entreprenureship development assignment

8/22/2019 Entreprenureship Development Assignment

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An Assignment

On

Software Business MakingDifferences

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Date of submission: 21/07/2013

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An Assignment

On

Software Business MakingDifferences

Submitted to:Md.

Lecturer

Department of Marketing

Comilla University

Submitted by:

Name ID NOMd. Faizul Haque 12030707

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Date of Submission: 21 / 07/ 2013

INDEXDescription Page No

Abstract, Introduction 4

Software Development Process 5-6

Snapshot of the Industry: Size, Composition and Market 7Business Expertise of the software Industry

Industry Growth and Manpower Scenario of Software Industry8

PPP in gov. Policy and Budget

Current Status Of e-Government In Bangladesh9

Benefits of Electronic Business and on line banking system

Software prices10-11

Infrastructure ,Hardware and technical back-up Local market

opportunities ,Market threats12

Export of ICT services .Key areas of operation 13Investment scenario ,ICT industry employment scenario

ICT Business Promotion Council (IBPC)

ICT education in Bangladesh .Political risks with the industry

14-16

Total Market Analysis 17-21Conclusion And Recommendation 22

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ABSTRACT

Improving software process to achieve high quality in a software development organization isthe key factor to success. Bangladeshi software firms have not experienced much in this

particular area in comparison to other countries. The ISO 9001 and CMM standard has

become a basic part of software development. The main objectives of our study are: 1) Tounderstand the software development process uses by the software developer firms inBangladesh

2) To identify the development practices based on established quality standard and

3) To establish a standardized and coherent process for the development of software for aspecific project. It is revealed from this research that software industries of Bangladesh arelacking in target set for software process and improvement, involvement of quality controlactivities, and standardize business expertise practice. This paper investigates theBangladeshi software industry in the light of the above challenges.

INTRODUCTION

As computer technology offers efficient and high performance information processing, it hasgot popularity over the home and office users in the whole world. By the decade of 1990, inBangladesh, it has also taken an important role. Since during this time PCs become more userfriendly and attractive, the number of users had been increased. Beside the general users, inBangladesh, a number of software developers have been increased as well. Many ofComputer Science and Engineering graduates form public and private universities as well ascomputer diplomas from training institutions are getting employed to the local softwarecompanies. As the time goes, the overall development of skill of software developers has

been increased with respect to Bangladesh.

Bangladesh stands out distinctly as a potential software-exporting nation, considering theanalytical and technological ability of its people. Bangladesh is one of the potential countrieswhere software development is to be grown as a software industry. According to BangladeshAssociation of Software and Information Service (BASIS), there are around 250 companies,are working closely with the development of software for local and international market fordifferent information and communication technology services 1. Bangladesh is a country,where the only surplus property is the human resource. Considering the earning of foreignexchanges and removing of unemployment problem, software industry is a very prospective

field. To make this field more profitable, several plans has been done by the government andprivate organizations in the last several years. The Government of Bangladesh made an indepth study on how the software sector of the country could be designed to suit the needs ofthe global market. To follow up on the outcome of the study and to monitor the issuesassociated with the sectors growth and development, a high powered National StandingCommittee (NEC) on software export has been formed. This standing committee has broughttogether the concerned government offices organizations and leaders of the software trade towork in unison to study the problems and prospects of the sector 2.

Table 1 shows the business application nature of software service of software industry atBangladesh 1. It is notable that each software company in software industry develops

multiple category of software service.

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Table

Products/Service Category % of Companies Offering Service

Accounting & Financial Management 69%

Inventory Management 59%

Human Resource Software 58%Web Site/Web Application Development 57%

ERP (Enterprise Resource Planning) 48%

Software Implementation & Integration 46%

Billing 43%

Asset Management 38%

POS (Point of Sales) 37%

E-Commerce 36%

Data Entry/Data Conversion 34%

CRM (Customer Relationship Management) 32%

E-Governance Application 29%

SCM (Supply Chain Management) 27%

Data Warehousing 23%

Access Control 22%

Mobile/Wireless Application Development 18%

E-Learning 17%

Data Security 14%

Gaming Software 6%

SOFTWARE DEVELOPMENT PROCESS:

A software process is a framework for the tasks that are required to build high qualitysoftware 3. Therefore, software process defines the approach that is taken as software isengineered. It may be an ad-hoc process devised by the team for one project. But the teamoften refers to a standardized documented methodology which has been used before onsimilar projects or one which is used habitually within an organization. Some managers whoare held accountable for software development may seek to find the commonalities in theefforts of their organizations. If those managers are process oriented then they may seekmethodologies or other proxies which can serve as templates for the software development

process. Another reason why software development process is important is that a processprovides organizational stability and more control to its activity. Scott et al. 4 discussesimportant requirements for software process improvement (SPI) that should be built on

developed and proven SPI technologies like CMM, SPICE, and ISO 12207. However, asthese models are built actually for large companies, they may not be appropriate for Smalland Medium Entrepreneurs (SMEs), where they have short deadlines, are dynamic projectsand have tight budgets. Another paper of Kautz, Hansen and Thaysen 5 has investigated thesuitability for IDEAL model for small software enterprises, though it was actually based onthe experiences of large organizations. IDEAL model was developed by SoftwareEngineering Institute at Carnegie-Mellon University, USA (SEI). This model, as originallyconceived, was a life-cycle model for software process improvement based upon theCapability Maturity Model (CMM) for software, and for this reason, this model uses processimprovement terms. IDEAL model defines five phases: Initiating, Diagnosing, Establishing,Acting and Learning. The Authors implemented this model in a small Danish companynamed NP and deployment of IDEAL model took 10 weeks for them, one week initiating,

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three weeks diagnosing, and six weeks establishing and acting in parallel. McGuire &McKeown 6 showed how an ISO 9001 certified company adopted CMM level 2 first andlater adopted level 3. The authors pointed that ISO 9001 had similarities with CMM level 2;however, differences were more pronounced and profound with CMM level 3. McGuire &Mc Keown placed a UK-based software companys example in this regard and examined that

it takes five(5) steps to adopt CMM in an ISO environment, which are:

1) Establish a Software Engineering Process Group to change the culture of theorganization,2) Perform a gap analysis between ISO 9001 practices and CMM key practices,3) Make a plan, schedule and detail the specific tasks, target a timeframe,4) Provide training that address the CMM specific roles, and finally5) Measure the improvement. Each of the companies is following their own software

development policy and software development standard if any. Some of the companies gotcertified that they are following ISO9000-1/2/3: 1994/2000 for their software development.Some of are trying to upgrade their certification up-to CMM level. But there are no unique

guidelines for software development for all companies as well as for the nation so that eachof the software developer can follow the unique standard guidelines throughout the country.These rules of software development come through the software development life cycle(SDLC). To develop international standard software, it is important to know the SDLC.

