Building a vibrant software services industry in Bangladesh
We live in an extraordinary era. Never before was the competition so intense, opportunities so huge and challenges so daunting. It is because of one significant phenomenon: globalisation.
To me, globalisation is sourcing capital from where it is cheapest, sourcing talent from where it is best available, producing where it is most cost-effective and selling where it is most profitable -- without being constrained by national boundaries.
In this globalised or flat world, every nation that has something to contribute to the global bazaar can improve the lives of not just its own people but people throughout the globe -- the rich and the poor, the urban and the rural, the powerful and the weak, the educated and the not-so-well-educated.
Never before in the last 200 years did the developing countries have an opportunity to take their share of limelight as they do today and it is all thanks to globalisation. In fact, currently, more than half of the world’s GDP (measured on purchasing power parity) is accounted for by the developing countries.
The globalised world is essentially about how fast you can innovate and develop new ideas, implement them and gain competitive advantage in the marketplace so that you can create a better company, society, country and world. Thus, hardworking and well-educated people are the key differentiators for a nation in this flat world.
It is quite natural for people to wonder whether technology, in general, and software technology, in particular, have any major role in helping the poor in such a world. They do and let me elaborate. Technology makes the life of human beings more productive and more comfortable by reducing cost, improving productivity, saving time and improving comfort.
Let me give you a few examples to illustrate the power of IT for the poor. Fishermen in Pondicherry use wave pattern data on the high seas broadcast by the US Navy to improve their yield by as much as 40 percent. NASSCOM of India used IP-based videoconferencing to bring joy and relief to a taxi driver and his family at Mumbai by connecting him with his family in a remote village in Uttar Pradesh. A balance inquiry at a manned bank counter costs Rs 40. The same transaction costs Rs 8 at an automated teller machine while the internet brings the cost down to just Rs 2.
Technology is a great leveller. It does not distinguish between the rich and the poor. The use of the e-governance paradigm for deployment of inexpensive, efficient, quick and corruption-free community services is another case in point. Information technology enhances transparency in decision making and, thus, improves the confidence of people in the government.
Now, let me come to an important reason for why Bangladesh with its large educated population should embrace global software opportunities. Today, we live in a global village. No country can afford to isolate itself from the global market.
Even countries that did so for a few decades realised their mistake and got back to the global bazaar and have succeeded in improving their prosperity by enhancing the share of exports in their GDP. We have to focus on an export orientation for a number of reasons.
First, every country leverages its competitive advantages to trade in the global bazaar products and services that leverage these advantages. This is the best way to create jobs in Bangladesh.
Second, you have to maintain a certain healthy proportion of exports and domestic revenues in order to ensure balanced and de-risked growth in the economy.
Third, an export orientation helps Bangladeshi enterprises benchmark their products and services on a global scale. If you succeed in the highly-competitive global market, you are likely to provide high-quality products at the best prices even in the domestic market.
Now, let me come to what areas of software export Bangladesh can focus on. Given its huge population and its large educated workforce, the export of services based on remote application development and maintenance (ADM) and business process outsourcing would be viable for Bangladesh for a long time. This model would succeed as long as the opportunity for outsourcing of software development and maintenance remained.
The opportunity for outsourcing would remain as long as the Bangladeshi software services companies introduce new IT service areas through innovation.
It is important to remember that these new services require the application development and maintenance skills though they may use different languages, operating systems, data bases, object orientation and a host of other new tools and paradigms.
The Bangladeshi software services companies must invest resources to continue to explore new opportunities in services by innovating new ideas and build on what they have already done.
They have to focus on attracting, enabling, empowering and retaining the best and the brightest. This can happen through hygiene factors like competitive compensation, good career planning, protecting dignity of the professionals as well as enabling factors like 24 week-long entry-level and week-long continuous training and certification programmes.
You have to invest in the latest technology and tools infrastructure, in new methods of requirement elicitation, analysis, design and software development and in new methods of improving quality and productivity.
You have to train your youngsters in understanding the difference between value (what the customers obtain from your company) and price (what your company gets from your customers). Your challenge is to enhance value leverage or the ratio of value to price.
A big advantage of Bangladesh is its pool of well-educated, high-quality, English-speaking people. In the software services industry, scalability is of paramount importance and analytical reasoning is critical.
Therefore, your talent pool is a unique asset. Your youngsters will succeed if they are willing to unlearn old ideas, learn new ideas, apply them and move from “reactive problem solving” to “proactive problem identification and solution” for your customers.
The bulk of software services opportunity is in the US. The 10 to 13 hours difference in time zones between Bangladesh and the US facilitates efficient project execution with compressed timeframes and through seamlessly-integrated cross-border teams. The resulting 24-hour virtual workday enables Bangladeshi software services companies and their clients to leverage the benefits of globalisation.
Quality is a hygiene factor for software services companies. Quality models like the ISO 9000 and Capability Maturity Model (CMM) of the Software Engineering Institute form the process quality benchmarks for the Bangladeshi software industry.
Bangladesh must provide easy access to latest hardware and software technologies from advanced countries. Further, consultancy services in software development, marketing, branding, quality and productivity related areas from developed nations must be made available to Bangladeshi companies.
Broadband communications infrastructure will help Bangladeshi companies implement the global delivery model and use local talent to service customers across the globe.
Bangladesh may like to introduce economic reforms to abolish industrial licencing, rationalise taxes, create a strong thrust on exports, reduce import tariffs, simplify foreign exchange regulation, introduce free pricing of IPOs, encourage foreign participation in your capital markets and to create a regulatory framework that permits employee stock option plans.
Venture capital should be available in plenty for your entrepreneurs. Further, debt finance should be available from banks as well as from state-owned institutions even for companies that do not have large physical assets.
Bangladesh must provide at least limited convertibility on the capital account to Bangladeshi global software corporations.
Acquisition guidelines must allow proven Bangladeshi software companies to acquire software companies in the developed world.
Bangladesh must invite leading software companies from across the globe to set up captive software development activities there.
Bangladeshi software companies must improve their brand image to move up their price points.
If Bangladesh implements most of the suggestions, I have no doubt that Bangladesh will become a vibrant player in the global software services market.
The author is the founder of Infosys Ltd. This is an abridged version of the keynote speech he delivered at the 18th DHL-The Daily Star Bangladesh Business Awards ceremony in Dhaka on Friday.