EMPLOYMENT GENERATION IN BANGLADESH: ROLE OF ICT

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EMPLOYMENT GENERATION IN BANGLADESH: ROLE OF ICT Course Title- Managing People at Work (H501)

Submitted to: Syed Alamgir Jafar Professor IBA, University of Dhaka

Submitted by: Name Afm Riasat Hossain Md. Raihan Shourov Wazedur Rahman Imrul Huq Md. Shamim-Ul-Alam Md. Mahmudur Rahman Majumder Md. Ferdous Kabir Tanvir Hassan Chowdhury Roll 134 139 143 145 151 154 140 49 Batch 46D 46D 46D 46D 46D 46D 46D 47D

Date of Submission: April 5, 2012

LETTER OF TRANSMITTAL
April 5, 2012

Syed Alamgir Jafar Professor IBA, University of Dhaka.

Dear Sir, With great pleasure we are submitting to you the report on Employment Generation in Bangladesh: Role of ICT that we were assigned as the requirement of completing the course titled Managing People at Work. We have found the study to be quite interesting and beneficial to our current field of study.

We hope you find this report satisfactory. Please feel free to contact us at <riasat_hossain@yahoo.com> if you have any questions and/or comments regarding the interpretation of this report.

Sincerely yours,

AFM Riasat Hossain Md. Raihan Shourov Wazedur Rahman Imrul Huq Md. Shamim-Ul-Alam Md. Mahmudur Rahman Majumder Md. Ferdous Kabir Tanvir Hassan Chowdhury

134 139 143 145 151 154 140 49

46D . 46D . 46D . 46D . 46D . 46D . 46D . 47D .

ACKNOWLEDGEMENT

While preparing the report we found assistance from a number of people employed in the field of information and communication technology and we want to express special thanks to all of them. We would like to express gratitude to our honorable Professor Syed Alamgir Jafar for assigning this term paper. Its a great pleasure to thank to him for providing us important suggestions during the preparation of our report. To prepare this report we have taken assistance from different organizations like Bangladesh Computer Samity (BCS), Bangladesh Association of Software & Information Services (BASIS), Bangladesh Computer Council (BCS), Ministry of Information and Communication Technology and different journals and websites from relevant field. Despite facing different constraints and problems we have completed the report successfully.

EXECUTIVE SUMMARY
This paper presents a picture of current state of ICT (Information & Communication Technology) along with a sobering analysis of role of in generating employment opportunities in Bangladesh. Into 41 years of inception as a state, Bangladesh currently has an export basket worth around $25 billion, which features a predominant coverage by RMG. Bangladesh is doing well in RMG sector but due to unavoidable constraints, it is still miles behind strong competitors like China to grab a significant share of global RMG market. Moreover, in many countries, the Bangladeshi exporters are facing trade barriers in forms of non-tariff and para-tariff. As a leastdeveloped country, Bangladesh is enjoying facilities like rules of origin as well as duty free access, but such benefits are unlikely to last longer. Hence comes the need to expand the export basket to reap the fruits of economic growth currently enjoyed by its fellow Asian countries. ICT has emerged as a major export tool in service sector with rise in outsourcing from developed countries. Countries like India and China have gone far ahead in terms of realizing the potential of outsourcing as well as software export. Though late, Bangladesh has made a foray into this sector, but has yet to live upto the growth expectations. Bangladesh has long been identified as an agricultural country with majority of its people holding agricultural professions. But, due to increase in population, our land is shrinking and non-agricultural employments are on rise. The field of ICT has presented us a window of opportunities when it comes to employment and through proper planning , enormous potential of this field can be utilized to generate jobs as well as boost economic growth.Of late, the Government of Bangladesh has identified ICT as thrust sector and is undertaking various plans and programs to march forward. The field of ICT is classified into following: Hardware, Software Solution, Telecom & Networking Services.The paper has devoted separate sections to three fields, highlighting employment prospects as well as contribution to economic growth. An entire section has been dedicated toward analyzing prospects of growth of this sector.A SWOT analysis on ICT sector has been performed in this paper in order to identify challenges and opportunities. In the end, recommendations have been presented so as to improve the scenario of the sector.