Software and IT service industry in Bangladesh has crossed a long road over the last fewdecades. It has matured. The industry no more remains at the sideline. It joined themainstream. Not only the industry is contributing significantly in the national income, butalso it has been playing very crucial role in creating high quality employment for a sizable

portion of young graduates of the country. The presence of high number of youngentrepreneurs is one of the distinctive features of this industry. In last decade many techsavvy young graduates, some of them returning from abroad after finishing education, havestarted their IT ventures. Despite various local and global challenges, these young spiritedentrepreneurs have done remarkably well in building sustainable business organizationsthrough their hard work and passion. Surely, the enthusiasm and resilience of the youngentrepreneurs are the main driving force of Bangladesh IT industry.

Snapshot of the Industry: Size, Composition and Market

According to BASIS survey, there are over 800 registered software and ITES (IT EnabledService) companies in Bangladesh. There are another few hundred of unregistered small and

home-based software and IT ventures doing business for both local and international markets.

The total industry size is estimated to be around Tk. 1,800 crore (US$ 250 million).Approximately 30,000 professionals, majority IT and other graduates, are employed in theindustry. Though, compared to other traditional mainstream industry, the contribution foroverall employment creation is not significantly high, but if considered in terms of creatinghigh quality employment (average monthly compensation over Tk. 15,000 per month),software and IT service industry is surely one of the top graduate employment sectors in thecountry. BASIS recently carried out a survey on three hundred of its member companies.Analysis has been done on business nature, business volume and size of companies. Over70% of the companies (please see chart 2 next page) are found to be involved in development

and maintenance of software for their clients. A number of those are simultaneously engagedin providing different IT enabled services for their clients as well. In total, almost half of the

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surveyed companies are involved in providing range of IT enabled services (data/formprocessing, graphic/web design, content management etc.).

Interestingly, a significant number of companies (18%) have developed software products orproductized services; most of those have been developed over time after repeated installations

for multiple clients. A number of companies are in digital content development and deliverybusiness , mainly providing content services through mobile platform.

One of the most encouraging recent trends in the industry is that, leveraging on recentpositive changes like larger Internet user-base, better connectivity as well as introduction ofnew payment methods (online payment through credit card and mobile payment), a goodnumber of companies (around 45%; some dedicatedly and some along with their coresoftware or IT service business) are focusing or diversifying on different web based servicesthat include specialized portals, listing services, e-Commerce, e-Learning, paymentintermediary services etc. A number of these ventures have done quite well in terms of

popularity as well as financial viability. Off late, some companies are also developing web

applications based on cloud/SaaS delivery model. These emerging new business and servicedelivery models might define the new wave in the coming years for Bangladesh IT industry.With regard to average size of enterprises within the industry, it is interesting to note that, thedistribution is quite spread with respect to both revenue size and employment number.Majority of the companies are in the range between 10 to 50 people in employee size. Similar

pattern can be found in revenue size of the companies. However, there are few productcompanies who have relatively less number of people for significant revenue.

Local market still constitutes the major part of business of the software and IT serviceindustry (63% of BASIS member companies are focused only in local market). There has

been a consistent growth (around 20-30%) in this market over last few years. The trend also

shows that the market is maturing in terms of both client requirement and solution responsefrom IT companies. Although there is high level of interest for IT jobs in public sector,market share is still dominated by private sector. From a survey carried out on 110 ITsolution companies who are focused mainly in domestic market, it is found that a large partof them provide business application solutions including ERP, Accounting software, HRsoftware, Sales Automation, Inventory Management system etc. to private sector businessenterprises.Banking and other financial sectors (including capital market, Insurance, Leasing, MFIs) stillcontinue to be the major focus for a large portion of IT companies. In the banking sector, thecore banking software market is dominated by foreign software (though in a number of caseslocal solution companies are working for implementation and maintenance for those

software's). However, interestingly a good number of local IT solution providers are workingwith banks for providing range of ancillary services related to banking. Because of theincreased activities in Bangladesh capital market during recent years, a number of companieshave developed solutions for merchant banks, brokerage house and issue managers. Asregulation in the micro credit/micro finance institutions (MFI) are getting more stringent andmore pressure is on for operational efficiency, a number of MFI solution developmentcompanies are targeting this otherwise untapped market.

Manufacturing sectors including RMG, textile, pharmaceuticals and other consumer goodsindustries have created sustainable demand for IT solutions like ERP, HR informationsystem, production and financial management solution. On the other hand, service industries

like telecom (second highest after financial sector within service sector), retail & wholesale,

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healthcare (hospitals, diagnostic centers etc.), education (University, schools and colleges),publishing/media and real state have created sizable market space for IT solution companies.

A good number of software and IT service companies who provide non-specialized/nonfocused services are surviving on business demand generated across different client

industries. Examples of such general IT solutions are accounting solution, web sitedevelopment, CRM, sales automation, office management, security solutions etc.

The local software industry has been trying to keep pace with the most recent developmentgoing on across technology and communication space. A number of companies aredeveloping apps for mobile and other hand-held devises. Some companies are also providingservices (platform or content service) in the new business models like pay per use, primarilyusing the mobile distribution channel.

