Coronavirus turns into malware as cash crunch hits software industry

Splash360, a US-based email and social media marketing firm, has long been a regular client of Brain Station-23 – a leading Bangladeshi software company that exports IT products abroad.

Brain Station-23 has been developing a new marketing feature for Splash360, and until March, was getting paid each month. Although payments have dried up, the local firm has continued providing software development services.

"All clients around the world are showing the impacts of economic slowdown due to the Covid-19 pandemic," said Raisul Kabir, founder and CEO of Brain Station-23.

"We too are witnessing a slowdown in our revenues as everybody is telling us that they have also failed to get the money from their customers. Considering the situation though, we kept working with them as they are very good clients," he added. 

The company has received some new work orders, but it has also lost some regular customers.

In the last one month, the Brain Station-23 secured three new e-commerce work orders and one health service-related order from abroad. 

Apart from these, it also got some work orders from the local market, including maintenance of AB Bank's internet banking software and an app-based learning platform Esho Shikhi.

Raisul said some of his clients are requesting the company to reduce charges, even if that means losses, and then to adjust the bills when the situation returns to normal.

"So, considering the situation and in fear of losing customers, we are providing services," he added.

Like Brain Station-23, most software companies in Bangladesh have already been hit hard by the coronavirus pandemic, with 30 to 70 percent work orders cancelled and payments held-up. They are likely to plunge deeper into trouble because of a cash flow shortage.

On the other hand, half of the companies – which only do business locally – are also in trouble as they cannot collect revenues from the market during this crisis. 

Others have resorted to exploring new avenues of work from the sudden emergence of a technology-driven society. They are getting orders from both local and foreign companies who are providing services such as food, clothes, and health and education services.

However, investors fear they might lose $1 billion in business opportunities if the pandemic stays throughout the year.

Syed Almas Kabir, president of the Bangladesh Association of Software and Information Services (BASIS), said, "The industry has been affected seriously due to the pandemic. The companies, for whom the software firms work, are all closed now. Nobody is investing in the IT sector. So, if the situation continues till the end of the year, the sector will lose $1-$1.3 billion."

Currently, around 800 software companies are operating in Bangladesh, according to BASIS. Of them, around 250 software companies export ICT goods amounting to $800 million to 60 countries per annum.

According to USAID, North America is the main destination for Bangladeshi software and ICT product exports. The country generates almost 35 percent of its revenues from American buyers and 15 percent from buyers in the UK. Earnings also come from some European countries such as Denmark and the Netherlands.

Datasoft, another leading software development company in Bangladesh, registered a 15 percent growth in sourcing new work orders during the coronavirus shutdown. 

However, a cash crunch has made it difficult for the local firm to continue its operations.

"Our business volume has increased, but cash flow has dropped as clients – be they local or international – are delaying payments," said M Manjur Mahmud, director and chief operating officer of Datasoft. 

For some, however, the coronavirus has been less of a malware and more of a temporary enabling of hyperthreading for their businesses.

Software companies that are providing services, such as food, clothes, health and education, are doing better. Services such as video streaming, machine learning and online learning have also seen a strong upsurge in demand.

Purple Patch, an internet marketing service and advertising networking company, has registered a 200 percent growth in its revenues.

From the very beginning of the nationwide shutdown, telecom operators and mobile financial service providers have been trying to reach their customers through digital advertisement, said Hossain Mohammad Faysal, chief engineer of Purple Patch.

But the company fears the growth will not last long.

"As most of our clients' products are daily essentials, we are witnessing growth in the business. It will return to the previous condition once the pandemic is controlled," Faysal said.