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COLUMN

Catching a ride on the IT gravy train

HABIBULLAH N KARIM
The global offshore IT outsourcing market is estimated at around USS 300 billion for 2007 by market study firms such as Dataquest. AC Nielsen, IDC and XMG. During the past 10 years many people in this country from government policy makers to industry executives have expressed optimism that Bangladesh can garner at least 1 percent of the offshore IT outsourcing market. If this had happened we would by now be looking at an extra US$3 billion in export earnings.
The harsh reality of course is that we are so far from this target that even Vietnam, which entered this market only recently, comes up more frequently than Bangladesh in IT outsourcing literature. So what went wrong?
In short, we have failed to adequately address both the supply and demand sides of the IT offshoring industry in a cohesive and consistent manner since 1997 when the policy planners first took serious notice of this global phenomenon. Let me elaborate.
To sustain and thrive, any Industry needs an ecosystem catering to the full value chain of the particular industry. In
plainspeak, the industry must have all the pieces from supply sources for investment, labour and raw materials to distribution and sales arrangements of its products where the producer sits in the middle, the sourcing forms the backward linkage and distribution forms the forward linkage. In our highly successful ready-madegarments (RMG) industry the backward linkage is primarily the source of fabrics and accessories (both domestic and imported) whereas the forward linkage is the cadre of buying houses taking the products from the RMG factories to globally renowned' distributors and retailers. The investment and labour or management components of the industry have matured over the last 20 years to a point where these are not major constraints or irritants to the RMG ecosystem. We see a very similar situation in the Indian IT offshoring industry that now commands 11,5 percent of the global market.
So what about the IT offshoring ecosystem in Bangladesh? Simply it does not exist. The supply side of an IT offshoring ecosystem requires cheap sources of IT profes-
sionals, internet connectivity and investments, while the demand side requires direct access to markets in developed economies. While wages of IT professionals in our country are highly cost-competitive, our internet connectivity costs are among the highest in die world. Furthermore we have only one submarine link to the global internet trunk, limiting our options for uninterrupted connectivity. The biggest missing link in our ecosystem is the lack of access to global markets and lack of investment heavyweights entering the field. Ten years ago when we started
making forays in the global IT offshoring market that market was already carved up by India. Ireland and Israel. To make a dent in that market we needed an aggressive marketing apparatus that the private sector on its own was incapable of.
Let us look at the Philippines, a country that has now reached the 1 percent target and whose population is similar to Bangladesh. Whereas Bangladesh is slipping behind in the race to capture any respectable share of the IT offshoring market. Philippines is aggressively
chalking up plans to gain a 10 percent of the market share by 2010. The government of Philippines together with Business Processing Association of Philippines (BPAP), launched their marketing campaign in New York in September last year together with the American Chamber in the Philippines. The event was addressed by the Philippines Finance Secretary Mr. Gary Teves who said that in 2001 the Philippines employed around 2,000 people in FT Offshoring which grew to around 250,000 by 2007. So what are we going to do in the face of such fierce competition to snare a piece of the global action in IT Offshoring?
The caretaker government recently reconstituted the ICT Task Force headed by the Chief Adviser. The ICT Task Force was set up in 2000, with its first meeting at the beginning of 2001. In tire eight years since its formation the committee met a total of 4 times and achieved little.
In the reconstituted ICT Task Force the government has kept a provision to induct 5 distinguished members of the ICT industry in addition to the ex-officio representation
from FBCCI. BASIS and BCS. I hope the government will utilize this proviso to co-opt one representative of the Internet Service Providers Association of Bangladesh, one CEO-level representative each from the mobile telco operators and landline telco operators, one representative from the armed forces not below the rank of a two-star general (usually the armed forces are the biggest users of ICT in any country) and one NRB representative of high stature in the global ICT industry and make the ICT Task Force more dynamic and effective.
XMG's 2007 survey concludes that the IT offshoring market will grow to $450 billion by 2010. It's not at all unrealistic to shoot for a 1 percent share of this market if we are to believe the optimism expressed by international organizations such as Japan International Cooperation Agency (JICA) who put Bangladesh ahead of Vietnam in a recent study. Can we be brave enough to embrace this optimism?!
Habibullah N Karim is a software entrepreneur, he can be reached at hnkarlm@gmail.com