Table of Contents
Chapter-01: Introduction 1.1 Scope of the report 1.2 Objective of the study 1.2.1 Primary objective 1.2.2 Secondary objectives 1.3 Methodology 1.3.1 Data collection 1.3.2 Data analysis 1.4 Limitation of the study Chapter-02: Economic and employment condition of Bangladesh 2.1 Statistics on Bangladesh economy and public finances Chapter-03: Present Scenario of ICT 3.1 Software 3.1.1 Snapshot of the industry: size, composition and market 3.1.2 Technical skill matrix of the software industry 3.1.3 Growth of software industry 3.2 Telecom 3.2.1 Employment creation in telecom Chapter-04: Prospects of ICT in generating employment 4.1 ICT incubation centre 4.2 High tech park 4.3 Export market: new optimism 4.4 SWOT analysis Chapter-05: Industry barriers Chapter-06: Recommendations Chapter-07: Conclusion

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List of Tables and Charts

Table 1: Economically active population in Bangladesh Table 2: Industry at a glance Table 3: Employment creation in telecom
Table 4: Export trends in recent years

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6 8 12
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Chart 1: Bangladesh software and ITES industry Chart 2: Enterprise size distribution (revenue and employee size) Chart 3: Technical expertise of software companies Chart 4: BASIS membership growth
Bibliography

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1. Introduction
Information Technologies have generated profound changes in human society. These are quite different from social transformations caused by earlier scientific advances. The invention of the telegraph in the early 19th century started the modern Information & Communication Technology (ICT). By the 21st Century we witness a dramatic new wave of ICT, leading to massive socio-economic changes. Bangladesh has placed poverty alleviation on the top of its development agenda. It is here that ICT has a critical role to play. It is for developing countries and especially the least developed among them to seize the opportunity and adopt ICT as a priority tool to fight hunger, malnutrition, illiteracy, discrimination against women, children, aged and disabled. The need to invest in ICT infrastructure and especially ICT human resources is paramount. The ICT sector of Bangladesh is one of the fastest growing sectors of its economy. ICT has been declared as the thrust sector by the Government. A comprehensive ICT Policy has been formulated and a National ICT Task Force, headed by the Honorable Prime Minister, has been formed. The Government organization entrusted for the development and promotion of the ICT sector is the Ministry of Science and Information & Communication Technology. Bangladesh Computer Council (BCC), the apex body for promotion of all kinds of ICT activities in the country, works under the Ministry of Science and Information & Communication Technology.

1.1 Scope of the Report

In the course, Managing People at Work, traits of typical working environment are assessed. In contemporary business world, employment trend has radically been transformed to automation. This impact of change in IT is no more different in Bangladeshi corporate houses, though it is trivial. This report strives to identify the predominant factors regarding this change and plots further analysis which to combat challenges in this regard through suggestions.

1.2 Objective of the Study

1.2.1 Primary Objective To explore the strategic opportunities in employment generation within Bangladesh through spontaneous adaptation and utilization of ICT. 1.2.2 Secondary Objectives To present and analyze the condition of ICT industry in Bangladesh. To present and forecast employment condition in Bangladesh. To forecast the role of ICT in employment generation within Bangladesh To match the employment condition with business theories in Bangladesh

1.3 Methodology
To prepare this report the following steps have been followed1.3.1 Data Collection Secondary sources were used such as BASIS and BCS reports, books, articles, newspapers, online journals and so on. 1.3.2 Data Analysis Scrutiny of the collected data were practiced to ensure timely inflow of accurate information.

1.4 Limitations of the Study

Lack of time made it difficult to prepare such a comprehensive report. Secondary sources are not always accurate therefore the results may not portray what the scenario actually is.

2. Economic and Employment Condition of Bangladesh

The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2010 was est. US$1,700 (adjusted by purchasing power parity). According to the International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world in 2010 in PPP terms and 57th largest in nominal terms, among the Next Eleven or N11 of Goldman Sachs and D-8 economies, with a gross domestic product of US$269.3 billion in PPP terms and US$104.9 billion in nominal terms. The economy has grown at the rate of 6-7% per annum over the past few years. More than half of the GDP is generated by the service sector; while nearly half of Bangladeshis are employed in the agriculture sector. Other goods produced are textiles, jute, fish, vegetables, fruit, leather and leather goods, ceramics, RMGs.

