The recent wave of violence, vandalism, and destruction surrounding the quota reform movement has significantly impacted the country’s key sectors, with the outsourcing and freelancing industry, comprising 7,00,000 freelancers, bearing a substantial blow. Industry leaders report that the internet shutdown imposed during the unrest has resulted in losses exceeding Tk 400 crore.
The internet is the lifeblood of the outsourcing and freelancing businesses. Cutting off this lifeline has completely crippled their operations, they expressed.
"This industry has been built over the past 15 years, but the recent internet blackout has set us back by a decade," stated an industry expert, adding that the shutdown not only caused financial losses but also eroded client trust, resulting in decreased partnerships and a tarnished professional reputation.
Leaders have expressed uncertainty about the future, stating, “We are aware of what we have lost today, but the challenges that lie ahead remain unknown.”
They warned that losses in the freelancing sector could escalate to Tk 700 to 1,000 crore in the next three to six months.
“A drop in rankings will significantly reduce our chances of securing work, forcing us to compete even harder when bidding for projects in the market. It will become a battle as we struggle to catch up,” they added.
In response to violence during student demonstrations for quota reform, Bangladesh government halted mobile and broadband internet services on July 17 and 18, disconnecting Bangladesh from the rest of the world and disrupting various online services.
As a result, IT-dependent entrepreneurs, business owners, and freelance professionals have incurred significant losses. Beyond the immediate financial impact of the internet shutdown, there is also a growing concern over potential job losses in the sector.
Survey highlights extent of layoffs
The Bangladesh Association of Contact Center & Outsourcing (BACCO) recently conducted a survey among its 83 members to assess the impact of the recent internet shutdown on the Business Process Outsourcing (BPO) sector. The survey, which involved over 400 BPO-related business owners, highlighted losses exceeding over Tk 400 crore.
According to the survey, 50.6 per cent of BPO businesses use dedicated bandwidth, 32.1 per cent use shared bandwidth, and 17.3 per cent utilise both methods.
The internet shutdown had various impacts — communication with clients was affected by 23.7 per cent, internal communication by 16.7 per cent, project delivery timelines by 20.7 per cent, customer support by 20.1 per cent, data access and storage by 15.5 per cent, and other areas by 3.3 per cent.
The survey also revealed the extent of layoffs during this period, with a striking 54.2 per cent of businesses reducing their workforce by more than 70 per cent, contrasted by only 10.8 per cent of businesses cutting less than 10 per cent of their staff.
This underscores the severe impact of the internet blackout, leaving many freelancing and outsourcing firms with no choice but to implement drastic layoffs to cope with the operational disruptions and financial losses.
Mid-sized businesses bear the brunt
The most affected by the internet shutdown were mid-sized businesses, with 32.5 per cent of them experiencing losses between Tk 5 lakh to Tk 10 lakh. Additionally, 31.3 per cent incurred losses from Tk 10 lakh to Tk 30 lakh, indicating that nearly two-thirds of the affected businesses incurred losses within the Tk 5 lakh to Tk 30 lakh range. Larger businesses also suffered, with 8.8 per cent reporting losses exceeding Tk 50 lakh, but the mid-sized businesses collectively represent the majority of those affected by the shutdown.
The survey's projected impact on annual revenue for businesses in the freelancing sector reveals that 4.9 per cent of businesses anticipate the most severe impact, with revenue dropping by more than 80 per cent. A smaller segment, 1.2 per cent, predicts substantial declines of 61 to 80 per cent.
Overall, the majority, 53.1 per cent, expect a moderate decrease in revenue between 11 and 30 per cent.
Freelancing and outsourcing firms have made every effort to mitigate the impact of the internet shutdown by attempting to communicate with clients and deliver services, but they have largely failed. According to the survey, businesses reported offering discounts of 25 to 50 per cent for delayed service deliveries.
In light of the current situation, if no permanent solution is provided, business owners have outlined several potential plans, including relocating operations or teams to other countries, partially moving operations to neighbouring countries, reducing the number of employees to cut costs, collaborating with companies in neighbouring countries, and recruiting remote workers from countries with stable internet infrastructure.