Business Expertise of the software Industry

Response provided in Table 8 reveals the information that although most of the softwarecompany follows documented contract review procedure, they generally do not use anydocumented procedure for involving sub contractor. Even though few companies engagedsub contractor for developing their product they do not generally do not have anyorganizational policy to manage sub contractor. After sale services is very crucial forsoftware business. But substantial percentage amount of software firm do not maintaindocumented procedure for after sales service. Most of the company gives priority on trainingwhich will be beneficial for the software industry in the long run. The statistical techniques tocontrol and verify process capability of the organization need to introduce more in thesoftware company in Bangladesh.

Industry Growth and Manpower Scenario of Software Industry

Now a days Software customers are clearly going global and are demanding quality. It isimportant for software organizations to understand all the rules for self-improvement and fordoing business in the international marketplace. At present, more than fifty (50) software andIT service companies have been exporting their services to 30 countries in the worldincluding USA, Canada, Middle East, Japan, Australia, South Africa and some of the SouthEast Asian and European countries.

Table 9. Growth of Software Export in Bangladesh2000- 2001 2001- 2002 2002-2003 2003- 2004 2004-2005

(till February, 2005first eight months)

Export in US$(in Million)

2.24 2.8 4.2 7.2 7.38

Yearly Growth 25% 51% 71% 77%(over same period

last year)

Another important thing is that a knowledge based software industries required the qualifiedhuman resources in the market. The following table shows the academic background of the

technical professionals employed software firms. From the table 10, it is clear that only 44%professional are from Computer science graduate and 56% from other education background.

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CURRENT STATUS OF E-GOVERNMENT IN BANGLADESH

The World Bank in 2007 ranked Bangladesh 92nd among 132 countries and last among 5countries in the South Asian subcontinent, with regards to its ICT infrastructure. It is also

ranked 123rd and 5th in South Asia, in the e-services adoption index.

However, despite being behind most South Asian counterparts, Bangladesh has been catchingup quickly in the field of e-Government. According to UN's E-Government readiness report2008, while most other countries (including India and Sri Lanka) in the region have slippedsignificantly in the rankings, Bangladesh advanced 20 steps between 2005 and 2008.Bangladesh's Readiness Index value of 0.29 was not that far behind India (0.38), although itwas still some distance from the regional leader Maldives (0.45). Nevertheless, Bangladeshwas still behind all neighbors except Nepal, Myanmar and Afghanistan.

PPP IN GOV POLICY AND BUDGET:

The present government has put emphasis on building a "Digital Bangladesh", and alsodemonstrated its intention to pursue PPP projects widely during its 5 year tenure. The FY2009-10 budget gives due importance to PPP (creating three new expenditure heads focusedon PPPs with about 3% of the total budget allocation), although not explicitly in the e-Government sector.A major step forward in the quest for digitized government has also come recently in theform of the National ICT Policy 2009, which has also mentioned PPP as a mode for

providing e-services to citizens. The ICT policy 2009 and the ICT Roadmap, however, havefailed to shed specific directions regarding the possibilities of PPP in e-Governmentimplementation. The policy has noted the importance of encouraging public private

partnerships, promising to "wholeheartedly encourage use of PPP for new e-citizen serviceinitiatives" in the short term, and to "develop PPP as an appropriate model for e-Citizenservice delivery" in the medium term.However, these policy statements are yet to be realized through specific initiatives. PPPshave so far been governed by the Bangladesh Private Sector Infrastructure Guidelines(BPSIG), which is the de-facto PPP policy. However, these guidelines did not cover ICTsector or e-Government projects, although e-Government is a vast sector and ICT componentis integrated with many developmental activities. Recognizing the importance of having anew standard PPP policy, the gov is now preparing a national PPP policy which will replacethe existing BPSIG. The Board of Investment (BOI) of the Prime Minister's Office (PMO)has finalized this draft PPP policy in March 2010, entitled "Bangladesh Public-PrivatePartnership Policy & Guidelines" which has been sent to the Cabinet Division for furtherapproval. This PPP policy is being designed to attract both local and foreign investors and

partners (including NGOs) in ten explicitly mentioned development sectors, which includesInformation Technology (IT).However, it is not clear whether e-government projects aresubsumed under the IT sector or considered to be an inseparable component of eachdevelopment sector.

According to the draft policy, a PPP Cell will be established in the Board of Investment,under the PMO; and line ministries and executing agencies will encourage local investorsthrough awareness creation and motivation to participate in various projects. The draft policy

has included 16 modalities for implementation of PPP related projects which are Build-Operate-Transfer, Build-Own-Operate, Build-Own-Operate-Transfer, Capitalization, Design-

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Build-Finance-Operate, Securitization, Build-Transfer, Build-Lease-Transfer, Build-Transfer-Operate, Lease Management Agreement, Management Contract, Rehabilitate-Operate-Transfer, Rehabilitate-Operate-Maintain, Service Contract, Supply-Operate-Transferand Joint Venture Agreement [a brief information on popular PPP mode is given in Appendix3]. It remains to be seen whether this new policy adequately covers the area of e-

Government, and how well the government can define a regulatory and legal framework forthe operation alization of PPPs

Benefits of Electronic Business and on line banking system:

Managers at various levels of organizations especially in underdeveloped country likeBangladesh will have to play vital roles to successfully implement e-business. They may actas strategic leaders at different stages of managerial capabilities. They are the key forces toinitiate dedicated strategy to change from the traditional business processes to the technologydriven business processes. This is not involving only huge costs as a transition period oforganizations but adaptability of the human being in the new processes to adding values are

required. Due to global changing environment, to succeed in the global arena as well asdomestic business, organizations often forced to do business in the electronic ways.Moreover, to succeed over the competitors organizations needs to be changed their strategyand they are gradually become bound to adopt e-business. At these stages successfulimplementations depends on all the stages of the Hierarchy of the Management i.e. startingfrom the Top Management level to the lower level management. On line banking systemworks as a complementary factor of electronic business. Though electronic business has agreater set of field but on line banking can work as a 14 subset of the e-business .Benefitsderived form the e-business largely depends on successful implementation of the business

process.

