Prof Dr Sazzad Hossain

With the unparallel march of artificial intelligence and internet of things and information technology demands the utmost attention from every nation globally.

Tech industry facilitates rapid and convenient access to information, crucial for national economic progress. Countries worldwide are witnessing the emergence of prominent IT firms, leading to the establishment and advancement of their respective information technology sector.

Asian nations are actively participating in this trend, fostering favourable environments to attract global tech investments. Major industry players such as Microsoft, Apple, and Samsung are heavily investing in Asian markets to leverage cost advantages.

Bangladesh, with its abundant and cost-effective workforce compared to countries like India, Malaysia, and China, stands to gain from these opportunities. To capitalize on this potential, Bangladesh needs to establish a robust foreign investment framework, coupled with a comprehensive nationwide IT infrastructure and a skilled workforce.

The software and IT-enabled services (ITeS) sector in Bangladesh shows significant potential for growth, driven by various factors such as a substantial talent pool of skilled young workers, cooperative government initiatives, proactive leadership from the Bangladesh Association of Software and Information Service (BASIS), and favourable media engagement.

Technology plays a crucial role in the development of developing countries like Bangladesh, offering a multitude of benefits across various aspects of the economy and society. In general, the IT sector encompasses a range of services including IT-enabled services (ITES), e-commerce, Artificial Intelligence, outsourcing, and the production of software and hardware.

These services are vital for enhancing productivity, streamlining business operations, and fostering economic growth in a competitive environment. Moreover, IT sector has played a significant role in improving the efficiencyand accessibility of governance. Additionally, IT has enhanced the management and delivery of essential government services, such as healthcare, education, and consumer rights, by increasing transparency.

The IT sector contributes significantly to economic growth by creating employment opportunities across various skill levels, from software developers to customer service representatives. Export of IT services generates foreign exchange earnings, contributing to the countrys foreign reserves and reducing trade deficits.

Outsourcing of tech services by freelancers provides a significant source of revenue. Investment in IT education and training programs enhances the skillset of the workforce, making them globally competitive and adaptable to technological advancements. The IT sector fosters a culture of innovation, entrepreneurship, and start-ups encouraging the development of new products, services, and business models.

The present government of Bangladesh under the leadership of Prime Minister Sheikh Hasina is committed to bridging the gap between rural villages and urban areas by leveraging technological advancements and implementing various government initiatives.

Local entrepreneurs are securing significant outsourcing contracts for a range of services such as back-office operations, image processing, graphic design, animation, data entry, communication services, accounting, legal process outsourcing, and data analytics, as noted by professionals in the industry.

The annual earnings from freelancing by around 650 thousand individuals amount to $500 million. Apart from this, IT companies brought home $282.77 million in the July-December period of 2022-23, up from $208.09 million in the identical half of 2021-22, data from the Export Promotion Bureau (EPB) showed.

The Bangladesh Association of Software and Information Services (BASIS) estimates that the annual IT export stands at $1.5 billion. In addition, Bangladesh is aiming to reach the $5 billion export-mark by 2025 and $20 billion by 2031. By 2025, 30 lakh youths will be employed in the country's tech industry.

The main export market for software products continues to be North America, with the USA leading the way. However, the UK, Denmark, and the Netherlands have also become prominent destinations in recent years.

Moreover, in addition to regular exports to Australia and Japan, many IT companies have achieved significant success in mobile applications and communications sectors in Malaysia, Singapore, the UAE, Saudi Arabia, and South Africa.

The prospects of IT sector in Bangladesh have some challenges that should be evaluated closely to improve the condition of this sector. Firstly, the IT industry faces challenges due to a shortage of highly skilled professionals, hindering its competitiveness. Insufficient infrastructure, including reliable internet connectivity and power supply, poses obstacles to growth of this sector.

Secondly, complex regulatory frameworks and bureaucratic procedures can deter foreign investment and hinder market expansion. Cyber threats and data security vulnerabilities challenge the sectors sustainability.

Additionally, numerous companies and independent professionals tend to bring their foreign currency through unofficial channels to benefit from a higher exchange rate of the dollar against the local currency. Finally, competitive dynamics within the software industry pose a significant challenge, as both large and small local firms present formidable competition to new ventures launched by smaller companies.

Increasing global demand for IT services presents opportunities for Bangladesh to tap into international markets. The current administration under the Awami League is actively fostering numerous opportunities and implementing essential measures to transform Bangladesh into a robust IT hub. Bangladesh boasts a large, relatively low-cost labour force, offering opportunities for IT outsourcing and software development.

Since 2018, the government has been offering a 10% cash incentive to software exports, aiming to stimulate the foreign exchange-earning segment, in addition to the apparel industry. The exemption of all taxes and duties on imported computer hardware and software has led to increased affordability and widespread use of PCs in Bangladesh. Simplified tax-free export earning remittance procedures with 40 percent retention in foreign currency.

The recent increase in cash incentives on remittances has been raised from 2.5 percent to 5 percent. Besides, exporting via the internet or other electronic media is acknowledged under sales contracts or agreements without the requirement for any Letters of Credit (LCs). Intellectual Property Rights law has been passed by parliament.

Digital security Act 2018 is primarily targeted to ensure cyber security. Most importantly, Bangladesh is producing sufficient amount of energy to support this sector. The establishment of hi-tech parks will be game changer for this industry.

Presently, Bangladesh has approximately 28 Hi-Tech Parks (HTP), Software Technology Parks (STP), and IT Training and Incubation Centres distributed across the country. Furthermore, the government has recently sanctioned additional hi-tech park projects, reflecting its commitment to fostering the IT sector. The Bangladesh Hi-Tech Park Authority (BHTPA) is tasked with executing and overseeing these projects to ensure their successful implementation and maintenance.

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.To flourish their IT sectors and earn foreign revenue, developing countries like India, Pakistan, China, Vietnam, Taiwan, the Philippines, and others can follow these steps:

Prioritizing education in STEAM fields and vocational training programs. Creatingfavourable policies, tax incentives, and regulatory frameworks to attract foreign investment and promote local IT industries. Encouraging innovation through funding research institutions, establishing tech parks, and fostering collaboration between academia and industry. Fostering partnerships with multinational companies, participate in global tech events, and promote exports of IT services.  Emphasizing continuous training to develop a skilled workforce with mastery in block chain, Artificial Intelligence, 3D technology and virtual reality to secure high-value work orders. Many tech-savvy young graduates, including those returning from overseas education, have initiated their own IT ventures in recent years. Despite encountering numerous local and global challenges, these young entrepreneurs have managed to establish successful businesses. However, they require increased support from the government. Providingmore funding, mentorship, and incubation facilities to nurture a vibrant startup ecosystem. Taking proper steps to minimize flow of foreign currency throughillegal channels.

Strengthening cybersecurity infrastructure and enact regulations to protect digital assets and foster trust among global clients. Revising the foreign exchange regulations and revenue policies. Exploring subcontracting opportunities from technologically advanced Asian countries can yield positive results. Bangladesh can attract small-scale companies overlooked by India and China. Additionally, India and China may find benefits in assisting Bangladesh in expanding its IT sector. Furthermore, both the public and private sectors can promote IT careers to youth and foster entrepreneurship by offering startup capital or facilitating easy bank loans for launching IT companies.

-- The writer is a senior professor and a full-time member at University Grants Commission (UGC) in Bangladesh