VSJ – April 2006 – Work in Progress

Shah Md. Safiul Hoque, MIAP is a lecturer in the Department of Computer Science and IT at Bangladesh University of Business & Technology. Here he tells us something of the growth in the Bangladesh software industry and the initiatives being developed to sustain it.

Introduction: The globalization of the software industry is seen as a particular example of the new global economic division of labour, driven both by lower costs in developing countries and skill shortages in industrialized economic economies and facilitated by ICTs (Carmel, 1999; Herbsleb and Moitra, 2001). There has been an increasing incidence of developing countries engaging in software export, an industry assumed to have few barriers to entry (Heeks, 1999). As a developing nation, Bangladesh is working to overcome existing barriers to increase its software export volume. The government of The People’s Republic of Bangladesh has addressed the importance of ICT infrastructure in total economy development. It has open up a new Ministry of Science & Information and Communication Technology to offer special concentration on the ICT sector in particular. Radical development in the telecommunication sector within the last decade is a further hope for the Bangladesh software industry.

Initiatives: Recent trends indicate that the industry has certainly reached a take-off stage and is, in the coming years, poised for high growth (BASIS, 2006). Both private and government agencies are working and taking timely initiatives for developing this sector. A good number of talented, energetic and innovative entrepreneurs have been working and trying hard to develop the software industry in Bangladesh to present it to the international market in full bloom. Government recognized this industry as a thrust sector and launched some development and promotional initiatives. These include:

• setting up a High Tech park at Gazipur
• the ICT Business Promotion Council
• a Software Marketing Office in Silicon Valley
• a Special Fund for the Software Industry
• Government supported Internship Programme for Computer Science Graduates to gather real life experiences and eventually become software engineers
• a 1-year post-graduate diploma in ICT
• reducing VSAT licensing fee
• legalizing VOIP (which had previously been seen as too rapacious a competitor to conventional telephone services)

In the coming days, all these initiatives will definitely bring further fortune to this industry and stimulate growth accordingly. Recently memoranda of understanding have been signed with some Danish companies for joint collaboration in the sector during the BASIS SOFTEXPO-2005, the biggest software and IT exhibition in the country. BASIS organizes these every year to promote and attract local and international buyers for its members’ software and IT products and services.

Source: BASIS Software Catalogue 2006

The Software Market: About 300 software firms operate in the country, 12 of them being ISO 9001 certified. BASIS is playing a key role in keeping close relationships with policy makers, government and academia, and foreign agencies to ensure unhindered growth in the industry. Textiles and garments, pharmaceuticals, financial institutions, healthcare organizations, telecommunication (the booming sector), hotels, education, and government ministries/agencies are particular local clients. Beside the local firms, some foreign software companies are also involved in the growth of the software industry in Bangladesh by keeping their presence in specific areas like banks, telecoms, MNCs, and donor funded government projects. According to the BASIS report, the total market size of ICT in the country is about 11 bn Taka or some £93M per year. This excludes the telecommunication sector. the size of the software segment itself is about 1.7 billion Taka per year (£14M) and that particularly comes from customized and packaged software development. Apart from the local market, the Bangladesh software industry has been able to extend to some 30 countries in the world including Europe, the Middle East, Japan, Australia, Canada, UK, and USA.

Software Export: According to the Bangladesh Bank, in the 2000-01 fiscal year, IT export volume was USD 2.24M whereas in the 2004-5 it increased to USD 11.44M. Of this, USD 9.64M comes from exporting software itself and the rest from data processing and consultancy (The Daily Ittefaq, 18/12/05). Currently, more than 50 software firms are exporting software to 30 countries.

Experts expect that the growth of software exports will increase noticeably in the coming years, as DANIDA (a Dutch agency) is extending its support and cooperation to introduce buyers for promoting Bangladesh software and IT services into the European market. Software firms in Bangladesh have gained significant skills and expertise in developing quality software for both front and back end, such as back office automation, ERP and POS, Web application and E-Commerce.

Conclusion: Although the software industry is not one of the top sectors of the Bangladesh economy yet, but it is one of the priority sectors. Only a few specific sectors of the economy have implemented IT-supported business environments to remain competitive but still a huge number of industries and organizations are yet to enjoy the blessings of IT and so to increase their productivity. The local software market can be extended through organizing regular seminar and awareness programmes on how other industries can gain further competitive advantages through producing quality products and services and to minimize costs if their business environment is IT backed. Software development and maintenance costs can be reduced for local clients by capitalizing the potential of the available number of computer graduates passing out every year from more than 70 universities. To extend the international market, foreign missions from Bangladesh can play exceptional roles for building the image of the capability of the Bangladesh software industry through publishing success stories and potentials in the respective countries’ print and electronic media.

References:

1. BASIS, Software Product Catalogue 2006, Bangladesh Software Industry and Its Dynamics, 3-8
2. Carmel, E. (1999) Global Software Teams: Collaborating Across Borders and Time Zones.  Prentice Hall: Upper Saddle River, New Jersey.
3. Heeks, R.B. (1999) Software Strategies in Developing Countries, Communications of the ACM, 42, 6, 15-20
4. Herbsleb, J.D. and Moitra, D. (2001) Global Software Development, IEEE Software, 18, 2, 16-20
5. The Daily Ittefaq, Page 3, 18/12/2005

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