Softwares and ICTs Industry in Bangladesh

Wpfreeware 6:49 AM Softwares and ICTs Industry

IT & ITes industry Sector Overview

Emerging destination for digital skills

Supported by the availability of English-proficient young tech savvy workforce combined with an increasingly reliable communication and power infrastructure, bolstered by strong government support and favorable policies and incentives, the IT sector has been recognized as one of the most promising industry in the country and is forecasted to reach USD 5 billion by 2025. After the Covid pandemic, the major trend that has accelerated across the world is digitalization. As countries all over the world grappled with lockdowns, digital technologies became the savior. The Bangladesh ITes industry has adapted and progressed rapidly during 2020 with a Harvard Business Review study recognizing it as a break out economy suggesting the potential to rapidly digitalize for both post-Covid economic recovery and longer-term transformation.

One of the fastest growing sectors in the country, the IT industry in Bangladesh is well represented by software development and IT-enabled service (ITES) including business process outsourcing (BPO) service and ecommerce. While the industry’s revenue is generated largely by software & application development products and services such as AMD, IT help desk, web development, there has been a noticeable increase in products offerings such as big BPO, data analytics, Internet of Things (IoT), 3D imaging, virtual reality/augmented reality (VR/AR), Robotics process automation (RPA) with Ecommerce business soaring since the covid pandemic. Over 4,500 IT /ITES firms are thriving in Bangladesh, employing over 750,000 ICT professionals . Export earnings surpassed USD 1 billion in 2019, registering a CAGR of 21% since 2013. The earnings are further enhanced by a large pool of online workers. In 2017, Bangladesh had a total of 650,000 registered freelancers , the second largest pool of online workers in the world, commanding a market share of 16% after India with 24% of the market. Among them, 500,000 are actively working with aggregate earnings of USD 100 million per annum .

1400 USD million+ Domestic market size
40%Growth in domestic market 2010-2018
1000 USD million+ Export income in 2019
21% Growth in Export 2013-2019
22% Forecasted growth in domestic market size 2018-2025
4500 IT /ITES firms
750000+ ICT professionals
650000+ Registered freelances
300USD million BPO market size 2018
71% Growth in BPO services 2012-2018
2500 USD million+ Ecommerce market size 2020
3600 USD million+ Estimated Ecommerce market size in 2023
180 USD million+ Wireless phone subscribers September 2021
128USD million+ Internet users September 2021
62 million Engaged in social network 2021
68 million+ Smart phone users 2020
40 million No. of active mobile financial account
9th highest mobile phone subscribers in the world
9th highest internet users in the world
29 Hi-Tech parks for IT/ITes Industries.
Highest levels of 4G coverage by population (95%) in South Asia with 5G implementation set to begin in 2021
4th cheapest mobile data among South Asian countries and 18th cheapest mobile data in the world

Bangladeshi IT industry (software development, and ITES including BPO) is a promising destination of investment. This is evidenced by growing market and recent multinationals’ investments for offshore development hub, young and tech adaptive workforce and government's strong commitment for the sector promotion.

1. Large domestic market with access to regional markets

With increasing growth in economy and business the demand for IT products and services are on the rise. Additionally, government is moving towards digitizing processes and is making large investments in such projects.

One of the lowest-cost locations for IT service operation among the peer countries.

16-30 % lower operating cost than neighboring countries Total operating costs in Dhaka is 16-20% lower than Bangalore and 30% lower than Cebu. Jessore, Rajsahi, Kaliakor have even lower cost of operation
Most value for money 2.4 Kbps/c
Competent tech savvy human resources
Availability of a young tech savvy population
Bangladesh, where 67.61 % of the population is between 15-65 years and 27.21% is below 14 years is bestowed in this regard, since 1.5 -2 million talented youth is constantly joining the workforce.

Competitive Education
155 public and private universities 500,000+ graduates enter the job market every year. 51 public polytechnic technique and 269 private polytechnic institutes 130 universities with specialized IT labs

Language proficiency
English is vastly used in professional communication in Bangladesh with majority of the population conversant in English.

