The PRIME research team has conducted the first mission for the case study on private sector support in the Information Technology (IT) sector in Bangladesh in June 2014.
The first step of the case study was the conducting of a feasibility study to determine which sector in Indonesia was most suitable to conduct the case studies. Given the number scope of the activities of both CBI and PUM in ITC, this sector emerged as the most suitable sector for the case study. A desk-study on the sector was conducted. Subsequently, various telephone interviews were conducted with the PUM and CBI managers involved with the activities in this sector in Bangladesh.
The next step was the selection of companies. Based on the list of firms supported by CBI and PUM in the period 2010-2014 a selection of companies was made on the basis of diversity in activities (covering both aquaculture and fishery sectors) as well as geographical clustering (in order to facilitate the visiting of the firms within the short timeframe of the field mission). In addition, a number of non-supported firms were contacted to be interviewed to obtain insights in the comparability of supported and non-supported firms, selection into the programs and other aspects of the processes and mechanisms underlying the impact of the activities. These ‘comparison group’ SMEs were selected and contacted through the local PUM and CBI representatives.
Overview Economy & IT sector Bangladesh
Bangladesh is the world’s eighth-most populous country with over 160 million inhabitants. An estimated 31.5% of the population lives below the poverty line (source: World Bank). This percentage has been steadily declining in recent decades. Bangladesh has a capitalist economy. In 2013, GDP/capita was $900. Contribution to the GDP of three key sectors is as follows: 19% agriculture, 30% industry, 51% services. The largest service sector is the production of garment, which is also by far the largest export sector. Key destinations for export are Europe and the U.S, with Asia gaining share in recent years. Around 6% of exports are services, of which between 25-35% information technology exports. Europe is increasingly becoming Bangladesh’ largest export destination.
Although still small in absolute size, the IT service sector in Bangladesh has been growing rapidly in the past 20 years. The Bangladesh Association of Software and Information Services (BASIS) was established in 1997 with 17 members and has grown to 326 members in 2009. According to a recent BASIS study there are over 800 IT companies in Bangladesh as well as several hundred of unregistered and home-based software ventures. The sector employs over 30.000 people. Internet penetration in Bangladesh has risen from 3% in 2009 to over 20% in 2012 (wiki). Around 5% of households have a computer and of these most have access to internet (World Bank ICT factbook). The Bangladesh government expects that the IT sector will add over 7% to GDP growth in 2021. Expenditures in the IT sector, such as computer hardware, software, networks systems, data processing systems and communications services, were estimated to be around 9% of GDP in 2008 (World Bank).
The first mission took place between December 8-17, 2014. For the first mission we have chosen to focus on SMEs in the region of Dhaka, where the vast majority of ITC firms are located. During this mission 12 SMEs – both supported and supported – as well as various key sector stakeholders (including ITC, WB/LITC, BASIS, Dutch Embassy) were interviewed on a range of topics such as: (i) how firms got into the programs, (ii) how support from CBI and PU was integrated in the organization, (iii) which factors influenced the success with which SMEs could apply the support to the benefit of their organization. The interviews were planned by- and conducted jointly with a local consultant with expertise in the ITC sector in Bangladesh. In addition, a stakeholder conference organized by the sector organization BASIS & CBI was attended during the beginning of the mission.
The research team is exploring possibilities co-funding a sector wide study which is to be implemented in Q3 2015 by the Bangladesh IT-sector organization BASIS. The aim of this study would be to collect detailed data on the characteristics and performance of all SMEs in the IT-sector, including both those firms supported by CBI & PUM (and other development organizations) as well as firms not exposed to these programs.. A second mission will be in 2016 to explore and deepen observations from the first mission and explore enablers and barriers of effectiveness of the support activities. The overall case study analysis will be done late early 2017, followed by a verification workshop to present and discuss the findings.