Managing external pressure as well as internal pressure should be coordinated by the anagementso that e-business can supersede traditional business processes of organizations .Moreover,ansformation process requires huge cost especially organizations of Bangladesh. Greater andcautious resource management especially financial capability should be handled by themanagement of the organizations. Flexible innovative changes processed by the management ofthe organizations are required for the organizations to succeed in the transformation process.Changing processes should consider socio-economic and cultural environment as well as laborsurplus country. Business process reengineering may be designed with the aim that personnel ofthe organizations will use the technological functionalities which will lead to furtherenhancement of the organizations. As such strong motivations by the management towards alllevel of personnel of the organizations are required. Managers functionality to implement e-

business is a stressful task for which their mindset should be strong and they should consider notonly global considerations but also consider domestic situations. E-business can add valuethrough knowledge management as it helps to attain new services to the customers. Successful e-

business depends on sharing of strategic knowledge for which dissemination of the informationand free flow of knowledge around the globe is required. On line banking can provide twentyfour hours banking facilities.

Through electronic data interchange customers are able to draw money from one branch toanother. Letter of credits can be sent through SWIFT or electronic fund transfer from one countryto another can be feasible. Actually on line banking provides faster, reliable services.Encryptionand decryption can be used to send money from one place to another. As such on line

bank management handles customers in a far better way. In Bangladesh decision makers aregenerally reluctant about advancement of technology. It is difficult for people who do not have

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much technical knowledge to understand the necessity of adoption of new technology. So thepace of computerization in various offices, business enterprises and sectors are low. Anotherproblem of initiating E- business is that in our country policy makers, managements are generallyreluctant to accept something new. As such management prefers to maintain current businessmodel and thats why they are reluctant to introduce some thing new. To avail the advantage of

E- business, organizations including banks have to invest for software, hardware, infrastructuredevelopment etc. The owners are uncertain about the positive return on investment astransformation from manual system to electronic transaction involves huge cost. This is a greatdrawback to implement E-business at a full swing. But the organizations are not interested toinvest because they consider huge expenses.

In Bangladesh most of the business organizations are running centralized manner. As suchvisions, missions, goals of the top management of various organizations are very important. Topmanagement should change their mindset and like Bangladesh Bank, they should encourage e-

business process. Top management views are reflected to the mid level management and lowerlevel management. Unfortunately most e-business efforts fail for non-performing visions,

missions, goals and tactics at the business processes of the organization.Software prices :

BEA uses a hedonic price index (as well as a matched-model index) in the estimation of realprepackaged software investment for 198593, but this index declines more slowly than BEAscomputer price index, and its impact is largely offset by BEAs use of cost-based estimates inconstructing the price indexes for the other two components of software-custom software andown-account software (charts 1 and 2). BEAs price index for custom software is a weightedaverage of the prepackaged- software index and a cost-based price index; the price index for own-account software is a pure cost-based index. (A paper describing BEAs methodology forsoftware .By construction, BEAs cost-based indexes assume roughly zero growth in multifactor

productivity A number of observers have questioned this conservative methodology, but untilBEA is able to obtain better indexes, the contribution of software investment to real GDP growthis likely to be little different than its contribution to current-dollar GDP growth, so

Infrastructure

Bangladesh has been building its infrastructure support for the IT industry over the years. Thisyear, the country ensured global connectivity by connecting to the Information Super Highwaythrough SEA-MEA-WE 4 consortium. High-speed Internet connectivity through fiber opticscables costs about USD 2.67/per month for 1 kbps connection. The existing VSAT backbone willcontinue to remain the major Internet infrastructure until the new Backbone (Submarine CableConnectivity) operates 100 per cent. There are as many as 150 ISPs in the country and the

competition among Internet service providers has resulted in significant improvement in theirservices. Most of the ISPs are now providing 24/7 on-site technical support. In relation toinfrastructural weaknesses, all the stakeholders identified stable electricity as the top priority. In

general, the country lacks adequate electrical supply. The companies operatingin Bangladesh, therefore, must make alternative arrangements to ensuresmooth power supply, This has developed a strong market for alternativepower equipment in the form of UPS (Uninterrupted Power Supply) and IPS(Instant Power Supply). For smaller projects, the cost addition due topower shortage may not be significant, but for larger projects the cost of aproject may increase for this reason.

Hardware and technical back-up

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According to research by Springboard Singapore, the volume of thehardware market in Bangladesh is USD 129.4 million at present. Locallyassembled and often unbranded machines dominate the pc/servermarket. However, most of the international giants (HP, IBM, and Dell etc.)are present in the market through their local agents.

Local market opportunities

In recent times, Bangladesh has become one of the prominentoutsourcing destinations in the world. Danish companies could easilyventure into this readily available opportunity. The telecom boost in thecountry presents another opportunity for the IT companies as supportservice to the telecom companies. The major focus of the telecomopportunities lie in the form of mobile content development and valueadded service solutions. The government is yet another big opportunitythat is worth pursuing. To act on its declaration of ICT as thrust sector,

the government is seriously taking initiatives towards public

Market threats

The Bangladeshi IT industry has many of the right ingredients for success,however, according to the industry stakeholders, some existing/perceivedthreats for the industry remain. At individual company level, the businessvision (or lack of it) of the local IT entrepreneurs is the biggest threat.Groups of companies have many times started in IT as a chance venture.This naturally, in most cases, did not succeed. On the other hand, the lackof finance for the real IT entrepreneurs has limited them from reaching

their true potential. The countrys IT policy is favorable, yet, Bangladeshfaces a big threat of resource crunch in the near future. Brain drain andattractiveness of other business sectors are reducing the number ofprofessionals pursuing an IT career. Bangladeshis are used to short termprofit from investing in the textile business. Many of the investors fromthis sector are also expecting short-term profit in the IT business. Themanagement style in Bangladesh is largely based on a top-downapproach. Apart from clashing directly with the Danish/Scandinavian stylei.e. each person is responsible for its own job it also means thatBangladesh is short of middle management skills. In Bangladesh, theprocess of legally establishing a company takes a long time. It can take up

to six months to obtain the necessary licenses, approvals etc.The existing supply of Internet access is somewhat constrained. The costsof Internet access are relatively high, and even at high costs no optimalconnection is yet available. China, Vietnam and similar countries pose afuture threat to the Bangladeshi IT industry. The industryprospect/potential for those countries is very similar to Bangladesh. Inaddition, they enjoy more stable political situation. The even field in thelower strata of IT industry created by the fact that India moving tohigher strata provides equal chance for all potential countries likeBangladesh, China, Vietnam etc.

