BCG LICT Brochure

Bangladesh your next ICT Destination

WE ARE COMMITTED TO ESTABLISHING DIGITAL BANGLADESH BY 2021 Sheikh Hasina Honorable Prime Minister of Bangladesh

Message from the Minister’s Desk The IT Industry will be the topmost revenue earner for the country in the coming days Sajeeb Wazed Adviser to Hon’ble PM

At the outset, I would like to use this medium to express my gratitude for your interest in Bangladesh and its emerging ICT sector. ‘Digital Bangladesh’ is an ambitious endeavor for us and a critical lever to realize our ‘Vision 2021’ of becoming a middle income economy in the next 4 years.

We have worked relentlessly towards this goal by heavily investing in the local IT and ITES industry to make it competitive at a global level. We believe that our industry offers all the right elements sought by top sourcing locations in the contemporary scenario; we are young, low-cost, committed, and most importantly, rapidly growing in demand and scale.

Your organization is among the first to be approached with this unique opportunity that Bangladesh has to offer.

We are positive that you will be able to appreciate and assess this differentiated proposition well. As the State Minister for the sector, I commit to making this process of investment evaluation a smooth and fruitful one for you.

We have not only established the machinery to support smooth investment inflow but also set it in motion to facilitate business ease.

I sincerely hope this brochure serves as an initial insight into Bangladesh’s unique position in the ICT industry today. We are all extremely excited as we set course to undertake large-scale digital transformation in Bangladesh and eager to have you join us on this critical journey.

Sincerely,

Talent Development Skill for the 21st century

Industry Promotion Make ICT a growth driver

Connecting Bangladesh

Connect citizens meaningfully

Digital Government Take services to citizens’ doorsteps

Zunaid Ahmed Palak MP Honorable State Minister, ICT Division

Bangladesh is the second fastest growing economy The country is experiencing an exciting phase of large-scale Digitization Fast emerging economy with a promising future

A fast growing economy

A young country

2nd

50%

highest GDP growth (~7%) globally

population under the age of 25 years

Among countries with minimum GDP of USD100Bn

A global innovator

#1 2

1

10th

largest mobile market (130 Mn users)

largest RMG exporter globally

Five Billion Dollar Opportunity Local ICT spend at $1 Bn, poised to be $5 Bn by 2025

Fastest growing ICT market @ 21% ahead of India, Philippines, Vietnam and Sri Lanka

Significant Cost Arbitrage

Bangladesh provides ~10-60% lower cost compared to peers

A surging consumer market

in Mobile Financial Services (bKash) nd

5

reasons for investing in Bangladesh

3

A bright spot with a promising future Recognized for its potential by top evaluators

Dhaka,Tier-2 locations most cost competitive

Large Talent Pool

50%+ Bangladesh population is under 25 years of age >2 Mn annual tertiary enrollments with large-scale youth skilling underway by the government

Fast Scaling Infrastructure

25+ Hi-Tech Parks planned with world-class facilities

Leapfrogging in ICT and Digital adoption

Robust supporting infra; >15k MW power capacity, > ~1.7k Gbps bandwidth

75%+

40%+

99%+

mobile penetration

internet penetration

Geographic GSM cover

130Mn+

70Mn+

98%+

mobile subscribers

internet users

Population GSM cover

5

2

Committed Government Support Customized and attractive incentive packages with dedicated Relationship Management support

4

Bangladesh offers ~10-60% cost advantage compared to peers

Local ICT spend at $1 Bn, poised to be $5 Bn by 2025 Fastest growing market (21%) followed by Sri Lanka (15%), India (12%), Philippines (11%) Public sector spending (75%)

Operating cost for a 500 FTE IT set-up

Private sector spending (25%)

