Eyeing $5b by 2025, local IT companies expand global footprint

With growing demand for information technology-enabled services and industry automation, Bangladesh IT firms have expanded their global footprint, fetching the country $1.4 billion annually by exporting software and other services. 

More than 350 local firms are now exporting the IT products to around 80 countries including the US and the European Union countries, according to the Bangladesh Association of Software and Information Services (BASIS).

In 2019, the number of exporting firms was 250, as they had businesses to some 40 countries. Over the past couple of years, many of the firms have also established liaison offices abroad, including the USA and the UK, according to officials.

"We are aiming to reach the $5 billion export-mark by 2025 and $20 billion by 2031," Russell T Ahmed, president of Basis, told The Business Standard.

According to the Export Promotion Bureau, the growth of ICT exports was 23.63% in FY19, 22.86% in FY20, 9.88% in FY21, and 94.91% in FY22.

Infographic: TBS

Currently, there are more than 4,500 software and IT-enabled service companies registered in Bangladesh, which employ over three lakh local information and communication technology professionals. A little over half of the companies, 2,300, are members of Basis.

According to BASIS, the average annual growth of the local IT sector has been over 40% in the past five years on the back of the burgeoning exports and increasing automation in the domestic market, and it is anticipated to continue in upcoming years.

Of the BASIS members, top ten local firms in terms of export volume in the last five years are: ServicEngine, BJIT, Graphic People, Therap (BD), Brain Station 23, Secure Link Services Bangladesh (SELISE), Taskeater Bangladesh, Cefalo Bangladesh, KAZ Software, and Golden Harvest Infotech.

The export volume by the firms during the 2018-2022 period stood at around $170 million, and their export amounted to $35.54 million alone in FY22. 

According to BASIS, over 40 companies, including some top exporters, were established through joint ventures with foreign firms or as offshore development centres (ODCs) with 100% foreign capital.

For example, BJIT, one of the top ten firms that mainly develops software for foreign clients, is working with different registrations in different countries.          

"Around half of our business is in Japan," Alamgir Mostafa, senior general manager of BJIT Limited, told The Business Standard. He said their remaining business is spread among foreign markets such as Finland, Sweden, the Netherlands, USA and Singapore.

Alamgir Mostafa said they exported products worth Tk80 crore in the last fiscal year – up from previous year's Tk60 crore.

The government has been providing software exports with a 10% cash incentive since 2018 to encourage the forex-earning segment alongside the apparel. However, a firm must be a member of BASIS to qualify for it.        

TigerIT – a renowned local firm that provides end-to-end credential management solutions for government and state agencies – has so far worked in at least 11 countries including Bhutan, Malta, Tajikistan, Canada, USA, Nigeria and Kenya.

AHM Rashed Sorwar, director of the firm, said their IT solutions to the foreign clients included biometrics registries, automated fingerprint identification system, iris recognition and face detection.

"We have developed the driving licence database in Tajikistan and provided a backend solution for India's Aadhaar card," he added. 

Was not a smooth sailing 

The IT sector in Bangladesh has come a long way since it was just getting off the ground in the 1980s. 

Rafiqul Islam founded Computer Solutions Limited (now CSL) in 1985, and while most companies in the sector were focused on hardware at that time, CSL also offered software services. 

These days, CSL has grown to employ over 100 workers and provides automation and digital support to various sectors, including manufacturing, textile, and banking, with an annual turnover of several crores of taka.

"When we started outsourcing in 1986-87, there were no broadband Internet connections. Our modems disconnected frequently. We only could send smaller files," recalled Rafiqul Islam. 

He said there was a lack of acceptance of Bangladeshi IT services on the global stage, and the speed of internet connectivity was a roadblock to progress. 

The sector started to pick up steam in the 1990s when the tax on computers and other accessories were reduced and Internet accessibility improved, according to the entrepreneur.  

The CSL founder said the sector has a bright future, with plans to stay ahead of the curve by updating products according to market demand and working with companies on long-term projects. 

Still many hurdles to overcome

Local IT sector is now facing three key challenges, according to Syed Almas Kabir, former president of Basis. Those are: foreign exchange regulation and revenue issues, poor Internet connectivity and infrastructure, and lack of skills for high-end IT products. 

Of those, a local IT firm top official pointed at the ease of doing business as the most crucial issue.

"Even before the dollar crisis, we could not directly invest in Nepal from Bangladesh. They [the Bangladesh Bank] thought that we might launder the money. Later we did the work through collaboration from other countries," he said while talking to The Business Standard on condition of anonymity.

"It is very difficult to do business abroad from Bangladesh," he claimed.    

On the policy issues, Syed Almas Kabir said IT firms can bring in the money they have earned, but will have to pay a 15% tax while sending the amount abroad for reinvestment.  

"That is why IT firms often do not want to bring money from abroad. They leave it there somewhere and spend it. So even though we are doing a lot of work, the money is not coming into the country," he added.

He recommended revising the foreign exchange regulations and revenue policies.

The ex-Basis president said the industry will not grow until we can connect faraway districts with broadband Internet at an affordable price.

He also stressed developing a skilled workforce with mastery in block chain, 3D technology and virtual reality to secure high-value work orders.     

However, CSL founder Rafiqul Islam said the skills of new graduates entering the sector are not a concern despite the ever-changing technology landscape.

"But they do need to keep learning to stay ahead in the game," he noted.