SWOT

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The specific success factors that Danish companies could leverage whenentering the Bangladesh ICT industry are:

Business Vision (taking IT as core business) Management Practices (proven effective management practices and

business acumen) Business linkages (links with prospective clients in Nordic/EU regions) Regional knowledge (knowledge of the business practices of the regionsfrom where many outsourcing projects placed) Danish Governments presence (support for relationships betweenDanish and Bangladeshi companies)

The Danish companies, however, need to improve on some aspects if theyare to succeed in angladesh. The foremost success factor is to improvelocal knowledge. Similarly, the HR management needs to be customizedto suit the local culture. Overall, the communication barriers are to beaddressed properly.

Entering Bangladesh would help Danish companies in expanding theirmarket and would help them enter new markets. In the long run, Danishcompanies could venture into the potential Asian markets and they couldcapture the SME market niche in Bangladesh and in other regions.However, the road to success presents some challenges for Danish ITcompanies. The lack of methodical approach of Bangladesh IT companies(and IT professionals) and their lack of information could become majorhurdles in business planning. On the operational aspect, the training

requirement and communication barrier has to be addressed properly toachieve the desired outcome.

Export of ICT services

According to the Bangladesh Bank source, export earnings from Softwareand ITES was USD 27.01 million in the fiscal year 2005-06 registering ahigh growth of 113 per cent from the previous year (2004-05). Thefollowing chart shows the Bangladesh software and ITES export earningfor last five years.

Key areas of operation

BASIS carried out a survey among the 152 participating companies inSOFTEXPO8 2005 to find out some key industry trends9. One of thefindings of this survey provides a good insight into the client/industryfocus of the software companies operating in the Bangladeshi market. Thefollowing section reproduces the findings of the BASIS survey ofoperational domains of the software companies The industry analysts findthe survey results positive because of the fact that a significant proportionof the software companies (57 per cent) are focusing on the government

sector. The obvious implication is that the public ICT projects areincreasing in numbers

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and attracting business people towards them. The focus of thegovernment spending on IT is targeted towards e-governance and officeautomation. The public sector is the largest domestic segment forsoftware (IT) companies in Bangladesh. Greater access to this sector hasdefinitely provided added impetus for the local ICT industry. Among other

sectors, the textile and garment and the pharmaceutical industry standout (both at 60 per cent). The textile and garment industry is the largestexport sector in Bangladesh. The international exposure and competitionof the sector have prompted the garment manufacturers to streamlinetheir productivity. The most effective and readily available option was theintroduction of process control through automation. As a result, manyexport oriented garment companies opted for phase-by-phase automationand thus created opportunities for the local IT companies. Similarscenarios exist in the pharmaceutical industry. However, contrary togarment and textile industry, the pharmaceutical industry focuses onfulfilling the needs of the domestic market. Another key operational areafor the IT companies is the financial sector. In recent years, the banks aregoing online creating a huge demand for software and networksolutions.

However, so far, foreign software dominates the banking sector. Thehardware/server market segment in Bangladesh is doing relatively good inits operations. A recent Springboard10 research reported that BangladeshiPC/server market generated growth of 23.8 per cent in Q1 2006 (Jan-Mar),compared to the first quarter of the preceding year.

From a buyer perspective, large enterprises are currently the dominantsegment of the market, contributing around 23.0 per cent of the totalPC/Server shipments11. The large corporations particularly in bankingand telecom are the key customers driving market growth. Thegovernment segment showed strong growth of 30.7 per cent annuallymainly due to the increased automation activities of local and nationalbodies. The SME market represents a significant portion of shipments(33.9 per cent) in Bangladesh but receives limited focus from IT vendorsdue to the substantial opportunities in the government and largeenterprise sectors.

Investment scenario

The lions share of the ICT market in Bangladesh is dominated by theinternational giants like Microsoft, Oracle, Sun etc. The off the shelf(packaged/license) software were introduced in the local market in themid 90s. As a result, they enjoy a market dominance compared to theindigenous customized software segment. In addition, the multinationalcompanies working in Bangladesh brought in their global software.Though, recently they have been working with local companies inprocuring their ICT requirements. One other aspect of the investmentscenario is the presence of international software vendors through local

agents. Microsoft in this regard leads the way.

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Mainly, the initiation and implementation process of IT projects at theorganisational level is done through market exploration and an internaloperational requirement assessment. The exploration based on theinternal assessment mainly takes place in the form of market research foravailable solutions. In this case the more established companies (MNCs

etc.) have their own in-house IT consultancy support available. For theother segments, the proper IT planning is sometimes missing. In light ofthat, an opportunity exists for IT consultants. There are a few suchconsultancy support companies who have started their formal operation(Microsoft, IBM etc.), but in most cases advice is sought from individualswith IT knowledge.

ICT industry employment scenario

The total number of IT professionals available in Bangladesh is more than25,00012 . The booming telecom industry has created a large IT related

employment. As a result, the technological professionals are switchingover to the telecommunication industry leaving alarming many vacanciesin the other ICT segments. The most severely affected is the softwaresegment.

The BCS reports that in 2006 the number of IT professionals increased by12.50 per cent. When considering the yearly growth, the table shows thatthere is a slow growth in the 2003-04 period. The reason behind is thatthe introduction of telecom companies encouraged many aspiringprofessionals to choose a business education instead of IT studies.However, the trend in the number of IT professionals is gradually

increasing as the career opportunities and salaries are increasing.

According to BASIS, more than 300 local software companies employabout 5,500 software professionals. In 2005 (during SOFTEXPO 2005),BASIS carried out a survey on 1,100 employees working in 55 companies.This section discusses the general findings from that survey. Section 2.0(Labour force) includes other findings (skill matrix, educational level etc.)of the same survey.