Indexed Annual Operating Cost (at steady state) 0

Digital connectivity ~$1 Bn

Smart National ID ~$200 Mn

60

80

100

120

140

~$ 5 Bn

Airport Digitization ~$500 Mn+

~$ 1 Bn 2017

National Data Center ~$190 Mn

App Development and Maintenance

2025

Customer backoffice

21% CAGR

HO CHI MINH CITY

11

BANGALORE

11

122

82

27

39

111

61

19

100

70

VIZAG

9

17

65

NAGPUR

8

17

64

COLOMBO

8

91

89 Salary and benefits

Automation

23

88

57

Infrastructure costs

ERP solutions

Railway Digitization ~$70 Mn

Strong funding and partner ecosystem

“To ensure quality work and speedy output, we invite experienced global companies” – DG, Central Procurement Technical Unit

12

telecom

Manufacturing Machine Readable Passport ~$180 Mn

CEBU Digital Banking

Core Banking System

8888.88

Smart city ~$550 Mn

CBS (State Banks) ~$150 Mn

40

Banking Smart Grid ~$2-3 Bn

National IT backbone ~$360 Mn

20

“We are looking to outsource 300+ FTE worth IT/ITES services to a reputed firm” – CTO, Leading local bank

DHAKA

8

BANGLADESH TIER-2

6

13

82

50

25

44

Other direct costs

63

Salary and benefits’ is a clear lowcost driver

• Bangladesh offers the lowest entry-level salaries across delivery locations • Local talent at managerial levels adding to cost arbitrage - L3 and L4 salaries are about 20-30% lower than traditional delivery destinations

Bangladesh T-2 most competitive in infra costs

• Subsidized HTP rentals augmenting cost advantage - Rentals at approx. 15 cents per sq.ft. per month • Rentals lower than Indian principle of ‘one dollar real estate cost’ ~1/3rd of Bangalore rentals

Bangladesh to retain labor cost arbitrage going forward due to lowest wage inflation (6.3%) compared to India (9.5%), Vietnam (7.3%), Philippines (6.5%)

50%+ Bangladesh population is under 25 years of age

Existing skilled resource pool can be leveraged

>2 Mn annual tertiary enrollments with large -scale youth skilling underway by the government

Professionals working with CMMI level 5 companies and as a large freelancing community Skilled professionals

A large, young and skilled population Population under 25 years (Mn)

650

2nd youngest population

643 82

54

50

39 8

0 Philippines

Bangladesh

India

Sri Lanka

Vietnam

• Working with CMMI Level 3 & Level 5 firms • Mobile app, website, custom app developers available at scale • Experienced in BFSI, Telco & RMG clients

Java, .NET, PHP and Magento

Global project delivery for clients based out of major sourcing locations such as the US, UK

2nd most preferred after India

6% CAGR in tertiary enrollments

Annual tertiary enrollments (‘000)

10,000

+6%

5,000 0

1,582

2009

DHAkA unIVersITy

BuET

2,008

2,068

2011

2014

CuET

IuT

F&A, DBMS, Risk and Compliance

AuST

With ~65,000 receiving focused training in IT / ITES skills

• Image processing experts • Knowledge of Adobe Illustrator, Photoshop tools

TOP-UP

IT services skilling program (EY-run) Trainees: 10,000 IT & non-IT graduates Key skills: Java, .NET, PHP Collaboration with major Universities

FAST TRACK FUTURE LEADER (FTFL)

IT sector leadership building program Trainees: 1,000 IT industry professionals Key skills: IT management Collaboration w/ top sector stakeholders

FOUNDATION SKILLS

Foundation IT skills training (EY-run) Trainees: 20,000 ITeS professionals Key skills: F&A, Digital Marketing Skills benchmarked to global standards

SKILL ENHANCEMENT TRAINING

Hi-Tech Park Authority skill program Trainees: 3,000 IT industry professionals Key skills: C++, ADM, Drupal Trainings delivered online & in-person

Mid-level manager skill build (EY-run) Trainees: 500 middle managers Key skills: Project Management, SDLC Training imparted by IIT and IIM faculty

