Bangladesh’s ICT export grew in 2022 despite major challenges
Local IT companies’ export revenues had increased by 52% year over year (YoY) to $369 million.
Despite local and global uncertainty, Bangladesh’s expanding ICT sector did rather well in 2022.
Local IT companies in the country saw a 52% year-over-year increase in export revenue to $369 million by the first quarter of 2022 as a result of increasing demand from international customers for software, data processing and IT-enabled services (ITES), according to data from the Export Promotion Bureau (EPB).
The earnings from the July-April period of FY 2021-22 were 35.59% higher than the target set for the sector during that period, suggesting that businesses in the ICT sector are continuing to thrive despite challenges posed by the pandemic.
Amidst the Russia-Ukraine war in 2022, which disrupted almost all economies around the globe – including export destinations of Bangladesh IT services – local IT firms have expanded their global footprint and crossed the $1.4 billion annual export milestone by offering software and ITES.
According to Bangladesh Association of Software and Information Services (Basis), export earnings from IT services are actually higher than what the EPB figures show because the government figures don’t take into account the earnings of freelancers and service providers who bring in their export proceeds through unofficial channels.
Industry experts have pointed out that prior to the current war, Ukraine was one of the top providers of IT and ITES services, and some of their orders have been diverted to Bangladesh as a result.
Additionally, work orders are coming in from EU and US markets as IT firms in those markets are struggling to meet demands as job switching has intensified.
Omar Sharif, managing director of IT and ITES exporting company, focused on the US market, said that their export earnings doubled in the first half of the year thanks to growing demands for call centre agents as well as software from clients in the Texas region. Sharif went on to say that he expects the trend to continue as more and more IT firms face challenges in meeting the needs of their customers.
Shariff said that all the top local IT companies performed well last year and they are expanding. He cited how his organization has been hiring more and more in response to the growing demand of its foreign clients, since the beginning of last year.
More than 350 local firms are now exporting IT products to around 80 countries including the US and the European Union countries, according to Basis.
Syed Almas Kabir, former president of Basis, notes that the Local IT sector will face three key challenges in 2022: foreign exchange regulation and revenue issues, poor internet connectivity, infrastructure and lack of skills for high-end IT products.
He goes on to say that pandemic-induced disruptions to supply chains, soaring US dollar and energy prices and the Russia-Ukraine war, as well as the imposition of new taxes this year on broadband, smartphones, laptops and digital services, have brought digital entrepreneur and consumer suffering.
The National Board of Revenue (NBR) has imposed a 15% VAT on laptop imports, a 10% advance income tax on broadband internet service, and a 5% VAT on mobile phone sales – all of which has adversely impacted the IT sector as well as consumers.
As smartphones and the internet are crucially linked to the IT sector, the government’s decision to impose a 5% VAT on online sales and deliveries in the current fiscal budget has impeded the growth of the e-commerce sector – which is deeply connected to startups of the country and the ICT sector.
