Bangladesh's IT Industry
The Next Frontier?
Information Technology (IT) gives fast, easy access to information which is essential for the development of a nation. Large IT companies are opening around the world, and nations are building up IT platforms, developing and promoting their IT industries. Asian countries are also becoming stakeholders in this boom by creating conducive environments, drawing global IT companies to invest there. Existing giants like Microsoft, Apple, Samsung, etc. are making massive investments in Asian countries to utilise the cost advantage. Bangladesh, with its huge under-utilised manpower (cheaper than India, Malaysia and China), can also benefit from these initiatives, provided an established foreign investment platform with a nationwide IT infrastructure and skilled labour force is created.
Considerable achievements in the IT sector have already been made over several years towards building a 'Digital Bangladesh' and more initiatives are coming. However, to fully capitalise on the opportunities offered by the worldwide IT expansion, Bangladesh should thrust heavily towards further developing the IT sector to draw the attention of foreign investors competing with other technologically advanced/well-invested Asian countries. At the same time, we should encourage our entrepreneurs to launch IT companies here. Both these efforts would create hundreds of thousands of IT jobs and, consequently, help Bangladesh become a middle-income country by 2021.
The idea is to repeat the success of the RMG sector (which has created millions of jobs, though mainly lower-skill/lower-wage, and billions in foreign exchange), and significantly increase higher skill IT jobs to attract the youth, along with billions in foreign exchange, thus accelerating the growth of Bangladesh.
Emerging Asian countries like India, China, Malaysia, etc. have opted for digitisation to exploit opportunities offered by the Digital Age and catch up with technologically advanced countries. These countries have heavily invested in IT sectors, reaping considerable benefits in higher employment/income, and accelerating growth. For example, continuous growth of the IT sector in Malaysia, fully supported by the government, has created 800 new IT companies with over 98,000 new jobs, while 200 foreign companies have set up regional centres in Malaysia, bringing billions of dollars in investment and creating significant new jobs. Indian IT industry growth was spurred by huge foreign investment, contributing significantly to India's GDP growth. It is estimated that the outsourcing sector has a worldwide market of USD 500 billion; India's share is USD 140 billion compared to Bangladesh's USD 700 million.
Bangladesh can draw on experiences of these countries to design and implement a rapid IT promotion strategy tailored to her own resources/objectives. The government can consider the following strategy to compliment the ongoing 'Digital Bangladesh', which will accelerate the IT industry and utilise this sector as a platform for sustainable growth. Through injecting a major investment of USD 1.0 billion over five years (USD 200 million per year), the government can accelerate progress in this sector. This strategy can intensify efforts in specific areas: (a) Speeding up IT training/skills; (b) Actively attracting international IT companies/investors (Google, Intel, etc.) to establish IT centres (R&D, Service); and (c) Helping Bangladeshi entrepreneurs to start IT companies by providing funds/incubation, sales/business development/marketing support.
The proposed strategy can generate the two main positive outcomes that will set Bangladesh towards the goal of sustainable growth: one is the creation of high paid IT jobs, further leading to the expansion of small Bangladeshi IT companies, while the second is to generate massive inflow of foreign exchange through Foreign Direct Investment.
Moreover, this could also lead to the creation of high income jobs that would encourage foreign trained Bangladeshis to return (thereby reversing the brain-Drain), who can contribute to R&D, and help attract foreign companies to come. The IT industry also uses higher skill, pay better, can be more stable with greater potential for growth than the RMG sector, which is more vulnerable to lower cost regions in Asia and Africa. Development of a more professional sector will encourage youth to seek better education/IT training, generating higher income. Bangladesh can also receive huge remittances from exporting IT labour.
As the mobile phone sector in Bangladesh is well-developed, ICT-related service trade will progress, particularly in business process outsourcing (BPO). Development of other businesses and industries through computerisation of the business process can lower costs significantly, increasing productivity and profitability.
The government can accelerate investments in English and IT education starting at primary schools to scale up this industry. Enabling conditions such as, improving transportation, communication, physical infrastructure of major IT hubs, installing work ethics, transparency, accountability laws, strengthening regulatory roles, and ensuring homeland security can turn Bangladesh into a popular investment destination.
A government promoted private-public partnership foundation can be established to promote investment in IT and aid entrepreneurs. Institutions already working towards developing the IT sector (for example, BASIS) can become partners in this effort and senior representatives from key government agencies (for example, the Computer Council) should be included to advice investors on policies and procedures. Together, they can attract foreign investment in Bangladesh's IT industry. A global network of small overseas IT trade offices can also be established to attract and assist investors in setting up IT companies and service centres in Bangladesh.
Efforts to sub-contract from IT advanced Asian countries can be fruitful. Small scale companies not considered by India and China can be attracted to Bangladesh. India and China can also see the benefits in helping Bangladesh expand its IT sector. Moreover, the public and private sector can advertise IT careers to the youth and encourage entrepreneurship by providing start-up capital or easy bank loans to start IT companies.
The Bangladesh government has been playing a key role in framing policies to foster infrastructure developments in ICT. With Digital Bangladesh in mind, people are also in the correct mental space to move forward with government agendas of economic growth through developing the IT sector. However, it is important that ICT initiatives and implementation under both existing and new schemes be closely linked to the overall economic development and poverty reduction strategy to turn Bangladesh into a middle-income country by 2021.
The writers are a veteran of the high-tech industry who lives in Silicon Valley, USA, and a freelance economist who has lived for several years in Canada, and has published writings on Labour & Development Economics, including poverty and women's empowerment.