INDUSTRY ASSOCIATION SKILLS TRAINING

BASIS and BACCO skill program Trainees: 30,000 tertiary graduates Key skills: Customer support, graphic design, mobile app development

MIDDLE MANAGER TRAINING

• Skilled in non-voice BPO niche areas • Key clients across BFSI, Telco and Pharma verticals

Existing professional capabilities

Extensive graphic design capabilities

Digital marketing, ADM

Strong delivery experience in design and development projects

Seeking lucrative employment Many are students who can be hired post minimal training

Freelancing community Global brands serviced

Non-exhaustive List

25+ Hi-Tech Parks planned with worldclass facilities Significant supporting infrastructure and ICT infrastructure coverage Brick and mortar infrastructure

Customized and attractive incentive packages with dedicated Relationship Management support No Tax on profits till 2024 20 - 100% Tax discount for 10 years from start of operations in HTPs

Major highway International airport

RANGPUR

Domestic airport

Rangpur An integrated township with state-of-the-art facilities. Flanked by five Universities.

Sylhet

RAJSHAHI Rajshahi

DHAKA Kaliakair

15-storeyed multitenant building, 12-storeyed dormitory.

Surrounded by tech colleges.

Jessore Khulna

KHULNA

11-storeyed building with uninterrupted electricity supply, high speed internet & data infra facilities.

CHITTAGONG

162 acres of land for setting up an office complex, sub-power station complete with fiber optical connectivity.

Barisal BARISAL

Chittagong

Custom investment support Dedicated RM, one-stop redressal portal

“ICT is a thrust sector – we are willing to give customized incentives to attract companies into Bangladesh”

~15,000 MW power capacity

key sourcing location

1.4 Kbps/¢

230% growth

8 airports, incl. 3

in last 7 years

100% VAT exemption on IT / ITES office rents

Duty free import of fixed capital and assets

and much more!

~1.7k Gbps

most value for money

100% repatriation facilities for profit and capital

10% cashback on export-oriented revenue

World-class facility with office space, shopping complex, hospital, gym and hotel.

Connected to Dhaka via dedicated shuttle train service.

Supporting infrastructure and ICT

bandwidth capacity

No foreign equity limit on share holding

50% tax discount for foreign employees for first 3 years

SYLHET

Dhaka

80% VAT exemption on utilities in HTPs

28 daily flights per

international airports

- Chairman, Bangladesh Investment Development Authority (BIDA)

“Multiple government subsidies and fiscal incentives being offered to FIIs to establish Bangladesh as an alternative lowcost location”

“Bangladesh is far ahead of other emerging market countries in giving incentives to attract investors and facilitate FDI

- Global Delivery Head of a major IT, ITES company

- Everest Group

Multiple global industry leaders are seizing the Bangladesh opportunity GrameenPhone back-office

Airtel Bangladesh servicing

Long list of reputed global names already present in Bangladesh

Robust ecosystem to support this industry promotion agenda

Ministry intent on making IT an attractive investment decision for global players

Key public sector body governing fiscal and non-fiscal investment initiatives

Government agency developing and managing Hi-Tech Parks as havens for investors

Bangladesh Railways ERP

Bangladesh Investment Development Authority (BIDA)

BANGLADESH BANK

Statutory authority responsible for monetary initiatives aimed at investment promotion

Many more seriously evaluating entry into Bangladesh

Azure Data Center set-up

AWS Data Center set-up Non-exhaustive List

Government commissioned program to facilitate new investment inflow One-stop resolution window Your investment journey starts here!

We look forward to hearing from you

LICT

Name of contact point: Mr. Sami Ahmed Official email ID: ctl.lict@bcc.gov.bd Phone number: +8801913760134

BIDA

Name of contact point: Mr. Md. Ariful Hoque Official email ID: arif@bida.gov.bd Phone number: +8801711220922

BHTPA

Name of contact point: Mr. Atiqul Islam Official email ID: info@bhtpa.gov.bd Phone number: +8801712259696 / +8801713067590