A remittance from Bangladeshis working overseas, mainly in the Middle East, is the major source of foreign exchange earnings; exports of garments and textiles are the other main sources of foreign exchange earnings. Ship building and cane cultivation have become a major force of growth. GDP's rapid growth due to sound financial control and regulations has also contributed to its growth; however, foreign direct investment is yet to rise significantly. Bangladesh has made major strides in its human development index. The land is devoted mainly to rice and jute cultivation as well as fruits and other produce, although wheat production has increased in recent years; the country is largely self-sufficient in rice production. Bangladesh's growth of its agricultural industries is due to its fertile deltaic land that depends on its six seasons and multiple harvests. Transportation, communication, water distribution, and energy infrastructure are rapidly developing. Bangladesh is limited in its reserves of oil, but recently there has been huge development in gas and coal mining. The service sector has expanded rapidly during last two decades and the country's industrial base remains very positive. The country's main endowments include its vast human resource base, rich agricultural land, relatively abundant water, and substantial reserves of natural gas, with the blessing of possessing the worlds only natural sea ports in Mongla and Chittagong, in addition to being the only central port linking two large burgeoning economic hub groups SAARC and ASEAN. 4

2.1 Statistics on Bangladesh Economy and public finances

GDP GDP growth GDP per capita GDP per sector Inflation (CPI) : 282.5 billion : 6.3% : $1700 : agriculture (18.4%), industry (28.6%), services (53%) : 10.7%

Population below poverty line: 31.5% Labor force Labor force by occupation Unemployment Main industries : 75.42 million : agriculture 45%, industry 30%, services 25% : 5% : textiles and apparel, jute, tea, leather, telecommunications, pharmaceuticals, cement, ceramics, shipbuilding, fertilizer, food processing, paper newsprint, light engineer, sugar. Ease of doing business rank : 122nd Exports Export goods : $22.5 billion : apparel, ship, jute and jute products, frozen fish and seafood, leather and leather products, ceramics, pharmaceuticals, cement, processed food, fertilizer Main export partners : US 22.1%, Germany 14.1%, UK 8.5%, France 6.8%, Netherlands 6.1% Imports Import goods : $30 billion : machinery and equipment, chemicals, iron and steel, textiles, foodstuffs, petroleum products, cement Main import partners : China 18.9%, India 12.7%, Singapore 6%, Malaysia 4.7%, Japan 4% Gross external debt Public debt Revenues Expenses Economic aid : $24.6 billion : 36.7% of GDP : $12.67 billion : $17.15 billion : $0.957 billion 5

Age group

Activity rate, total population, %

Activity rate, male population, %

Activity rate, female population, %

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 Total 15+

49.7 53.8 58.4 62.1 64.6 65.9 64.6 62.8 61.0 52.6 57.3

58.9 84.9 97.7 99.7 99.8 99.8 99.5 99.2 97.3 87.8 87.4

38.2 26.7 27.5 27.2 28.1 25.6 22.6 19.9 17.1 13.4 26.1

Source: International Labor Organization (ILO)

Table 1: Economically active population in Bangladesh

3. Present scenario of ICT

As expected recently our country business has shown a gradual start in shift in focusing on solution services rather than simply hardware services. With each day, more and more firms are coming into the fore for providing IT solutions based services to not only local but also international firms. Also more and more firms are exporting software solutions to different countries worldwide. At present the ICT sector can be classified into three areas Hardware Software Solution Telecom & Networking Services Since there is no significant contribution of hardware in IT industry, this report report will emphasize on Software & Telecom Industry.

3.1 Software
Software and IT service industry in Bangladesh has crossed a long road over the last few decades. It has matured. The industry no more remains at the sideline. It joined the mainstream. Not only the industry is contributing signicantly in the national income, but also it has been playing very crucial role in creating high quality employment for a sizable portion of young graduates of the country.

Table 2: Industry at a glance The presence of high number of young entrepreneurs is one of the distinctive features of this industry. In last decade many tech savvy young graduates, some of them returning from abroad after nishing education, have started their IT ventures. Despite various local and global challenges, these young spirited entrepreneurs have done remarkably well in building sustainable business organizations through their hard work and passion. Surely, the enthusiasm and resilience of the young entrepreneurs are the main driving force of Bangladesh IT industry. 3.1.1 Snapshot of the Industry: Size, Composition and Market According to BASIS survey, there are over 800 registered software and ITES (IT Enabled Service) 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.

