following chart shows the Bangladesh software export earning for year 2006-11. 2006-07 2007-08 2008-09 2009-10 2010-11 Software export Yearly growth 26.08 -3.44% 24.09 -4.83% 32.91 32.59% 35.36 7.44% 45.31 28.14%

Top export destinations

Australia Canada UK USA 0.00% 10.00 % 20.00 % 30.00 % 40.00 % 50.00 % 60.00 % 70.00 % 80.00 %

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Software industry of Bangladesh in international market

Reason for choosing the software sector

The main reason of choosing this sector is that to answer why we need Bangladesh software sector in international market? The following reasons are here to answer it. The core strengths of Bangladesh software sector is the people. An educated, trainable and young workforce working in this sector possesses the required skill sets to compete in the global scenario. Bangladesh enjoys a clear competitive advantage in its software labor force. The leading universities in the country provide world class software courses and each year, various institutions produce about 3,000 IT graduates. In addition to that, a huge number of non-IT graduates are working in the sector as well. The work force, especially, has historically strong abilities in mathematical and logical analysis processes. Bangladeshi students have won a number of programming and mathematical competitions globally. Bangladesh has been building its infrastructure support for the software industry over the years. There are more than 800 software houses are currently working here. The geographical location of the country is suited to reach out to other markets in Asia. India, the leading IT sector in Asia, has moved up in the ladder and is now operating in higher and more complicated levels of software. Bangladesh is relatively new as an outsourcing destination. This means many unexplored areas of business are offered. More and more investments are coming in and the industry is experiencing growth. These attractive business prospects are bound to encourage local and international investors in the near future. These are the reasons that make the question turn into, why not Bangladesh software sector is needed in the international market?

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Software industry of Bangladesh in international market

Potentiality of Bangladeshi Software

During the last two decades, there has been a remarkable change in IT sector in the country. Today, there are about 800 software and IT firms registered as members of the Bangladesh Association of Software and Information Services (BASIS) alone. At present, more than 52 public and private universities and some institutes and colleges are offering degree courses in the area of Information Technology. It is estimated that every year, around 3000 IT graduates are coming out of these institutions. Students from BUET (Bangladesh University of Engineering and Technology), Dhaka University and some private universities have excelled in national and international computer programming competitions. Especially new graduates from technical institutions have been engaged in self-employment concept earning spectacular financial gains by designing software, graphics, websites and by processing data for both local and overseas markets. Online editions of various foreign newspapers, periodicals and journals and even 3-dimensional movies of reputed international companies are also being designed by experienced IT professionals in the country. Bangladesh has huge potentiality in software market. They are Labor force Infrastructure Hardware and technical back-up Favorable government policies Availability of financially capable investors New outsourcing destination Asian market penetration

Let us talk about in brief here-

Labor force
Bangladesh enjoys a clear competitive advantage in its IT labor force. The most significant advantage of the Bangladeshi workforce is the low wage rates. The salaries for

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Software industry of Bangladesh in international market IT professionals could be as low as USD 75/month. On the other hand, the higher salary ranges at approximately USD 1,000-1,200/month. The quality of the graduates coming out of various institutions is satisfactory. Bangladeshi students have proved their potentials in the international competitions by winning a number of programming contests.

Infrastructure
Bangladesh has been building its infrastructure support for the IT industry over the years. The country ensured global connectivity by connecting to the submarine cable. Highspeed Internet connectivity through fiber optic cables costs about USD 2.67/per month for 128 kbps connection. The existing VSAT backbone will continue remain the major Internet infrastructure until the new Backbone (Submarine Cable Connectivity) operates 100 per cent. There are as many as 150 ISPs in the country and the competition among Internet service providers has resulted in significant improvement in their services. Most of the ISPs are now providing 24/7 on-site technical support.

Hardware and technical back-up

According to research by Springboard Singapore, the volume of the hardware market in Bangladesh is USD 129.4 million at present. Locally assembled and often unbranded machines dominate the pc/server market. However, most of the international giants (HP, IBM, and Dell etc.) are present in the market through their local agents. A branded server with basic configuration costs about USD 6000 whereas the unbranded version costs about USD 2,000. The average workstation price is USD 700-900 for a brand PC and USD 500-600 for a clone PC.

Favorable government policies

The Government has recently formed an Information Communication Technology Business Promotion Council incorporating the private sector computer professionals to boost ICT trade and services at home and abroad. The Ministry of Commerce plans to set up two more such business promotion councils for diversifying and stimulating faster growth of export trade. The Government also identified IT as the thrust sector. The

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Software industry of Bangladesh in international market Government developed a hi-tech park at Kaliakoir, about 40 k.m. from Dhaka city in an area of 119 hectares (with additional 55 hectares available for future expansion), which is envisaged as an integrated and ultra-modern techno-township, The duty free trade access to the first world countries also provides an attractive incentive for Bangladesh to merge into the international market with huge potential. Added to special policy benefits for the ICT sector, the favorable investment policies for FDI should encourage companies from other nations to venture into the Bangladesh ICT industry.

Availability of financially capable investors

Local business investors in Bangladesh are well equipped to invest in strategic alliances and partnerships. The willingness of the investors combined with their local business knowledge could be utilized for better return on the investment. These people have funds and are ready to invest money in new industries. As a result, the foreign investors feel comfortable working with them.

