IT: the next bright spot

Bangladesh and readymade garments are almost always spoken of in the same breath nowadays. But, there is life beyond it -- and nowhere is it simmering more than at the software and IT-enabled services sector.

It all started in 2008, when Prime Minister Sheikh Hasina laid out the vision of building a digital Bangladesh by 2021.

Since then, lots of great things have happened in the ICT sector, said Shameem Ahsan, president of the Bangladesh Association of Software and Information Services (BASIS).

For instance, it has attracted the likes of South Korean electronics giant Samsung, which set up a software research and development centre in Dhaka in 2010, and global outsourcing firm Accenture, which has a large business process outsourcing (BPO) outfit.

Gartner, an American IT and research firm, counts Bangladesh among the top 30 outsourcing destinations in the world, and the country came in at No. 26 of Chicago-based global management consultancy firm AT Kearney's index of top 50 offshoring destinations.

It has gone on to become a huge hub for freelance work via online marketplaces such as Upwork, punching with heavyweights like India and the US and coming higher in the rankings than China, Canada and the UK.

Today, the IT sector in Bangladesh is a $600 million industry, with more than 1,500 firms and 40 offshore development centres -- and is steaming ahead with wind under its sails.

The reason for the wave of optimism, the BASIS president says, is the country's large youth demographic, who happen to be very receptive to the latest technology.

To harness it, the Asian Development Bank, the World Bank and finance ministry have taken up projects to train about 59,000 IT professionals over the next 3-4 years.

The government, too, is very committed to making sure that the sector reaches its full potential: it has granted tax exemption until 2024, withdrawn value-added tax from e-commerce and given 300 acres of land in Kaliakoir to develop an industrial park.

It has also passed the national ICT policy virtually unchanged from the version that BASIS handed over.

“This kind of partnership between the public and private sectors is very rare,” said Ahsan, a general partner of Silicon Valley-based venture capital firm Fenox, which launched a $200-million fund to invest in Bangladesh's technology, internet and media sectors.

But what the sector really needs for the definite leap now is thought leadership and infrastructure, according to Sonia Bashir Kabir, country manager of Microsoft.

But the infrastructure issue could be a boon too: when there is infrastructure, there are inventory issues.

“You just can't take up the latest and the greatest in technology like Bangladesh did with Telenor and Grameenphone. That is something to consider from an investor perspective,” she said.

To address the gap in thought leadership, Syed Farhad Ahmed, managing director of Aamra Companies, said world-class institutions can be invited to set up campuses in Bangladesh.

“We have a vibrant, knowledge-hungry youthful force that needs to be empowered with the right skills set and confidence.”

And solid, global institutions can fast-track that process, he said.

“Bangladesh is on the right track. It will excel in ICT -- there is no doubt about it. But the question is, do we do it in 10 years or three years?”

About the major investment opportunities, Abdul Mannan, chairman of Banglalion Communications, said: “Broadband internet and 4G are the future.”

But it is costly to build the infrastructure for it: just to cover the urban areas, a few hundred million dollars will be needed. So, the country could do with overseas investment in this area.

Sharful Islam, chief operating officer of Aamra Technologies, too highlighted internet infrastructure as an area ripe for foreign investment.

Ahsan though tipped the internet and e-commerce to be the next big money churners, as, after all, the government is looking to make half of its 160 million population full-fledged internet users by 2018.

He shed light on the 25 percent acquisition of local firm bdjobs.com by Australian job site SEEK International last year as the potential of the sector.

SEEK invested in the company with a $20 million valuation, and the individual who made an investment in bdjobs.com seven years ago got 28 times the return.

“That's the kind of return on investment you can expect if you put your money in Bangladesh.”