Industry leaders have voiced these strategies as potential measures to sustain their operations amid ongoing internet disruptions.
Scope of BPO services
Business Process Outsourcing (BPO) or call centres operate in two primary ways — voice-based and non-voice based services. Voice-based outsourcing involves services provided or received through phone calls, which can be further divided into “inbound calls” and “outbound calls”.
In addition to voice-based services, call centres offer solutions for document management, including consultation services, database management, bookkeeping, document scanning, and e-publishing.
Furthermore, call centres provide telemarketing services and manage various charitable funds. They also offer debt collection and market research as part of their non-voice services.
The scope of BPO services extends to lead generation, dropshipping, affiliate marketing, IT support, customer relationship management support, graphic and image processing, legal process outsourcing, engineering and architectural services, online education and training, software management services, human resources outsourcing, virtual assistance, knowledge process outsourcing, email and chat support, financial processing, social media and digital marketing, medical scribing or scripting, system administration, networking, and security, among others.
This comprehensive array of services underscores the vital role that BPO and call centres play in supporting various business functions and industries globally.
‘Set back by 15 years’
Tanvir Ibrahim, vice president of BACCO and country director of Automation Solutionz Bangladesh, told The Business Post that the global market for outsourcing and freelancing is worth $600 billion. In Bangladesh, this sector represents a billion-dollar market, providing livelihoods for approximately 7,00,000 people.”
Highlighting that overall losses exceeded Tk 400 crore, he continued, “We have become increasingly digital over time, and our dependency on the internet has grown. Outsourcing and freelancing heavily depend on internet and without it our lives are literally at state.”
He further expressed concern about the negative perception of the country that has emerged due to the shutdown. "For the past 15 years, we have been building our reputation, fighting against India, Vietnam, and the Philippines. Now, we are nowhere. Our hard-earned progress has been set back by 15 years," said Ibrahim.
Slow internet speed would escalate loss
Tanjiba Rahman, chairman of Bangladesh Freelancer Development Society (BFDS) (BFDS), which represents 12,000 individual freelancers, told The Business Post that the internet shutdown has caused approximately Tk 150 crore in losses for the freelancing sector. "This is a visible loss," she added.
Pointing out that the current internet speed in Bangladesh is insufficient for maintaining operations and client communications, she said, “The internet blackout has led to a loss of client trust. Additionally, the slow internet speeds we are currently facing could result in projected damages to the freelancing sector potentially reaching Tk 700 to Tk 1,000 crore over the next three to six months.”
Md Tanzirul Basher, BACCO’s joint secretary general and CEO and managing director of MY Outsourcing Ltd said, “It typically takes us between six months to a year to onboard a global client. However, due to the internet blackout, many clients have left, and some businesses are now a decade behind.”
Bashar also noted the competitive landscape, saying, “In the $600 billion global market for outsourcing and freelancing, India has surged to around $150 billion, the Philippines to nearly $30 billion, and Sri Lanka to $3 billion. We, on the other hand, are still at $1 billion, though we aimed for $5 billion.”
Calls for improved policy support
Industry leaders are calling for accelerated policy support, including measures to ensure that internet services remain operational during emergencies or crises. They also urge for incentives and easy loan conditions to support businesses in the sector. Without these measures, foreign investors may lose interest in investing in Bangladesh.
State Minister for Posts, Telecommunications, and Information Technology Zunaid Ahmed Palak earlier said that the IT sector in Bangladesh sustained a loss of Tk 18,000 crore amid the recent violence surrounding to quota reform movement.
Speaking to reporters at various briefings and programmes, Palak emphasised the impact on software exporters and freelancers, stating, “The disruption in service delivery due to the unrest has led to a significant loss of confidence among our software exporters. Our freelancers and outsourcers have also been severely affected.”
Palak revealed that discussions have been held with stakeholders to explore potential solutions. Consultations with entrepreneurs have focused on determining the level of support required to mitigate the financial losses.
Furthermore, Palak assured that efforts will be made to provide incentives, with a process based on the income of registered freelancers being considered.
