The ICT Sector Of Bangladesh

Digital Services and ICT

The Road To A Billion

The ICT Sector Of Bangladesh

Digital Services and ICT

The Road To A Billion

by LightCastle Admin

Thump thump… Silence. Thump thump… Silence. Mr. Anubal, a hotshot IT consultant looks around at the scenery as his taxi hurtles through one of India′s longest flyovers. Then, he notices his destination passing him by to the right, the head offices of Infosys, one of the largest Indian IT firms. Welcome to Bangalore, the Silicon Valley of India. It is the darling of western companies and is seen as the defacto destination for outsourcing from the most simple of office operations to the most complex of business processes.

The city however wasn’t always known as a tech hub. Instead, it resulted from the vision of a top infrastructure development firm, Keonics in the late 1970s and subsequently the political leaders of India during its liberalization in the early 1990s. Today, Bangalore is known as the outsourcing capital of the world.

At the initial stages of Bangalore as an outsourcing hub, business development worked a lot like a game of football, where Non Resident Indians would act as the midfielders, integrating themselves into the tech elite, networking and bringing in work for their partners in India – the strikers; these were IT professionals who were picked from the country’s top engineering schools such as the Indian Institute of Technology (IIT), commanding cheap rates but nonetheless offering dedicated and skilled labor. The rest as they say, is history.

Today, in 2016, the small delta of Bangladesh, housing the world’s 8th largest population needs to develop these midfielders and strikers and get on its way to becoming the next India of outsourcing. Bangladesh needs more institutes similar to IIT so that those outsourcing work to Bangladesh don’t have to be afraid of not finding the right talent. With the right set of structured actions, Bangladesh can leapfrog into the domain of IT/ITES outsourcing heavyweight by leveraging its inherent advantages.

Bangladesh′s ICT industry has been developing slowly over the past three decades, culminating to hundreds of millions of dollars of value addition every year recently. In fact, Bangladesh is now considered to be among the next high prospect destinations in the segment, with accolades from AT Kearney, Gartner, Goldman Sachs and a host of others. The industry has seen strong growth over recent years, characterized by local demand as well as global exports. Total earnings of the industry in FY 2014 was USD 600 million, out of which exports amounted to USD 132.5 million.

Source: AT Kearney Outsourcing Destination Rankings

Because the ICT industry encompasses technology, it is fast changing with fluid categories that often merge into each other. The industry segmentation has been designed keeping this in mind.

The ICT industry can be divided into two broad categories; IT and ITES. IT services can be broken down into Application Services (that include systems integration, IT infrastructure and consulting) and Engineering Services (including hardware and software development and testing).

The ITES category on the other hand can be categorized into Horizontal Process Outsourcing (including call centers and business process management such as HR and Supply Chain functions), Vertical Process Outsourcing (including banking, manufacturing, telecom, pharmaceutical), Knowledge Process Outsourcing (including business research, animation, data analytics, other specialized processes) and lastly, the latest entry into the segment, Automation Services (including task automation and Business Process as a Service; BPaaS).

The 1,500 IT/ITES companies currently registered in Bangladesh, are involved in most of the mentioned verticals of the ICT value chain, ranging from customized application development and maintenance, to BPO services throughout the value chain. Local demand has largely been driven by banking, telecom, pharmaceutics, RMG and Textile sectors, which has also built up capacity in the sector to export services.

The ITES segment in Bangladesh covers the entire gamut of operations which exploit IT for improving efficiency of an organisation, driving revenue growth and increasing profitability. This in turn can be broken down into horizontal, vertical and knowledge process outsourcing (categorized broadly as BPO).

The ITES category consists of specialized services that rely on technology for delivery. Including voice services, data processing and animation among others. This represents a major portion of Bangladesh′s ICT market exports, standing at 17%. The IT segment on the other hand includes services that require extensive technical expertise to accomplish. These include services that offer Platform as a Service (PAAS), Software as a Service (SAAS) models to help businesses reach their goals. Furthermore, technology consulting, product design, infrastructure development, systems integrations and ERPs are all examples of IT Services.

Software development on the other hand is another part of the IT services segment. It falls under the engineering services section of IT services and is extensively sought after by international firms looking to outsource this facet of their operations abroad. This segment has opportunities ranging from platform and software development to testing to specialized software design and beyond. This segment is the driver of digital growth around the world and world class expertise in this field are always sought. Bangladeshi companies have been outsourcing these services for a while now and have recently been joined by freelancers from across Bangladesh sourcing work from online platforms like Upwork and Freelancer on their own. However, the integrated and multidimensional nature of the software development arena requires the support of teams, with multiple capabilities, that can only be found in firms.