"In the heart of Bangladesh's technological evolution, cloud services are not just a trend – they're the transformative force reshaping businesses. As enterprises embrace the cloud's boundless potential, Bangladesh emerges as a hub where innovation and connectivity converge in the digital skies."
Situated in South Asia, Bangladesh is undergoing a profound digital transformation characterized by a notable upswing in both internet penetration and data consumption. The Financial Express reported, the country facilitates an transfer of thousands of gigabytes of data among its 131.44 million internet subscribers. This substantial data exchange translates into a significant economic impact, contributing to the generation of billions of Bangladeshi taka.
The World Bank's World Development Report 2021 estimates that globally, the amount of data generated is doubling every 18 months. While not specific to Bangladesh, it provides a general indication of the rapid growth.
i. Growing internet access: Bangladesh's internet access is booming, skyrocketing from 5% in 2010 to over 58% in 2024 mentioned in Statista. According to Data Reportal, data usage has tripled since the pandemic, exceeding 4.5 GB per user, driven by mobile-first access and 98% 4G coverage. This opens doors for cloud services to empower businesses and individuals alike.
ii. Digitalization trends: Sectors like banking, e-commerce, and logistics are rapidly adopting digital solutions, leading to significant data creation.
iii. Use of sensors and IoT devices: Industries like manufacturing and agriculture are deploying sensors and Internet of Things (IoT) devices that generate real-time data streams.
iv. Government Policies: In an attempt to tackle data generation and develop the country’s IT industry, the government of Bangladesh is rumored to extend the existing VAT rate of 5 percent for the sector until 2030 which was initially scheduled to expire on June 30, 2023. It is necessary for achieving the export target of U$5 billion and keeping the domestic ICT sector competitive. Private, public and foreign entities have already invested or are in the middle of injecting more than Tk 5,200 crore, with half coming from overseas.
The Business Standard published that the government is actively providing attractive incentives to companies in the IT sector:
Investment Boom: Private, public, and foreign entities have already invested or are in the process of injecting over Tk 5,200 crore into data centers in Bangladesh, with half coming from overseas.
Growing Demand: The exponential growth of data, driven by online services, e-commerce, and IoT, creates an urgent need for data storage and processing capabilities in Bangladesh.
Focus on Tier-IV Facilities: Several new projects emphasize setting up Tier-IV data centers, offering highest levels of uptime, security, and fault tolerance.
Government Support: The government actively encourages data center development through policies and initiatives like the National Data Center project.
To manage the growing data generation, the government has taken initiatives to build data centers. Some major developments include:
Yotta Data Services: The Daily Star published that the construction of a tier-IV hyper-scale data center park by Indian conglomerate Hiranandani Group has begun in Bangabandhu Hi-Tech City, Gazipur. The project has received a Tk 2,000 crore investment and will feature two buildings with 4,800 racks and 28.8MW IT power capacity. Phase 1 is expected to go live in Q3 2024.
DataVolt: New Saudi firm, DataVolt, announced plans for a data center campus in Bangladesh outside Dhaka. The company aims to invest $100 million in developing a data center on three acres of land within Bangabandhu Hi-Tech City, Kaliakair.
Fiber@Home: Felicity IDC Limited, a subsidiary of Fiber@Home Ltd, is setting up two data centers in Kaliakoir and Jashore. The Kaliakoir center, a highly accredited tier III facility, has 250 operational racks and caters to top banks. They plan further investments of Tk 350-400 crore in these centers.
Bangladesh Hi-Tech Park: Expansion plans are underway for the Hi-Tech Park in Gazipur, which could potentially house more data centers in the future.
Development of data centers in Bangladesh has a number of benefits.
For Individuals:
a) Improved Access to Services: More data centers mean greater availability of cloud-based services and online applications.
b) Enhanced Data Security: Tier-IV data centers offer robust security measures, safeguarding sensitive personal data stored online, like financial information and health records.
c) Faster Internet Speeds: Increased data infrastructure can contribute to improved internet speeds and latency, leading to a smoother online experience for browsing, streaming, and online gaming.
For Businesses:
a) Cost Savings: Renting cloud services from data centers eliminates the need for businesses to invest in their own hardware and infrastructure, reducing upfront costs and ongoing maintenance overhead.
b) Increased Scalability: Businesses can easily scale their IT resources up or down as needed, thanks to the on-demand nature of cloud services provided by data centers. This translates to flexibility and agility in responding to changing demands.
c) Improved Efficiency and Productivity: Cloud-based solutions hosted in data centers enable businesses to automate tasks, manage data efficiently, and collaborate more effectively, boosting overall productivity.
Hence, there exists a substantial opportunity for investors to allocate their capital within this sector. When considering data infrastructure, cloud services naturally become a focal point. The subsequent section will provide an in-depth exploration of these particulars.
The services models of cloud services are briefly explained below:
i. Software as a Service (SaaS): This is the most familiar type, where you use applications directly over the internet without installing software on your device. SaaS applications are like renting clothes that are always up-to-date and require no maintenance. You simply pay a subscription fee and enjoy the convenience, freeing yourself from software installations and updates.
ii. Platform as a Service (PaaS): PaaS platforms handle the heavy lifting of server management, allowing developers to focus on building innovative applications. It's like having a pre-built roller coaster track, where developers can add their own carriages and thrills.
iii. Infrastructure as a Service (IaaS): IaaS is like getting raw building blocks. You rent virtual servers, storage, networking equipment, and build your own infrastructure on top of it, just like owning and managing your own data center.
While the cloud services sector in Bangladesh is still relatively nascent, it's experiencing rapid growth and attracting increasing attention. With the development of data centers it creates windows for entrepreneurs to host their products locally. The Bangladesh Standard suggests the domestic cloud storage market currently sits around $20 million. Compared to India's $5 billion cloud market, Bangladesh has significant room for expansion. As businesses increasingly rely on cloud services, this trend is likely to persist mentioned at Statista:
International first-line vendors like Huawei, Google Cloud, Amazon, Microsoft Azure, and Oracle hold approximately 53% of the market.
International low-cost vendors like Cloudflare, Liquid Web, DigitalOcean, and Wasabi account for roughly 40%.
Local players currently hold the remaining 10%, but their share is expected to increase as the market matures.
Soaring internet and smartphone use in Bangladesh is sparking massive demand for cloud services across finance, healthcare, education, and e-commerce. The Business Standard reported that by 2025 it is estimated that 62% of Bangladeshi users will have smartphones, further fueling internet usage and digital services. Studies suggest potential for 1.5-5 million websites, with over 540,000 domains already registered. Businesses are embracing cloud solutions from email to hosting, while popular online platforms like Netflix and Facebook boast millions of local users, further fueling the cloud boom. Government initiatives like the National Data Center (NDC) offering cloud services due to the rising awareness of the benefits of cloud services, such as cost-effectiveness, scalability, and accessibility.
The burgeoning local data center landscape reflects the burgeoning demand for diverse cloud service models in Bangladesh. This shift is further emphasized by the arrival of major players like AWS and MS Azure, leasing rack space to deliver services from within the country.
Regional and Local Providers:
While local providers are rising, they lack the extensive features and global reach of international giants. This leaves gaps for foreign clouds offering advanced analytics, global networks, or specific compliance needs. The Business Standard mentioned, the domestic cloud storage market in Bangladesh is likely to grow $50 million by 2025 from its present, giving an opportunity for local entrepreneurs to innovate before heavier competition arrives. They can focus on filling these gaps and reducing costs for local consumers, potentially building significant market share.
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