Resource Diversified | 50 years of Bangladesh’s outsourcing industry is the prequel that set the stage for Digital Bangladesh

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With Bangladesh entering its fiftieth year of independence this year, it is time to visit one of the key forces that has been dominant over the course of these years – the not-so-distant dream of a Digital Bangladesh. A key driving area of this Digital Bangladesh has been the Business Process Outsourcing industry, otherwise known as BPO. For those wondering what BPO is, it refers to deploying business-related operations, whether technical or non-technical, to external service providers. Technology is usually at the crux of these outsourcing processes, and the IT-intensive processes that generally tend to be homogenous across companies and are usually the main tasks that get outsourced.

The prominence of Bangladesh’s outsourcing industry has grown significantly, especially over the past couple of decades, reaching new heights of success with every passing year. Since starting its journey in 2009, the industry has been on an upward trend over the years, mostly on the backs of a strapping IT infrastructure, legal documents, international business development, and skilled human resources. It also makes sense from a client standpoint – what would cost a foreign client a fortune to execute locally can be done by Bangladeshi freelancers at a fraction of the cost, with both parties walking away happy from the transaction. Because of this, Bangladesh has been becoming more and more attractive as an outsourcing destination over the years. This certainly merits a closer look at the change that has come. The reasons behind the change deserve deeper observation, along with the pondering of further steps that can be taken to improve efficiency, scope, and the overall current state of affairs.

A Look at the Numbers

The outsourcing industry of Bangladesh began with a mere 300 people only a decade ago, growing exponentially to over half a million just within a decade. From an annual outsourcing-based income of USD 12 million in 2012, the growth has been steady, reaching USD 160 million in 2016, and then rising to a staggering USD 399 million in 2018 – a 33% growth rate in just ten years. Right now, the number stands at a mammoth USD 400 million in revenue, from both local and international clients. On average, over 20,000 new people join the Bangladeshi outsourcing industry every year, boosting the BPO sector even more. Aside from individual freelancers, a significant number of companies specializing in this kind of work have also entered the scene, in numbers far greater than ever before.

It is quite difficult to evaluate the exact size of the BPO industry because it is not a separate borough entirely. However, an overall look at the numbers suggests that there are currently over 500,000 individual freelancers and more than 2,500 agencies involved in providing outsourced services to both local and international clients. Bangladesh is currently one of the top countries that provide diverse high-quality services and offshore centers at some of the lowest and most competitive costs in the world, in line with Vietnam, the Philippines, and India. It is not hard to understand that this has definitely helped boost the aforementioned numbers.

With more than half the population being primely suited for the working class, the BPO industry has seen tremendous growth over the past ten years. The Digital Bangladesh development project has also been a high-priority focus for the government, further fueling the growth of this lucrative sector. One of the most critical ways in which the Digital Bangladesh movement has helped the BPO industry is the initiative to boost internet accessibility to the masses, moving from around 1% to 60% penetration in a very short time, while bringing down internet access costs to a mere 1% of what it used to be.

The ICT Secretary of the country had mentioned that around 126,000 employees are currently working in the IT sector. However, if we take the hardware workforce, freelancers, and IT professionals into account, the total number rises to more than 1.3 million. With over half a million active freelancers, Bangladesh is currently the second-largest supplier of online labor in the world. This number can be further broken down between employment by companies registered under BASIS, BACCO, and e-Cab.

Why BPO?

To understand why BPO became successful, it is important to first understand why BPO became a viable option for companies in the first place. Outsourcing non-core functions enable companies to allocate their time and resources to core functions that result in higher impact for them. At the same time, the countries that mostly outsource their processes operate in high tax rate areas, making their labor very expensive and driving up costs. This is one of the key reasons why firms prefer to opt for offshore services so that they have access to more affordable labor forces, creating positives for their bottom lines while creating a mutually beneficial scenario for all the parties involved in this transaction. While cheap labor is one of the greatest causes for BPO, other considerations like access to innovation, technology, flexibility, and agility also play important roles in its success.

Cause for Success

BPO companies in Bangladesh have done well in many areas: data entry, customer service, and information analysis, to name a few. Right now, the most prominent figures in the outsourcing industry are hopeful about moving toward more complex areas, such as Big Data, AI, Machine Learning, and IoT – because, after all, the bigger the challenges, the greater the rewards to be reaped. This move, however, requires a massive development in the skillsets of the human resources involved, as well as certain infrastructural investments and developments that are not yet within everyone’s reach.

Even though BPO includes many services, a vast majority of them have probably emerged from IT products and services. In 2019, the Honourable Prime Minister’s ICT Advisor, Sajeeb Wazed Joy, spoke at a BPO summit about how it is a crucial element of the Digital Bangladesh movement to create and nurture new entrepreneurs and innovators, with an eye upon the advancement of the Fourth Industrial Revolution. So far, the BPO sector has been majorly clustered in Dhaka, but with ever-growing nationwide access to the internet, even greater progress and potential are being observed in the field, and the government is undertaking new initiatives to foster their growth. A number of hi-tech parks have been established in districts outside the capital to facilitate this. Mustafa Jabbar, the Honourable Minister of Post and Telecommunication, also stated that there are plans to create 500,000 new jobs in the BPO sector by 2024. The government is also taking strides in supporting IT exporters through subsidized resources and tax holidays, as well as helping to ensure ease of business wherever possible.

Other plans the Government has set in motion pertain to forming alliances with IT industries and educational institutions. It is quite evident that BPO will become one of the key boosts for the nation’s economic growth in the near future. The country has also seen a massive improvement regarding access to fast internet and steady electrical power. This required a great deal of active planning to make business processes more consistent to compete on the global level. For example, many steps have been taken by the Government to ensure IT skill development, and internet connectivity has improved by linking the country to the global highway by way of the submarine cable link. The IT infrastructure has massively improved as a result – something essential for the expansion of the BPO industry. A total of nearly BDT 35 billion has been invested in training skilled resources since 2019. and more than BDT 150 million are to be invested this year behind the same goals.

The rise of the gig economy has also helped the BPO sector. Freelancing has become a popular choice of profession among the youth, particularly in their mid-20s. The Oxford Internet Institute states Bangladesh as one of the largest suppliers of online labor, with the workforce focusing on many areas of service from sales and marketing support to creative and software development to clerical data entry and writing and translation. Aside from that, one of the most common business processes to get outsourced is call centers. Some of the key players in the market are Digicon Technologies, Graphic People, Kazi IT, Tiger IT, and Genex Infosys.

Aside from the agencies and companies, the youth fresh out of universities and colleges are also earning substantial sums of money working from their homes. The likes of Upwork, Freelancer, Fiverr, and other such freelancing sites are full of Bangladeshi youth and veterans alike, providing business services of all kinds. From writing to SEO to app development, the country’s got it all, and we have never been more ready to take on the world’s problems and solve them.

Way Forward

Even with the progress made and being made all across the country regarding internet infrastructure and training and development, there is still a long way to go. One of the common patterns observed when studying freelancers has been their general lack of proficiency in speaking English when dealing with international clients. The Government, along with the BPO companies, should actively focus on language development to stay on par with the competition, which has made clear communication a priority for dealing with clients.
Alongside communication, internet penetration should also be ensured in rural areas and villages. Only then can the educated youth residing in those areas join the sector and become a part of the nation’s online workforce.

And last but certainly not the least, scopes of BPO must also be increased from its current gamut of services to banking, education, finance, and the likes.

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