New outsourcing destination

Bangladesh is relatively new as an outsourcing destination. This means many unexplored areas of business. More and more investments are coming in and the industry is experiencing growth. The attractive business prospects are bound to encourage local and international investors in the near future.

Asian market penetration

The geographical location of Bangladesh provides a great platform for operating in Asian markets.

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Software industry of Bangladesh in international market

Weaknesses of software industry of Bangladesh:

There are quite a number of weaknesses that are inherent to our socio-cultural and socioeconomic upbringing that remains to be our drag-forces baffling and negating efforts in developing the software market. These cultural stereotypes need to be reversed if Bangladesh has to get to the success story in the software market. i. ii. Lack of full usage of sub-marine cable connection with the information super high-way. Inadequate networking and marketing capacities of the existing software companies. iii. iv. v. Inadequate experience in large IT Project Management skills. Inadequate experience in systems management and systems integration skills. There is no hardware manufacturing plant in Bangladesh. Since the hardware is essential to develop software, development of software industry wont go long without it. vi. vii. As the government give subsidies in export oriented industry, software industry dont get much. Most of the software firm in Bangladesh make software emphasizing local market.

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Software industry of Bangladesh in international market

Suggestion for developing the software industry of Bangladesh:

Development of the software industry is no silver bullet - there is no guarantee of success, and if success does come it will not be overnight. By following some suggestions it can be the most profitable sector of Bangladesh. The suggestions are follows: Improved country image at home and abroad: Create a strong, realistic, globally unified and positive international voice for Bangladesh through its Missions abroad. First acknowledge the extent of the problem, and then take visible action talking and Task Forces without follow-up action only exacerbate the image problem. Consolidated governmental approach to ICT here in Bangladesh: Commitment by all parties to coordinated interventions for the benefit of all Reduction of bureaucratic infighting Government officials taking an active role in increasing their personal awareness and knowledge of ICT (involvement of industry associations) Legal framework established: Enact appropriate laws for the protection of Intellectual Property Rights, as required under the WTO Charter. Faster, cheaper, more personalized and efficient service delivery through computerization of government: Set up low-cost high-speed data and voice communication link with the USA and the UK, with a minimum speed of 2 Mbps. Private Sector should be allowed to provide such service along with BTTB. Allow Private Sector to set up their own Satellite Communication links in order to obtain competitive price advantage and greater availability of Communication facilities. Ensure the proper usage of submarine cable.

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Software industry of Bangladesh in international market

Focus on factors beyond low labor cost that drive outsourcing decisions in favor of Bangladesh the human factors and soft skills: Focus for the most part stuck on the cheap labor aspect of Bangladesh with little consideration for sound and professional business practices and communications. Awareness campaign (industry associations and government) - this issue demands much more attention as Bangladesh finds itself a beginner in the global e-Commerce game, and it is not the only player banking on a cheap and plentiful labor force. Identify singular, marketable strength Programs that provide technical assistance in defining business skills and communicating and demonstrating their importance (industry associations). IT Training target qualified labor over cheap labor: Introduce training options that are beyond question international standards with success measured externally. Allow market to determine an institutes viability and quality decrease government involvement. Expatriate Bangladeshi experts should be encouraged to set up software development companies. Good governance reforms and increased transparency: It would enable marked improvements in this area and remove some of the obstacles to successful growth in not only the ICT sector, but other sectors as well. Training the trainers by non-resident Bangladeshis (NRBs): Build local capacity for quality training by limiting level of involvement by NRBs or any outside experts to the initial phase only.

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Software industry of Bangladesh in international market

Government incentives to companies for on-the-job training Shift away from government lead and toward greater private sector role in initiating activities such as internships, mentorships, and reality adjustments for trainers Secure the funding for ICT program Create a transparent mechanism for reliable distribution of funds. Build private sector advisory group to formulate additional options. Form neutral Placement Cell to act as hub for activities. Establish clear demand: numbers and skills sets: Work to further establish numbers on demand side, especially international markets. Search for specialized, standardized curricula that suit the needs of industry at home and abroad. Send Marketing Missions to North America / E. U. consisting of Members from IT Associations and EPB, on a regular basis. Empower Export Promotion Bureau to ensure regular participation in all major International Exhibitions / Fairs for IT products and services.

Conclusion:
Bangladesh has a huge potentiality in ICT sector. The existence of a strong and vibrant Software & ITES Industry is necessary for attaining growth as this is the one very important force which can drive other sectors in achieving their objectives through efficiency, accountability, and transparency. In addition to generating significant number of employment for educated youths, this sector can add important value to the country by making other sectors viable, productive, and efficient. Currently, more than 800 registered software companies in the country are employing more than 30,000+ high skilled professionals. It should be noted that the local value addition for software export earning is 100% whereas other big export have only 10% to 15% value addition. Bangladeshs strength lies with its people its workforce. The inputs required by the software industry are that of manpower, intelligence. These factors clearly point out that the software industry has the opportunity to grow into the leading industry of the country. There is a large scope for software market expansion. The domestic market and the volume of exports of software products could be raised to Tk. 70 billion by 2014 if the government gives proper attention and support to the sector. If the government can provide the industry with right environment like adequate power facility, the ODCs can come up quickly resulting in employment generation, branding, reaching new technological skills and facilitating outsourcing
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