Human Resource Development - key pillars of the government’s vision of a Digital Bangladesh
Various fully subsidized training programs have been introduced with strong focus on training professionals on emerging technologies – IoT, Block chain, artificial intelligence, Big data and analytics etc.
Strong government commitment
Digital Bangladesh is an integral part of the Bangladesh government’s vision for the country. 28 IT & software parks have been approved as part of Digital Bangladesh vision with plan to build IT parks across all 64 districts of the country. To ensure an investment friendly environment, Government has been updating policies to augment the ease of doing business for prospective investors/partners. Besides the ICT Policy 2018, updated policies include Digital Security Act 2018, RTI, IPR, Broadband, PPP, Alternative Investment. National strategy on Artificial Intelligence 2019-24 has also been drafted and will be released soon.
Improving physical and ICT infrastructure and environment
Infrastructure, power and tele-communication necessary for growing Bangladeshi IT industry have been rapidly improving over the last few years so that uninterrupted internet connection with low latency and high bandwidth is increasingly available, particularly for the higher value-added segments of ITES/ BPO service.

Power generation
Increase of installed power generation capacity to 26,114 MW from 15,000MW in 2015 with 99.5% of the population gaining access to electricity by 2021.

Internet connectivity
Bangladesh has 2,600 Gbps bandwidth capacity from two submarine cables with another 7200 Gbps to be added by 2023.

Strong mobile infrastructure supporting ITes products and services
Bangladesh is the 9th largest mobile market in the world with 128 million internet subscribers and 180 million mobile subscriptions providing base for ITeS enabled products and services. In addition, the first test run of 5G technology in Bangladesh took place in Dhaka and it is expected that 5 G would be available in the country by 2021, and will be available throughout the entire country by 2026.

Physical infrastructure
- 45+ Daily flights to key IT hubs
- 5 Domestic airports
- 3 International airports

Offshore Development Hub and Captive BPO Centers

Bangladesh is another attractive place for the multinationals and foreign industries for the establishment of their offshore development hub (for software and application) and captive BPO centers (including call centers).

IT Training, Vocational School Business

Opportunities for Bangladeshi youth to acquire advanced and basic IT skills can be extended through private investments to vocational and training institutions specialized in IT engineering, and business management and graphic design. Such investments are deemed valuable, since there could be many potential students interested in working for IT business, and computer engineers intending to equip more advanced skills.

Standards Accreditation Business

Smaller BPO firms do not have international certifications for IT-related standards (on software development process, internal control over contracted service, information security management). This is because the certification is costly, as local auditors are not readily available for most standards’ certification

Artificial Intelligence based system design and/or manufacturing

Bangladesh is embracing artificial intelligence (AI) for the digitalization of the nation. The government has developed a draft national strategy for artificial intelligence and is providing corporate tax exemption for developers/manufacturers of artificial intelligence-based system design (Income tax Ordinance, 1984 46BB).

Fiscal Incentives

Tax holiday is applicable on software development, nationwide telecommunication transmission network (NTTN), and information technology-enabled services (ITeS) provider's/ operator's income until 30th June 2024. A 10-year tax holiday is applicable for producers of hardware products such as motherboard, casing, UPS, speaker, sound system, power supplier, USD cable, CCTV, and pen drive.

This will be only applicable for companies who will start commercial production from 1 July 2021 to 30 Jun 2030.

Conditions:

Has to be registered with BIDA.
At least 30% value addition (in the factory) is required in the own factory.
Others.

Phased/ partial tax exemption of 5 to 10 years is applicable for industries established between July 1, 2019 till June 30, 2024

Eligible Industry:

Computer hardware.
Automation and robotics design and/or manufacturing inc. parts/ components thereof.
Nanotechnology-based products.
Paid-up capital of not less than BDT 2 million on the date of the beginning of commercial production.
30% of the exempted has to be reinvested in the same or other industrial undertakings within one year.
Others

Cash Incentives

10% export subsidy is available for the export of Software, ITeS, and hardware. Locally owned Software, ICT and hardware industries, situated at the high-tech park will get 4% incentives for product and market diversification. 30% value addition is required to avail the incentive.

Locally owned Software, ICT and hardware industries, situated at the high-tech park will get 4% incentives for product and market diversification. 30% value addition is required to avail the incentive. CBC).