ITES SECTOR of Bangladesh
jahangir Alam Shovon
The IT and ITES sector in Bangladesh has experienced rapid growth over the past decade, a young tech-savvy workforce, and increasing digital adoption. The sector contributes significantly to the economy, with exports exceeding $1.5 billion, primarily in software, BPO, and freelancing. With growing 4G coverage, the rise of local tech giants, and policy support like tax incentives and the Hi-Tech Park Authority, Bangladesh aims to become a major ICT hub by 2041. However, challenges such as the digital divide, cybersecurity threats, and skill gaps remain critical to address for sustained growth.
Nevertheless, digital services in the country are still inadequate, and there has been little progress in e-governance. A large portion of the country’s youth remains unskilled and unprepared for the global market. There is still much to be done to overcome these challenges. Some of these key issues are highlighted below.
Crisis and the path to recovery
I. Key Strengths / Competitive Advantages
• Cost Competitiveness: Lower labor and operational costs compared to leading ITES-exporting countries like India and the Philippines.
• Skilled Workforce: A growing number of IT professionals with expertise in software development, AI, and data analytics.
• Government Incentives: Tax exemptions, cash incentives (10% for ITES exports), and VAT exemptions on IT-related services.
• Young Demographic Advantage: A large, tech-savvy youth population contributing to a skilled workforce.
• Growing Freelance Ecosystem: Bangladesh ranks among the top freelancing markets globally, with strong participation in online work platforms.
II. Major Export Markets
• North America: USA, Canada (major clients in fintech, AI, data analytics, and BPO services).
• Europe: UK, Germany, Netherlands, Nordic countries (BPO, KPO, and cybersecurity services).
• Asia-Pacific: Australia, Singapore, Japan, and Malaysia (software development, AI, and automation services).
• Middle East: UAE, Saudi Arabia, Qatar (BPO and SaaS services).
III. Growth Trends Over the Last 5 Years
• ITES exports from Bangladesh have been growing at an average rate of 15-20% per year.
• The freelance workforce grew by 30%, supporting global service delivery.
• Major contributions from software development, AI-driven services, and cloud-based solutions.
• Expansion of Hi-Tech Parks and incentives, driving investment in IT-enabled services.
IV. Contribution of Hi-Tech Parks & ICT-Exclusive Areas
• Economic Zones & Tech Parks (e.g., Kaliakair, Jessore, Bangabandhu Hi-Tech City) attract FDI and promote IT startups.
• Infrastructure support, co-working spaces, incubation centers, and tax-free benefits for ITES companies.
V. Role of Government Incentives
• 10% cash incentives for ITES exports.
• Tax exemptions on IT/ITES earnings till 2024 (with possible extensions).
• Startup funding and investment support from Bangladesh Startup Ecosystem.
• Regulatory ease for foreign transactions and investment in tech startups.
________________________________________
Section B: ITES Services Exported from Bangladesh
• Business Process Outsourcing (BPO): Customer support, data entry, call centers.
• Knowledge Process Outsourcing (KPO): Market research, legal process outsourcing.
• Software as a Service (SaaS): Cloud-based software solutions.
• Artificial Intelligence & Data Analytics: Machine learning, big data analysis.
• Cybersecurity Services: Network security, ethical hacking, compliance solutions.
________________________________________
Section C: Global Trade Scenario
XI. How Bangladesh Compares to Leading ITES Exporters
• India: Established ITES hub with mature talent pool & infrastructure.
• Philippines: Strong focus on BPO and customer service outsourcing.
• Vietnam: Rapid growth in software and AI services.
• Bangladesh: Competitive in cost-effectiveness & freelancing but lacks strong branding & large-scale IT firms.
XII. Global Trends Influencing ITES Demand
• Digital Transformation: Increased cloud computing adoption.
• AI & Automation: Growing AI and machine learning applications.
• Remote Work & Freelancing: Shift towards decentralized, gig-based IT services.
• Cybersecurity Demand: Rising need for cybersecurity solutions worldwide.
________________________________________
Section D: Challenges in Exporting ITES
Top 5 Challenges in ITES Exports
1. Global Competition: India, the Philippines, and Vietnam dominate the market.
2. Infrastructure Limitations: Need for better internet penetration & IT parks.
3. Lack of Global Branding & Marketing: Low visibility of Bangladeshi ITES firms.
4. Skill Development Gaps: Workforce needs more specialization in advanced technologies.
5. Regulatory and Compliance Hurdles: Complex export policies & financial transaction challenges.
XIV. Comparison of Challenges with Other Countries
• India & the Philippines face higher labor costs but benefit from strong global branding.
• Vietnam has government-backed training programs, unlike Bangladesh.
• Bangladesh has low operational costs but lacks large-scale IT firms & global networking.
________________________________________
Section E: Improving Bangladesh’s Global Services Location Index (GSLI) Score
GSLI Parameter Bangladesh Score Global Average Suggested Strategies
Financial Attractiveness 2.81 1.77 Maintain tax benefits, reduce business costs
People Skills & Availability 0.85 1.06 IT skill development programs, university-industry collaboration
Business Environment 0.83 1.47 Simplified policies, ease of doing business reforms
Digital Resonance 0.41 0.66 Increased investment in AI, cloud computing, IoT
________________________________________
Section F: Best Practices from High-GSLI Countries
Country Best Practices
India IT education, Special Economic Zones, large ITES firms
Philippines Strong BPO sector, English proficiency, foreign investment
Singapore High-tech ecosystem, tax-free IT zones, cybersecurity focus
Vietnam Government-funded IT training, startup incentives
Malaysia Smart city initiatives, AI & IoT adoption
China AI innovation, cloud computing leadership
________________________________________
Section G: Policy Support for ITES
XVII. Policy Comparison with Other Countries
Country Special Policy Supports
Bangladesh Cash incentives, tax exemptions, Hi-Tech Parks
India SEZs, IT tax benefits, global IT partnerships
Singapore No corporate tax for IT firms, innovation grants
Vietnam IT education investment, government-backed IT projects
Philippines BPO incentives, strong public-private collaboration
XVIII. Recommended Policy Improvements (Top 5)
1. Increased financial incentives: Tax cuts, subsidies for IT startups.
2. Enhanced IT education & training: Collaboration between industry & academia.
3. Stronger global marketing & branding: Government-led ITES promotion.
4. Regulatory ease: Simplifying cross-border ITES transactions.
5. Cybersecurity & Data Protection: Stronger laws & compliance frameworks.
________________________________________
Section H: Private Sector & Industry Collaboration
XIX. Role of Private Sector in ITES Growth
• R&D Investment: Encouraging AI, blockchain, and automation projects.
• Infrastructure Expansion: Private investment in IT parks & data centers.
• SME Support: Grants & mentorship for IT startups.
• Industry-Academia Linkage: Training programs & job placement support.
________________________________________
Section I: International Partnerships & Trade Agreements
XX. Recommended Initiatives for Global ITES Trade
• Joint Innovation Centers: Partnering with global tech hubs.
• FDI Attraction: Encouraging foreign investment in IT parks.
• Bilateral Trade Agreements: Expanding trade with EU, US, and Asia.
• IT Talent Exchange Programs: Cross-border IT skill development.
Final Thoughts
XXI. Top 3 Recommendations to Accelerate ITES Growth
1. Strengthen branding & global market positioning.
2. Invest in skill development & cutting-edge IT education.
3. Simplify IT export policies & improve ease of doing business.
This structured approach will help boost Bangladesh’s ITES exports, making it a strong player in the global digital economy.
Write up: Jahangir Alam Shovon
Pic: Pixabay
