Key Revenue and Growth Drivers
The revenue drivers of the IT industry in Bangladesh is influenced by the following factors:
1. Export of ICT Products and Services: More than 120 companies export ICT products worth nearly $1 billion to 35 countries. By 2021, it’s expected that this will increase to $5 billion.
2. Digital Transformation: The growing emphasis on digital technology, cybersecurity, artificial intelligence, robotics, healthcare, and IT is significantly driving the market's growth.
3. Government Initiatives: The government's 'Digital Bangladesh Vision' identifies human resource development, connecting citizens, digital government, and the promotion of the ICT industry as critical to meeting transformation targets.
4. Human Resource Development: The education system produces more than 500,000 university graduates every year, and several dedicated training programs have trained more than 65,000 IT/ITeS professionals.
5. Internet Connectivity: Bangladesh is committed to ensuring 100% internet connectivity by 2021. This has led to more than 93 million internet subscribers and 160 million mobile subscriptions.
Key Cost Drivers
Recent cost driving factors of the IT industry in Bangladesh include:
1. Human Capital: The IT industry in Bangladesh has grown to 250,000 people, with 1500+ companies. The cost of human capital, including salaries, benefits, and training, is a significant cost driver.
2. Infrastructure: Reliable communication and power infrastructure are essential for the IT industry. The costs associated with maintaining and upgrading this infrastructure can be substantial.
3. Technology Investments: Investments in frontier tech centers of excellence with global technology partners such as IBM, and training professionals in emerging technologies – the Internet of Things, blockchain, Artificial Intelligence, Big Data, and analytics are significant cost drivers.
4. Operational Costs: Among the top 250 IT delivery locations, operative costs in Dhaka are 16% to 20% cheaper than Bangalore in India, and 30% lower than Cebu in the Philippines. However, these costs, including rent, utilities, and maintenance, still represent a significant portion of the total costs.
5. High-Tech Parks: In order to ensure a cost-effective space for companies interested in investing in Bangladesh, the government is building 28 high-tech parks around the country and plans to increase this to 64.
Porter's Five Forces Analysis
The Porter’s Five Forces analysis for the IT industry in Bangladesh are outlined below. These factors impact how businesses compete and conduct business in Bangladesh's IT sector, hence defining the sector's strategic landscape.
Porter's Five Forces is a business framework that helps analyze the competitive environment of an industry. Here's how it applies to the IT industry in Bangladesh:
1. Threat of New Entrants: The IT industry in Bangladesh is growing rapidly, attracting new entrants, so the threat is low. However, the need for technological expertise and infrastructure can pose significant barriers to entry.
2. Bargaining Power of Suppliers: The suppliers in the IT industry are primarily the hardware and software providers. Their bargaining power can be considered low due to the presence of numerous suppliers and the availability of open-source alternatives.
3. Bargaining Power of Buyers: With the proliferation of IT companies, buyers have a wide range of options to choose from, giving them high bargaining power.
4. Threat of Substitutes: The threat of substitutes is relatively low in the IT industry. While there are alternatives like open-source software, they may not offer the same level of functionality, support, or user experience as mainstream products.
5. Competitive Rivalry: The IT industry in Bangladesh is highly competitive with many firms offering similar services. This leads to high rivalry within the industry.