Industry experts are of the opinion that the significant proportion of thejobs in the non-coding segments (Project Management, System Analysis

etc.) is an encouraging sign. They contribute to the commitment andseriousness of the local software companies. Keeping in mind the everused 80-20 rule for management and technical work in software projects,the experts believe that with the increase in larger projects, the non-code professionals in IT companies could establish their prominence moreeffectively and efficiently. The fact that non-technical people are moreand more required in the IT industry, have encouraged many of the newgraduates from the universities to choose a career in IT companies inareas of business development and customer services. However, thecurriculum in the universities for business graduates do not include anyspecialization in busi-ness and IT (IT Marketing, IT Sales etc.).

Consequently, there is a gap between the academics and the people fromthe IT industry. However, trade associations with the help of various

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industry development partners are in the process of bridging the gapbetween the requirements from the industry and the output of a skilledworkforce. In this process, the biggest hurdle for the universities is thelack of impetus for the new students to decide on the IT all along. In mostcases, other industry segments absorb the business graduates for their

different operations. Moreover, as business and IT is still a relatively newfield, top class business graduates are reluctant to engage themselves inthe IT industry.

ICT Business Promotion Council (IBPC)

Public and private sector representatives related to the ICT sector haveformed an ICT Business Promotion Council. The Council is responsible forpromoting ICT related service and businesses in foreign as well as localmarkets. IBPC has already established a shared office in Silicon Valley inCalifornia, USA, for Bangladeshi ICT companies interested in doing

business in the US. Very soon, offices in Europe and other cities in the USwill be established.

Bangladesh Association of Software and Information Services (BASIS) isthe national association for software and IT related services companies ofBangladesh. Formed in 1997, the association has been working with avision of developing a vibrant local software and IT service industry in thecountry. In light of this vision, BASIS has been working hard to create ITawareness in the society through underlining the high importance ofmaking the country more IT capable for a better future of the nation. At

the same time, the association has been working hard for creating anenabling environment for the software and ITES industry of the country sothat it can flourish by rightly utilizing the huge market potential both athome and abroad.A nine (9) member Board of Directors (elected by directvoting by the members for a two-year term) runs BASIS. The Board ofDirectors has the overall responsibility for running the affairs of BASIS andsetting policy guidelines for its secretariat. Aside from the elected boardof directors, different sub-committees comprising of members deal withdifferent policy and development issues. BASIS has a strong secretariatheaded by the secretary. The secretariat is well staffed to deliver variousmember services and to carry out programs and activities in the different

areas as specified within the broad goals of the association.

Political risks with the industry:

The government of Bangladesh has declared the ICT sector as one of themajor thrust sectors. This has prompted suitable/encouraging governmentpolicies for the sector. However, the sector is not immune to the generalpolitical risks. The countrys political risks do not directly fall under thescope of this report and therefore, it is suggested to consult other reportsto learn about the general political risks associated with business. In thisregard, the Doing Business, published by World Bank could be very

effective.

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ICT education in Bangladesh:

In recent years, the growing number of private universities has providednew and broader opportunities for aspiring IT professionals to pursuerelevant education. However, as the IT orientation is not quite widespread

in the lower/secondary education system, the industry relies solely on thecompetencies the IT professionals obtain during their graduation/ postgraduation levels. Companies are stating that the students have a lot tolearn when they have graduated and as a result, special training and onthe job training play a vital role in developing the workforce in thesoftware companies.

At present, most of the university level IT education is concentrated oncomputer science and engineering courses15. According to apresentation16 by Mr. Fahim Mashroor Chowdhury, CEO, Bdjobs.comLimited, the industry demand for IT professionals per year is about 2,800.

The estimate is based on an assumption of a 50 per cent industry growthand minimum 20 per cent attrition rate. Each year the number of ITgraduates from different universities is 2,000. However, about 50-70 percent of the graduates choose a non-software firm or go abroad. As aresult, it is estimated that each year the industry faces a net shortage ofqualified workers in the range of 1,800 to 2,600.

According to Mr. Chowdhury, the industry faces few specific problems inavailing adequate IT professionals18. The following table present theseproblems as well as the underlying reasons. Though the industry facesproblems in the HR pool, the inspiring fact of the matter is

that the local software companies are seriously attempting to change thescenario. The company chiefs and top management have admitted theirdifficulties, which is a good sign in finding a solution. BASIS members havealready identified specific steps for improving HR aspects of the softwarecompanies. Some of these are organisation sponsored training, inductionof financial institutions, long-term internship and influencing

Universities and training institutions

According to statistics of the Ministry of Education, there are 73universities in the country .Of them 21 are public universities while the

other 52 are private universities. In terms of technical education,Bangladesh University of Engineering and Technology (BUET) is theleader. University of Dhaka (Computer Science and EngineeringDepartment), Shajalal University of Science and Technology (Sylhet) andKhulna University are also producing good quality IT professionals. Thesepublic universities enjoy the quality intake advantage over other privateuniversities. The difference in the intake is mainly the result of the cost ofeducation. The students in the higher education level in Bangladeshmostly come from middle class families. The high cost of education atprivate universities is still out of reach for most of them. Naturally, the

government supported public universities become the obvious choice. Inaddition, the public universities also provide better resources and

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environment (faculty, infrastructure etc.). The private universities are newin the education system and most of them lack the basic requirements foruniversity studies. Some of the private universities, however, in the recenttimes (last 2-3 years) have done well in IT education

The students pursuing IT education in the country have showntremendous potential over the years winning international programmingcontests, developing effective antivirus software and many other suchachievements are very common for Bangladeshi IT students. In thisregard, BUET and Dhaka University have been most successful. Amongthe private universities, North South University, Ahsanullah University ofScience and Technology, American International University of Bangladesh,BRAC University, Daffodil University and East West University are some ofthe leading institutions in IT education.

In addition to the universities, there are number of Diploma/Vocational

Institutions in the country who provide IT education. There are 20government and 87 private polytechnic institutes in the country. Theseinstitutions mainly offer diploma courses on engineering subjects. Most ofthese centers are owned and administered by the government throughthe Technical Education Directorate

An unauthenticated source reveals that there are more than 1000 privateand public sector computer-training institutes offering IT skill developmentat various levels. However, the interviews with the stakeholders revealeda different scenario.

