Bangladesh IT & ITES Industry
Supported by the availability of English-proficient young tech savvy workforce combined with an increasingly reliable communication and power infrastructure, bolstered by strong government support and favorable policies and incentives, the IT sector has been recognized as one of the most promising industry in the country and is forecasted to reach USD 5 billion by 2025.
After the Covid pandemic, the major trend that has accelerated across the world is digitalization. As countries all over the world grappled with lockdowns, digital technologies became the savior. The Bangladesh ITes industry has adapted and progressed rapidly during 2020 with a Harvard Business Review study recognizing it as a break out economy suggesting the potential to rapidly digitalize for both post-Covid economic recovery and longer-term transformation.
One of the fastest growing sectors in the country, the IT industry in Bangladesh is well represented by software development and IT-enabled service (ITES) including business process outsourcing (BPO) service and ecommerce. While the industry’s revenue is generated largely by software & application development products and services such as AMD, IT help desk, web development, there has been a noticeable increase in products offerings such as big BPO, data analytics, Internet of Things (IoT), 3D imaging, virtual reality/augmented reality (VR/AR), Robotics process automation (RPA) with Ecommerce business soaring since the covid pandemic. Over 4,500 IT /ITES firms are thriving in Bangladesh, employing over 750,000 ICT professionals . Export earnings surpassed USD 1 billion in 2019, registering a CAGR of 21% since 2013. The earnings are further enhanced by a large pool of online workers. In 2017, Bangladesh had a total of 650,000 registered freelancers , the second largest pool of online workers in the world, commanding a market share of 16% after India with 24% of the market. Among them, 500,000 are actively working with aggregate earnings of USD 100 million per annum .
Emerging destination for digital skills
Bangladeshi IT industry (software development, and ITES including BPO) is a promising destination of investment. This is evidenced by growing market and recent multinationals’ investments for offshore development hub, young and tech adaptive workforce and government’s strong commitment for the sector promotion.
1. Large domestic market with access to regional markets
With increasing growth in economy and business the demand for IT products and services are on the rise. Additionally, government is moving towards digitizing processes and is making large investments in such projects.
2. One of the lowest-cost locations for IT service operation among the peer countries.
Offshore Development Hub and Captive BPO Centers
Bangladesh is another attractive place for the multinationals and foreign industries for the establishment of their offshore development hub (for software and application) and captive BPO centers (including call centers).
IT Training, Vocational School Business
Opportunities for Bangladeshi youth to acquire advanced and basic IT skills can be extended through private investments to vocational and training institutions specialized in IT engineering, and business management and graphic design. Such investments are deemed valuable, since there could be many potential students interested in working for IT business, and computer engineers intending to equip more advanced skills.
Standards Accreditation Business
Smaller BPO firms do not have international certifications for IT-related standards (on software development process, internal control over contracted service, information security management). This is because the certification is costly, as local auditors are not readily available for most standards’ certification
Artificial Intelligence based system design and/or manufacturing
Bangladesh is embracing artificial intelligence (AI) for the digitalization of the nation. The government has developed a draft national strategy for artificial intelligence and is providing corporate tax exemption for developers/manufacturers of artificial intelligence-based system design (Income tax Ordinance, 1984 46BB).
|Tax holiday is applicable on software development, nationwide telecommunication transmission network (NTTN), and information technology-enabled services (ITeS) provider’s/ operator’s income until 30th June 2024. A 10-year tax holiday is applicable for producers of hardware products such as motherboard, casing, UPS, speaker, sound system, power supplier, USD cable, CCTV, and pen drive.|
|This will be only applicable for companies who will start commercial production from 1 July 2021 to 30 Jun 2030.|
|Phased/ partial tax exemption of 5 to 10 years is applicable for industries established between July 1, 2019 till June 30, 2024.|
|10% export subsidy is available for the export of Software, ITeS, and hardware. Locally owned Software, ICT and hardware industries, situated at the high-tech park will get 4% incentives for product and market diversification. 30% value addition is required to avail the incentive.|
|Locally owned Software, ICT and hardware industries, situated at the high-tech park will get 4% incentives for product and market diversification. 30% value addition is required to avail the incentive. CBC).|
Industry Association and Supporting Institution
Source: Bangladesh Investment Development Authority (BIDA)