Chart 1: Bangladesh software and ITES industry 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 the industry. Though, compared to other traditional mainstream industry, the contribution for overall employment creation is not signicantly high, but if considered in terms of creating high 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 the country.

Chart 2: Enterprise Size Distribution (Revenue and Employee Size)

With regard to average size of enterprises within the industry, it is interesting to note that, the distribution 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 product companies who have relatively less number of people for signicant revenue. 3.1.2 Technical Skill Matrix of the Software Industry The BASIS survey indicates that the majority of the software companies have taken a strategy to maintain exible technology skill portfolio that includes both open source as well as proprietary technology platforms. Microsoft clearly dominates in latter category. Though web application is still the predominant technological focus area for most of the companies, a number of companies have built technical expertise for core technologies (e.g. C, C++) for some advanced development works including embedded solution or game development. Very recently, anticipating the new wave of mobile centric global IT demand pattern, a number of companies have already started building skill base mobile platforms like Android, iOS, J2ME and QT.

Chart 3: Technical Expertise of Software Companies

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3.1.3 Growth of software industry: Bangladesh Association of Software and Information Services (BASIS) is the national trade body for Software & IT Enabled Service industry of Bangladesh. Established in 1997, the association has been working with a vision of developing vibrant software & IT service industry in the country.

Chart 4: BASIS Membership Growth

3.2 Telecom
The total number of Mobile Phone subscribers has reached 86.579 million at the end of January 2012. The total number of PSTN Phone Subscribers has reached 1028.19 thousand at the end of May 2010 and the total number of Internet Subscribers has reached 28372.03 thousand at the end of November 2011.
Sectors Cell phone PSTN Internet Subscribers 86.558* 1028.9** 28372.03**

* Subscribers in Millions (Source: http:// www.btrc.gov.bd) **Subscribers in Thousands 11

From the above table it can be inferred that telecom industry is showing the highest growth in the field of ICT. As a result, employment had to be increased drastically to support the huge demand for the services provided in the industry. In addition, it is evident that in near future, this industry will employ a large number of personnel in order to carry out the businesses which will put forth a huge contribution in the economy of Bangladesh.

3.2.1 Employment Creation in Telecom:

Table 3: Employment creation in telecom The operators in the telecom industry are scattered in remote areas. . The even distribution of these technologies within societies as well as across the world has reduced "the digital divide." People from remote areas are in the boundary of mobile internet through the advanced technology of telecom operators. They have also created massive employment in those areas which has reduced the poverty to a large extent.

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Summary of employment in ICT No. of IT professionals working within the IT Industry : 30,000 + No. of IT professionals working outside IT Industry (including business enterprises, govt. telecom, NGOs etc.): 35,000 + Yearly no. of graduates from IT related subjects: 5,500+

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4. Prospects of ICT in generating employment

IT sector have been identified as one of the thrust sectors in Bangladesh export policy. Computer software could not record the desired level of export through the sector offer bright prospects for earning foreign exchange. Rapid technological development in recent times has put Bangladesh at the cross-road of a major economic and social transformation. The aggressive strategy and decisive action plans of the government for achieving the vision of Digital Bangladesh by 2021 is opening up avenues for ranges of new and innovative citizen services for all sections of the people. At the same time, Bangladesh IT industry, powered by a highly talented large pool of youth, is now ready to offer itself as the next outsourcing destination. So, government of Bangladesh has taken the following course of action to boost up the sector.

4.1 ICT Incubation Centre

In order to encourage startup companies in software/ITES development and export, the government has set up an ICT Incubation Centre at a rented space of 68,000 sq. ft. in the heart of Dhaka City. At present, about 48 IT/software related companies have set up operations in this facility. The facility has been provided with 24-hour power supply and internet gateway facility from the Development of Infrastructure for IT Applications Project of BCC. ICT service industry which have bright prospect in Bangladesh includes data entry/data transcription services (voice, video), cyber-cafe, cyber kiosks, public call-centre (PCOs), telemedicine, electronic-mail centers, web-site design and maintenance, e-commerce and other web-based applications, electronic-journalism, Tele-banking, e-banking, etc.

4.2 Hi-Tech Park

A High Tech Park with all modern infra-structural facilities is being planned at Kaliakoir near Dhaka with an area of 231.685 acres of land at a cost of 2,522.5 million Taka (43.5 million USD), which will house software and ICT-enabled service industries, electronics and PCB 14

related equipment and products, telecommunications, hardware assembly/component/VLSI design (possibly manufacture also), optoelectronic equipment, bio-technology and related linkage industries, including a hi-tech University to provide technical support and for conducting R&D at the park facilities.