The industry experts (interviewed company CEOs and BASIS leaders)opined that the training facilities in Bangladesh for the ICT industry areinadequate. Especially, the types of training provided are not in line withthe industry requirements. Most of the training institutions providetraining in basic computer skills. Few specific institutions (NIIT, Aptech,Base etc.) provide advanced level of training courses. However, they lackthe relevance to the actual needs of the software companies.Professionals have the option to acquire certifications by MicrosoftCertified Partners.

Internet bandwidth availability

Bangladesh has joined the Information Super Highway through submarineconnectivity in 2006. Bangladesh Telegraph and Telephone Board (BTTB)is the official custodian of the new connectivity backbone. The BTTBauthority has recently publicized a utilization plan of the submarineconnectivity. The following sections provide a summary of the plan andthe upcoming Internet connectivity scenario of the country.

Bangladesh connects itself to the submarine cable connectivity throughthe SEA-MEAWE- 4 consortium. Available capacity for BTTB in this cable is468,000 MIU* Km which may have a maximum of 64 STM-1 (10 Gbps) at

the landing station. MIU is Minimum investment Unit that is equivalent toone STM-1. Out of BTTBs total capacity, 50,000 MIU* Km has already

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been contributed to the common pool of the consortium for sale. TheBTTB further plans to enhance the capacity of the cable in differentphases with minimal investment. Minimum capacity unit for this cable isSTM-1 i.e. BTTB has to utilize the capacity at STM-1 or multiple of thatbetween any two landing stations.

Although the connection to the Submarine Cable Super Highway presentstremendous improvement opportunities for Bangladesh, the presentsituation in terms of Internet connectivity is not at all satisfactory. Thepresent VSAT backbone connectivity is slower in nature and is prone totechnical difficulties. The new Submarine backbone on the other hand, stillhas to be streamlined.

Electricity and power stability

The problem with electricity is one of the major hurdles the software

companies in Bangladesh face. Through the ICT incubator26, there arespecial arrangements for an uninterrupted power line, but the othercompanies with offices all around the city must arrange for alternativepower sources. In this regard, most companies opt for an electricgenerator for supporting the larger electricity requirement. They use UPS(Uninterrupted Power Supply) and IPS (Instant Power Supply) forequipments and computer systems. The generators and UPS/IPS arewidely available in the market and are quite reasonable in price. Whenasked to comment the cost addition to production due to this alternateelectricity support, one CEO of a local company said that the problem has

been prevailing for last 2-3 years and in recent times it has deterioratedfurther. He does not see immediate improvement in countrys powersector. He strongly suggested on arranging for an alternate power sourcefor any new ventures. However, he said that the additional cost is veryinsignificant for his company and it increases the cost by about 0.5 percent. Most if not all IT joint ventures have assured that there is a powergenerator.

Bandwidth cost:

The BTTB Internet connection sets the tone for the trend in connectivity.The full ranges of andwidth/Internet connection costs are available at theBTTBs website (http://www.bttb.net). The following sections describe thegeneral cost of getting an Internet connection.

Overall hardware market:

The PC/Server market in Bangladesh is estimated at USD 129.4 million(2005). Springboard, a Singapore based Research Company revealed thisin one of their recent research reports27. The report also said that themarket growth rate in the first quarter of 2006 (Jan-Mar) was 23.8 per centas compared to the first quarter of preceding year. The laptop market

expanded 24.0 per cent in 2005.

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During Q4 2005, 48,340 PCs were shipped from international locations toend-users in Bangladesh for a value of USD 37.7 million, up from 34,884units in Q3 2005. For the full year (Jan-Dec), the PC shipments expanded16.4 per cent to 162,400, generating a value of USD 129.4 million.Aggressive sales and marketing activities undertaken by MNCs have

helped increase PC market growth.

The large enterprises (companies with more than 500 employees) andgovernment sectors collectively accounted for almost half of totalPC/server shipments in 2005. NGOs are also an important source offunding for IT investment in the country, but generally, spending is routedthrough the public sector. In the private enterprise market, banks andtelecom companies are largest on IT spending. The consumer and SMEmarkets represent significant long-term promise, but both segments arecurrently in the infancy stage.

Servers/workstation availability:

Locally assembled, often un-branded, machines continue to dominate themarket, holding over 75 per cent of the PC shipment market shares. Mostof the international giants also operate in the local market. In cases ofbrand equipment, the international giants usually rely on local distributorsand dealers. IBM, HP and Dell all have local distributors in the country.

Availability of technical support:

The position of the technical support for PC/server hardwaretroubleshooting is at a satisfactory level. The vendors have enoughtechnical knowledge to provide after sales support to their clients. Mostlarge organisations29 usually have an Annual Maintenance Contract (AMC)with the vendors. The AMC is customizable in accordance to the clientsneeds. In some instances, the larger users prefer having their owntechnical support team; however, the general support from the vendors isadequate for smaller organizations.

The interviews with local hardware vendors revealed an interesting aspectregarding the after sales support. They opined that, the local agreement

of maintenance is much more effective than a international warrantyagreement. Though, as agents of the international giants, the designatedlocal distributors are legally bound to take in the complaints from thecustomer, however, they may not necessarily be bound to take theresponsibility of providing the technical support by themselves. Theyusually communicate with the regional office and hand over theresponsibility to them. In case of a local agreement, the vendors wouldprovide the support locally by using their own resources. In the latter casethe support is more prompt and could be extended even to 24/7 support.

Key industry competencies:

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According to the industry stakeholders/experts, the major competencies(or comparative advantages) for ICT industry in Bangladesh are as follow:

Cheap labour:

Bangladesh has one of the cheapest rates for work force among thesimilar business estinationcountries. Concerning the ICT industry, the highly skilled labour forcecomes at a significantly competitive price. In addition to that, the ITprofessionals in Bangladesh are very good at absorbing new learning(easily trainable).

