Bangladesh's IT export surges despite global economic crisis

Bangladesh's IT export surges despite global economic crisis

Information technology exports from Bangladesh shot up 36 per cent in the first half of the current financial year, beating expectations of industry players as the local IT industry showed resilience against the global economic turmoil.

IT companies brought home $282.77 million in the July-December period of 2022-23, up from $208.09 million in the identical half of 2021-22, data from the Export Promotion Bureau (EPB) showed.

The higher earnings were driven by the shipment of computer data-processing and hosting services, which cover most business process outsourcing and IT-enabled services.

The shipment of computer data processing and hosting services rose to $233.55 million in the six months to December from $154.82 million a year earlier.

Local entrepreneurs are receiving a good number of outsourcing orders for back-office operations, image processing, graphic design, animation, data entry, accounting and legal process outsourcing, and data analytics, according to industry people.

IT export growth has been phenomenal since the middle of last year after businesses around the world reopened following the improvement in the Covid-19 situation.

In the last financial year, IT exports from Bangladesh crossed a major mark after local firms and freelancers earned more than half a billion US dollars for the first time. Local IT companies saw their export earnings shoot up 95 per cent year-on-year to $592.06 million in FY22.

The higher earnings came although industry people earlier expressed concerns whether the momentum would be maintained in the current financial year owing to the global economic crisis induced by the Russia-Ukraine war.

According to the EPB, IT consultancy services raked in $19.76 million in July-December of FY23, up from $18.62 million a year ago. The shipment of software dropped about 8 per cent to $27.39 million.

However, some software firms say their business expanded during the period.

For example, Brain Station 23 said it posted 44 per cent year-on-year growth in the first half of the current fiscal year.

"Now we are facing some slowdown, which is a worldwide trend as business growth has slowed. But it is not alarming," said Raisul Kabir, chief executive officer of the software firm.

Brain Station 23 mainly exports custom-made software to European clients. It hired more than 200 people in the last one year to take its total employees to 670.

Export receipts for the installation, maintenance and repair of computers and peripheral equipment decreased around 58 per cent to $2.07 million in July-December of FY23.

M Manjur Mahmud, president of DataSoft Systems, however, thinks the actual export earnings from the IT sector were much higher than the official figures.

"Many of the earnings are small in amount and they don't get included in the official calculation."

The IT firm has already exported software products to 31 countries and has offices in four countries. It employs 450 people.

The Bangladesh Association of Software and Information Services (BASIS) estimates that the annual IT export stands at $1.5 billion.

Besides, many firms and freelancers don't bring in their full export proceeds or fetch their export earnings through unofficial channels to avail a higher rate of the dollar against the taka in the informal market, industry people allege.

Despite the phenomenal growth, Bangladesh's IT export has remained at a far lower level than those of its peers.

India's technology industry generated export earnings of $227 billion in FY22, according to the National Association of Software and Service Companies of the neighbouring country.

Pakistan's information and communication technology exports, including telecommunication, computer and information services, were $2.62 billion in FY22.

AKM Fahim Mashroor, CEO of Bdjobs and AjkerDeal, said the higher earnings in the first half were a good sign amid the global economic crisis.

"But the overall IT export is very low."

He said the government is spending heavily to develop the ICT skill of people, especially freelancers. But it has failed to boost IT exports.

"This is because most of the money is being spent on developing low-skill freelancers, who can't generate big revenue."

The IT entrepreneur recommended the government incentivise IT companies to hire fresh graduates.

"We should follow the growth story of the garment industry. In the RMG sector, the 100 top companies account for 80 per cent of exports."

"We need big companies like India's Infosys or Wipro, the companies that employ tens of thousands of people each and earn billions of dollars," he added.