Bangladesh’s IT exports have experienced a significant decline, posing a threat to the country’s efforts to diversify its economy. According to the Export Promotion Bureau (EPB), earnings of domestic IT firms dropped by 7.42 percent in fiscal year 2022-23, reaching $548.10 million. This decline is particularly concerning as the government aims to achieve $5 billion in exports of IT and digital devices by 2025.
One of the main reasons behind this downturn is the country’s failure to produce major IT firms. While the government has focused on promoting IT freelancers in recent years, there has been little effort to upskill individuals in software development and advanced technology. Merely increasing the number of freelancers does not significantly boost overall IT export earnings as their individual incomes are minimal.
To put things into perspective, India’s IT exports are now worth more than $200 billion due to the presence of companies like Infosys, Wipro, and Tata Consultancy Services. These firms earn billions of dollars and provide employment to thousands of people by developing high-end software products. In contrast, Bangladesh lacks such large-scale IT ventures.
Furthermore, the downsizing of tech companies worldwide has resulted in a rise in the number of freelancers. This shift has also impacted Bangladesh’s overall IT exports. Additionally, the clients of Bangladeshi IT firms mostly consist of small startups. As venture capital investments decline globally, these exports suffer negative consequences.
All segments of the IT industry, including IT-enabled services (ITESs), software, and computer consultancy, have been affected. Earnings from ITESs, which include tasks like graphic design and business process outsourcing, decreased by 5.32 percent. Similarly, export earnings from software declined by 19.66 percent, and computer consultancy services experienced a decrease of 8.93 percent. The installation, maintenance, and repair of computer and peripheral equipment services saw a significant decline of 30.72 percent.
One of the reasons for the fall in software exports could be the global inflation that has compelled European and US companies to cut costs, resulting in reduced software imports. Moreover, the hiring of remote developers, which was popular during the Covid-19 pandemic, has shifted back to the traditional onsite work model in the last six months. This change in work model has also contributed to the decline in software exports.
To overcome these challenges, Bangladesh’s IT companies should focus on untapped markets like Africa and Pan Pacific Asia, which offer great potential for earning from IT/ITES services. Additionally, companies should invest in developing their own IT products rather than solely providing services. This approach would help them generate higher revenues.
Experts suggest that the decline in IT exports can be attributed to several factors, including the global recession caused by war and the ongoing Covid-19 pandemic. As firms worldwide reduce their IT investments, Bangladesh’s export volume also declines. Moreover, the type of work done by local companies, such as search engine optimization and photo editing, is becoming obsolete due to advancements in artificial intelligence and robotic process automation.
For Bangladesh to boost its IT exports, it is crucial to shift towards high-value tasks like data analysis and decision-making. This would result in higher payments and a more sustainable industry. Additionally, the country needs to develop expertise in emerging technologies like blockchain to stay competitive in the global IT market.
Overall, the decline in Bangladesh’s IT exports is a cause for concern, highlighting the need for the government and industry stakeholders to prioritize upskilling, product development, and expansion into new markets. By addressing these challenges, Bangladesh can strengthen its position in the global IT sector and achieve its export diversification goals.
