Home ›› 15 Jan 2023 ›› Front
Local software firms and freelancers have the experience, and are more than capable of providing up to the mark software and information technology-enabled services (ITES) to clients in both home and abroad, but they are not getting enough work orders locally.
From Bangladesh, over 2,100 firms and 6.5 lakh freelancers are providing software and ITES projects across the globe, and the country competed with global players to earn $1.3 billion from exports in 2022.
Bangladesh has set a target of $5 billion exports from software by 2025. Time and time again, local software firms showcased their expertise in successfully tackling large global projects, but both public and private organisations are still mostly reliant on imported software.
Former president of Bangladesh Association of Software and Information Service (BASIS) Fahim Mashroor said, “The country imports software services worth around $1.5 billion to $2 billion annually, but more than half of this work can be skillfully done by local firms or freelancers.
“Small and medium companies purchase software from local companies, but banks, telecoms and other multinational companies, even a big portion of government organisations are getting software solutions from global players.”
Fahim added, “If local service providers could get such projects, the domestic software industry would have flourished, and there would have been no need for sending a huge volume of USD abroad.
“Local tech-startups are already hit hard by the pandemic as funding is comparatively scarce. The country’s software import dependency has to be curbed as soon as possible to promote efficient local startups.”
Caught into a vicious cycle
Raisul Kabir, CEO of leading software firm “Brain Station 23,” said, “We started our journey back in 2006, with the goal to earn foreign currency. But later we observed that many local companies are availing services from global firms, which can easily be done by local firms at a more affordable cost.
“At around 2012, Brain Station started focusing on the local market and completed a good number of big local projects like MY GP app, MY BL app, Citytouch of City bank. More than 26 per cent of our total projects are currently from Bangladesh while the remaining 74 per cent came from abroad.”
Raisul added, “It is a matter of sorrow that we are subcontracting local projects from overseas companies at lower rates than the contracted company gets from the Bangladeshi company, which is draining USD to other countries.”
“We have to purchase little number of software like operating system software, database software from abroad, but we have capability to perform most of the local projects well”
He continued, “The local software market is caught in a vicious cycle. For example, a bank sees no issues in giving TK 40,000 to Tk 50,000 per day to a foreign company for developing software, but the same bank wants to give us TK 5,000 to Tk 10,000 per day for the same work.
“So, local firms are forced to provide lower-grade service as they cannot hire good developers within such budgetary constraints. Such issues ultimately create discomfort for both parties, so local firms prefer global projects to local ones.”
Fahim, also the CEO of Bdjobs, further claimed “In government projects, the people who deal with procurement impose conditions that local companies cannot fulfill.
“Besides, there is a possibility of corruption during government procurement of software from abroad, as the deals are usually bigger and involve large sums of money. Meanwhile, the local firms can provide quality service at a much lower rate.”
Mentioning that Bangladesh has more than 60 banks, Fahim said, “Nearly half of these banks are taking software support from foreign firms. Had our local firms lacked the capability to provide quality software solutions, how are they serving the other half?
“There might be some mismanagement in the procurementprocess as well.”
Industry insiders say the domestic software market is navigating through troubled waters due to the impacts of the Covid-19 pandemic, exacerbated by Russia’s invasion of Ukraine.
Discussing the matter further, Fahim said, “Most IT startups in our country are dependent on foreign investments. As investment in startups began drying up, most of the companies across Bangladesh started cutting costs especially on the technology they use.
“After the USD crises hit Bangladesh, the government imposed import restrictions on a number of items such as luxurious products and cars. But software imports continued unabated. The government should limit software imports through a gazette notification.”
Under the current context, one of two billion USD is not a negligible amount, he added.
Flaws in the system
Shahadat Khan, founder and CEO of local MFS provider SureCash, thinks there must be flaws in the country’s IT services concept, procurement system and branding.
He told The Business Post, “The people who purchase software do not have a clear idea about where they should make procurements, and which firms are efficient enough to provide solutions.
“For example, imagine a government body floating a software procurement tender. Different local and global players respond with their respective rates. Who will get the procurement? According to the rules, the lowest bidder would get the work.”
Shahadat continued, “But the way this process works, is not the right way to ensure quality service. Although Bangladesh has not managed to build an application that can reach the global arena, we have the potential to develop software on demand.
“But what it needs is trying to take their application to global market”
He then said, “We have a large number of freelancers who have proven themselves capable of tackling tech-based projects. If they group up or a process is available to help them launch start-ups, they can serve the software industry with flying colours.”
Bangladesh Association of Contact Center & Outsourcing (BACCO) President Wahid Sharif said, “We have with us 270 companies. On average, 40 per cent companies work for global clients, while 60 per cent work for local ones.
“Domestic firms or freelancers do not have any local marketplace. One such platform would certainly help build connections among software firms, freelancers and clients from home and abroad.”
Local expertise must come first
Wahid Sharif, also the managing director at Digicon Technologies Ltd, added, “Companies searching for software solutions should check with local experts first.
“Initiatives should come from both sectors, from our software trade body and other industry trade bodies such as Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Real Estate & Housing Association of Bangladesh (REHAB), and pharmaceutical companies.”
He continued, “Software has a good market globally, if we can take software as a niche, the opportunity will be wider, and we can build industry specific software.
“The government can provide policy support, and incentivise the companies availing software solutions from local firms. Such companies can be exempted from VAT for purchasing local software.”
BASIS President Russell T Ahmed said, “Our software industry is big. We are exporting software and ITES worth $1.3 billion annually. In 2022, we took various steps to showcase our technological capabilities.
“This trend will be stronger in 2023. We have taken various steps to make our manpower efficient. This year, most of the attention will be given to Bangladesh’s branding.”
BASIS has 2,146 IT farms under its umbrella.
He added, “The BASIS SoftExpo, which is scheduled to be held from February 23 to February 26, is the biggest initiative in Bangladesh for branding the country’s software industry.
Latest data from the Export Promotion of Bangladesh (EBP) show that Bangladesh’s export earnings from computer-related services – which include software, IT enabled services, consultancy and equipment maintenance – nearly doubled to $592 million in FY22.
Bangladesh earned $60 million solely from computer software exports, compared to $51 million in FY21.
