Although
Bangladesh has yet to carve out a significant share of the large and growing
market for the offshoring of information technology and business process
services, with the assistance of ITC steps are under way to strengthen
Bangladesh’s competitiveness and widen overseas awareness of its capabilities.
To be seriously considered as a competitor of currently dominant suppliers,
Bangladesh is moving to change perceptions and extend the modest market success
that is already being achieved.
The computers are brand new, the
screens large, and the staff is busy working on a series of flyers for the
computer maker Dell, which are being formatted in several languages for markets
around the globe. The office furniture is slick and contemporary. Abstract
paintings hang on the walls. Altogether, the atmosphere reminds one of a
start-up office in Islington, London. Apart from the saris worn by the female
staff and the view through tinted windows on the lush flora of the Banani
neighborhood, it is hard to believe you are in Dhaka, Bangladesh. Welcome to
Graphic People, an offshore graphic design service provider specializing in
pre-press work.
Companies
like Graphic People are leveraging the web to offer business services to
clients in China and the United States. They are the supply side of the global
offshoring market, which has barely been affected by the global financial
crisis.
As a
matter of fact, the outsourcing of information technology (software
development, network maintenance, etc.) and of business processes (data
capture, call centres, graphic design, among others) has emerged as a huge
global business with the fast growth of broadband Internet. Estimates for the
sales volumes of ‘e-commerce of services’, i.e. global information technology (IT)
and IT-enabled services (ITES) and ‘offshoring’ (outsourcing offshore, or
abroad) vary significantly. However, there is consensus that the industry has
been growing dramatically over the last few years and will continue to do so.
According to management consulting firm McKinsey the potential annual market
for IT & ITES was around US$ 500 billion in 2009. McKinsey considers,
however, that only 20% of this market is actually being addressed so far (US$
100 billion).
The
number of global sourcing locations (countries that provide IT & IT-enabled
services) is increasing in parallel. Over the years, India has become the
largest supplier among emerging economies and developing countries, with a
record US$ 50 billion in exports last year, generating employment for more than
two million Indians. India is now in competition with countries like the
Philippines, South Africa, Viet Nam and Pakistan. Bangladesh recently entered
the fray and has the potential to become a significant player.
So
far, Bangladesh can be considered an outsider. Approximately 150 companies in
Bangladesh exported their IT and IT-enabled services for a total value of less
than US$ 40 million in 2010. Average export earnings per company are limited,
mostly in the range of US$ 100,000 to US$ 200,000 per year. The United States is the major export
destination, with a market share of 60% (serviced by more than 70 Bangladeshi
companies). The European Union absorbs about 30% of exports. More than 20
companies are exporting to Denmark, about half that number to the United
Kingdom, eight each to Finland, Switzerland and Norway, and three to Sweden. A
World Bank report released in 2009, however, anticipated optimistic yearly
IT/ITES export revenues of US$ 500 million and the creation of 30,000 new jobs within
a five-year period.
Unlike
India and the Philippines, Bangladesh is not known for its IT and ITES
industry, hence the challenge of marketing Bangladesh as a potential supplier
to clients in Europe and the United States. The fact is, however, that Bangladesh
is already on the 2010 list of the top 30 global sourcing locations as
established by Gartner, a large technology consultancy.
ITC
began supporting the IT and ITES sectors in Bangladesh in early 2007 with the
development of an export sector strategy, which was endorsed by the Government
of Bangladesh. Since October 2010, ITC has been providing Bangladesh with the
means to realize its potential within the framework of the Netherlands Trust
Fund II (NTF II), funded by the Dutch Centre for the Promotion of Imports from
Developing Countries (CBI). The Creating Sustainable Exporter Competitiveness
in the IT & ITES Sector project aims to enhance the branding of Bangladesh
as an effective IT and ITES global sourcing location and provide the country with
the visibility needed to be part of the rankings of major information
technology consultancies, such as Gartner.
The
project also aims to increase Bangladesh’s IT & ITES exports through
targeted marketing and matchmaking activities. To ensure that the Dutch-funded
project has a sustainable impact, the industry’s trade support institutions
(TSIs), the Bangladesh Association of Software and Information Services
(BASIS), the Bangladeshi IT & ITES association, and the Dhaka Chamber of
Commerce and Industry (DCCI), will be equipped to support it in generating new
business.
At
the end of December 2010, 125 Bangladeshi IT & ITES companies applied to be
part of the project. Forty were selected and will receive support to upgrade
their marketing materials and skills and meet with potential clients both in
Bangladesh and in Europe. Furthermore, TSIs in the Netherlands, Denmark and the
UK, which are the three target markets for the project, have been engaged to
become project partners and support these efforts in their respective markets.
First
results are very encouraging. At SoftExpo, Bangladesh’s major IT trade fair
held in Dhaka in February 2011, Bangladesh captured the attention of the Dutch
and Danish business delegation. Delegates were impressed with Bangladesh’s
skills base (solid IT education and English proficiency with historic roots)
and competitive pricing. Bringing together the delegation and the enterprises
was the first major activity undertaken in the framework of the two-year NTF II
project as part of the effort to establish new business linkages and generate
new sales for the 40 beneficiaries. ‘I think they are very well prepared for
the European customers that need to look abroad,’ said Willem Hoekstra from
ATOS Origin NL, a global IT company, who took part in the delegation. In June,
some of the companies Mr. Hoekstra met in Dhaka will go on a road show to meet
more potential clients at NTF II events in Amsterdam, Copenhagen and London.
1Infodev-World Bank.
2010. The Global Opportunities in IT-Based Services.