Another great advantage with the Bangladeshi work force is their longer-term commitment to specific work areas. However, despite theircommitment to their work areas, they are not always necessarilycommitted to their organisations. The reason for the persistence with aspecific work area could be related to the fact that the people working inthe ICT industry in Bangladesh are not offered endless opportunities (as isthe case for many of the neighbouring countries). Therefore, ITprofessionals build their skills in a particular area. As a result, clusters ofexperts with different skill sets are available in Bangladesh. However,most companies need to customize their HR policies to support a long-term commitment of the work force.

Quick learning/easily trainable

The Bangladeshi work force as well as the business people aretraditionally renowned for heir quick learning abilities. The work force,especially, has historically strong abilities in mathematical and logicalanalysis processes. Bangladeshi students have won a number ofprogramming and mathematical competitions globally. Because of theircapability to quick learning, the Bangladeshi work force can easily betrained to acquire specific technical knowledge.

Geographical location

Geographically, Bangladesh has the potential to become a business hub.

Naturally, utilizationof this advantage would result in growth in all industries. Furthermore, asnonnuclear country, Bangladesh has added advantage for countries thathave restrictions in collaborating with nuclear countries.

Changed scenario in neigh bouring countries

India is no doubt the leader in South Asia when it comes to outsourcingand IT as a whole and India is a pioneer. However, in recent times Indiahas moved up in the ladder and is now operating in higher and morecomplicated levels of IT. In addition, salaries in India have increased. Thiscreates a vacant position for an outsourcing partner who can operate at

the lower strata of outsourcing. As a result, Bangladesh gains an edge onthis segment of market.

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Favorable government policies

As was explained above (please see section 1.9), the government ofBangladesh has declared the ICT sector as one of the major thrust

sectors. Added to special policy benefits for the ICT sector, the favorableinvestment policies for FDI should encourage companies from othernations to venture into the Bangladesh ICT industry.

Availability of financially capable investors

Local business investors in Bangladesh are well equipped to invest instrategic alliances and partnerships. The willingness of the investorscombined with their local business knowledge could be utilized for betterreturn on the investment. Another aspect of these local investors is thatthey have proven records of accomplishment in international businesses

in other sectors such as textile. These people have funds and are ready toinvest money in new industries. As a result, the foreign investors feelcomfortable working with them. However, in this regard, the localinvestors have more or less never favored the IT investment, asintellectual investment in IT businesses sometimes make the returninvisible.

English proficiency

Bangladeshi people have higher competencies in English compared tocountries like China and Vietnam. However, the language proficiency is to

some extent skewed towards professionals with better schooling. Ingeneral, the English skills need to be improved for Bangladeshi ITprofessionals to be able to compete in the global market.

New outsourcing destination

Bangladesh is relatively new as an outsourcing destination. This meansmany unexplored areas of business. More and more investments arecoming in and the industry is experiencing growth. The attractive businessprospects are bound to encourage local and international investors in thenear future.

Software application competencies

In response to the question regarding the specific software applicationcompetencies for Bangladesh ICT industry, the respondents of theinterviews were of the opinion that Bangladesh is not yet ready forcomplex outsourcing support. They think that any for- 5 Key competenciesin Bangladeshs ICT sector

eign company intending to enter Bangladesh IT sector, should start withsmall projects such as web development, desktop publishing, data entry,3D animation and back office development. For venturing into morecritical software solutions such as ERP and CRM, the proper resources

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need to be built gradually. However, all the respondents were veryoptimistic about the potential of ICT in Bangladesh.

Potential/upcoming

The telecom sector in Bangladesh is rising at great pace. The number ofmobile phone users in Bangladesh has crossed 15.50 million in August2006 with Grameen Phone as the leading operator31. An encouraging factabout the mobile phone usage is Bangladesh is that it is not restricted tothe urban areas only; rather it is wide-spread throughout the country. Thebooming mobile communication has provided new business opportunitiesfor software companies. The concentration of these opportunities atpresent lies within value added services. However, the assurance of localsupport would definitely influence the major telecom companies toprocure their operational software from local market A similar segmentthat came right after the telecom boom is mobile content development

opportunities. Many of the local companies are capable of providingsupport to the local and international telecom companies.

The government commitments/initiatives towards e-governance haveprovided a very important opportunity for the software companies.Additionally, the ICT 4D propositions though not directly designed with abusiness focus would result in new business opportunities for ITcompanies.

International:

The international threats from the neighboring countries (especially India)have always been present. Recently, the business threats coming fromIndia has changed. India is going into an upper segment of theoutsourcing/IT support market, which has created an even field for thesecond category countries. In this regard, countries like Vietnam andChina could become large threats for the Bangladesh IT industry.

CONCLUSION AND RECOMMENDATION

Bangladesh poses some advantages regarding software development, which is very important

to compete in global arena. One of them is low labor cost. Tjia 10 reports that cost perprogrammer is much lower in Bangladesh, which is more than 50% including overheadcompared to India. High programmer productivity and wide spread of English havesignificant influence in software industry of Bangladesh.

According to our survey 54% of the workforces are graduates from non-IT subjects anddiploma/certificate courses in IT. Generally, they are trained in professional IT courses fromdifferent internationally recognized IT institutions established in Bangladesh. This justifiesthe analytical and technological ability of Bangladeshi people.

With this competency, Bangladeshi software companies have to exploit the advantages of

having no major cultural differences with other client countries as have reflected so far.Software process and process improvement is the key to success for a software company in

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software business. Without a process, a software organization is not capable of producinghigh quality software. Without defined and measured software process, a software companyfails to determine its business goal. Software companies of Bangladesh are facing the

problem of adaptation of specific software process model. Our research has identified someproblems. These are lack in target set for software process and improvement, lack in

involvement of quality control activities, and lack of standard business expertise practice.This paper is a quantitative study and is based on questionnaires and interviews of softwarecompanies personnel. The total amount of software companies in Bangladesh is more than250 if we include the software company those are not enlisted with BASIS and we havecollect data from around 50 companies. Our result does not show the whole picture ofBangladesh. Therefore, the study is exploratory. The results are not conclusive at this stage.A further study is needed to explore the extensive scenario of the software developmentstandard of Bangladesh.

entreprenureship development assignment

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