4.3 Export Market: New Optimism

Table 4: Export trends in recent years It is a fact that despite high expectation, over last decade the software and IT service industry could not perform according to its potential in the export front. The export value is still meager compared to other outsourcing countries in the region. As reasons behind this lackluster performance, industry experts have identied a number of problems including lack of proper infrastructure, shortage of qualied IT resources, absence of international branding & marketing activities etc. However, in 2010 and 2011 there have been a number of achievements that have made the industry upbeat about the export trends in coming years.

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4.4 SWOT analysis:

Strength Presence of Skilled workforce Cost value proposition Convenient time gap between US and ours (a strong advantage for IT enabled sector) Government Incentives in terms of Tax and other benefits Opportunities Expand Valued Added Services (VAS) Convergence will become more important Infrastructure Sharing Lower Broadband costs Digital Bangladesh Possible Tax Cuts

Weakness Inappropriate Governing laws and legislations Lack of proper exposure to International markets Infrastructure issues More and more firms are outsourcing their IT related functions to companies in South East Asia With the ever increasing development of the global IT sector demand for IT services is always present Untapped market in terms of supply perspective

Threats Rise of neighbor nations in the IT field Competition base is much more widened Skilled personnel base may become redundant owing to obsolete technology. Lack of clarity on process and terms of Telecom license renewal 3G License uncertainty

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5. Industry Barriers
The Ministry of Information and Communication Technology (MOICT), the government agency responsible for ICT related issues has not been able to achieve the goals set out for EGovernance in the National ICT policy of 2002.

In Bangladesh, Government use of Information and Communication Technologies (ICT), especially those related to the Internet is still underdeveloped. The Government of Bangladesh has inadequate capacity and infrastructure to harness the benefits of ICT in improving public sector management and processes. Use of ICT within the Government is very limited and only a small number of civil servants have Internet and email access. Furthermore, strategic ICT planning skills are in short supply within the Government.

As a result, the Government has not been able to utilize ICT systems and applications to improve the efficiency, transparency and quality of public services and processes. Governments to citizen and business interactions are inefficient and cumbersome. Information stored in paper files is difficult to access and replicate. The flow of information between government agencies is also slow and this delays the decision making process. While a limited number of public agencies have websites, these are mainly informational and these technologies have not been effectively utilized to facilitate and improve information sharing within and between agencies.

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6. Recommendations
Provide schools with Internet access: In many cases it is the most cost-effective way to increase IT literacy and Internet awareness. The youths will effective way to increase IT literacy and Internet awareness. The youths will generally be the most technologically savvy age group, and will also have the highest level of literacy, making them an ideal target group.

There is a good opportunity for local ICT companies to enter into joint venture agreements with foreign companies.

For the development of human resources in the software information of computer science, courses in all universities and selected colleges shall be considered similarly for having a pool of skilled and trained instructors basic computer scheme at graduation level may be introduced.

An Information Technology Village making multifaceted facilities should be established as part of infrastructure development for promotion of export in this sector.

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7. Conclusion
Bangladesh has an asymmetric situation marked by wealth and poverty. The digital divide has widened the development gap. However, we have now devised a technology that can overcome these differences and lead to a global society with minimum poverty and maximum equity. Bangladesh must, indeed, resolutely commit itself to build the Information Society and implement her plan of action. Moreover, we have a large unutilized and unemployed youth force. We can take advantage of this immense manpower by providing them appropriate education and training in ICT, particularly in software and ICT related services. It should be emphasized at this point that a vibrant and quality local software industry is a prerequisite for deriving any substantial success in software export. For this, the use and application of ICT for local market, especially e-governance, has to be promoted.

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Bibliography
1. http://www.htpbd.org.bd/index.php/mission-and-objective 2. http://www.ictd.gov.bd/ 3. http://www.btrc.gov.bd/jdownloads/Annual%20Reports/annual_report_en.pdf 4. http://www.bcs.org.bd/ 5. http://www.bcc.net.bd/ 6. http://www.basis.org.bd/index.php/publications 7. http://www.basis.org.bd/index.php/resource

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