Building a Digital Economy for Bangladesh

In the last couple of decades, the growing importance of new technologies for business, media, health and public services has stimulated the development of the Information and Communication Technology (ICT) infrastructure in Bangladesh. Automation has allowed the ICT sector to move away from primarily being a hardware vendor industry and focus more on applications, engineering, and business process services. This article will look at the initiatives taken by the Bangladesh government, the key challenges ahead, and what further groundwork needs to be undertaken to make the country an attractive ICT outsourcing destination in South Asia.

In 1964, the first computer was installed in Bangladesh (then East Pakistan) at the University of Dhaka and the Dhaka centre of the Pakistan Atomic Energy Commission (later the Bangladesh Atomic Energy Commission). Since then, computer use in Bangladesh has come a long way and has been widely used to serve multiple purposes. In the 1980s, computers were used as a research and data manipulation tool. The internet arrived late to the country beginning with UUCP email in 1993 and IP connectivity in 1996. In 1997, the Bangladesh Association of Software & Information Services (BASIS) was established as the national trade body to represent the Software and ICT sectors. BASIS started with 17 members, but over the years, the numbers have substantially grown. At present, it has more than 1500 entries in its membership list. In 1998, the government adopted an unprecedently progressive tax policy for the ICT sector and withdrew import duties and value added tax on all computer hardware and software. As computers became more accessible, particularly in higher-level education, it encouraged more students to study computer-related subjects at university. This provided labour for the steadily growing ICT sector in Bangladesh, which aspired to acquire a share of the global ICT outsourcing market, currently estimated to be over $500 billion dollars.

ICT has enormous potential for Bangladesh to achieve a competitive position in the global market. The government of Bangladesh declared the ICT sector as a ‘thrust’ sector and for this reason it created a separate Ministry for ICT in 2001. Having gone through a few changes, the ministry is currently known as the ICT Division. In 2003, the government formed an ICT Business Promotion Council (IBPC) which consisted of public sector representatives and various industry associations who are responsible for promoting ICT related services and businesses in international and domestic markets. The IBPC has established a shared office in Silicon Valley in California, for Bangladeshi ICT companies wanting to do business in the US. Others are planned for European countries, Japan and North American cities. In addition to policy development, the government has provided support for the sector’s growth through favourable laws and public ICT projects to encourage domestic and international investors in the Bangladesh ICT sector. The ICT Division through its subsidiary, Bangladesh Hi-Tech Park Authority (BHTPA) is in the planning process of creating Hi-Tech Park, Software Technology Park, and ICT Training & Incubation Centre throughout the country to support ICT infrastructure such as data centres, provide training for ICT freelancers, and promote innovation. The government’s ICT ‘friendly’ policies are attracting investments in the sector, which could make them ideal strategic partners for international companies intending to venture into the Bangladesh ICT sector. Not only will this harness the potential of the sector, but it will also create huge employment opportunities and skilled human resources.

Digital Bangladesh

The telecom sector, financial institutions, pharmaceutical companies, and ready-made garments (RMG) industry had all started to introduce large scale business process automation projects, which led to a substantial growth in the number of local software development companies in the first two decades following the establishment of BASIS. In 2017, more than 250 Bangladeshi companies exported ICT services to more than 60 countries globally, totalling $800 million dollars, which is approximately 2.2 percent of Bangladesh’s total export value. According to USAID, North America is Bangladesh’s main export destination for ICT outsourcing followed by the UK and other European countries such as Denmark and the Netherlands. More recently, Bangladesh is marketing Dhaka as a low-cost operating destination that offers significant cost savings of between 20-30 percent, compared to its competitors Bangalore (India) and Cebu (Philippines). Because of that reason, Bangladesh has attracted significant interest from key international outsourcing players. Even though the ICT sector is relatively new compared to other established sectors such as RMG, growth drivers such as graduate level freelancers, government and private sector partnerships, make it one of the most promising sectors in the country. As technology is fast changing the world, Bangladesh has the opportunity to take a larger stake of the ICT outsourcing market through public and private sector collaboration.

The race to introduce ICT in the government apparatus has been on the agenda since late 1996, despite the early years being a difficult process. In 2006, Bangladesh started to make strategic infrastructure investments by connecting to the ‘Information Super Highway’ through an optical fibre submarine cable. More recently in March 2021, the Bangladesh Telecommunication Regulatory Commission (BTRC) auctioned off the 4G wireless spectrum band for a record $46.75 million/MHz for 15 years. Since the majority of the users in Bangladesh access ICT services through the mobile network, it is important that the network is robust, the pricing of mobile broadband is affordable, and telecommunications are of a high-quality. However, according to a 2019 report published by the International Telecommunication Union, the specialised ICT agency of the UN, fixed data packages, bundled voice and data packages prices are higher in Bangladesh compared to neighbouring countries of India, Pakistan, Myanmar, Sri Lanka, and Bhutan. Now with the availability of the 4G spectrum, the prerequisites for reducing the affordability gap by the BTRC should be increasing coverage and ensuring service quality. 4G, the technology that has been optimised for mobile broadband, at present covers less than 30 percent of the country. Furthermore, approximately 15 percent of cell towers are connected via fibre-optic lines, which means users are suffering from low data rates, sudden call drops, and many other issues related to poor service quality. To improve coverage and reduce the confusion on data packages, the government has to levy more taxes on infrastructure builders and network providers, otherwise consumers end up paying a high price.

Nationally, the investments in ICT infrastructure paved the way for greater bandwidth, reliable connectivity, and improved resilience. In the past fifteen years, Bangladesh has attained some major achievements in the ICT sector, the foundation for which was laid down in the incumbent governments 2008 election campaign manifesto. To coincide with the fiftieth anniversary of Bangladesh’s independence, the ‘Digital Bangladesh and Vision 2021’ initiative became the blueprint for societal and commercial development advanced through infrastructure investment and development for enhanced connectivity. Public service delivery was transformed through ICT-driven governance, investments were made in technology for an ICT based education system, and national policies were drafted to support these initiatives. However, Bangladesh’s performance has not been satisfying as there is clearly a gap between initiatives and the reality on the ground. United Nations data for 2020 ranks Bangladesh 119 of 193 in the E-Government Development Index and 95 of 193 in the E-Participation Index. If the governments ICT undertakings are to reach its full potential, then effective inter-agency coordination as well as good institutional, infrastructural, and legal frameworks are required.


In 2014, the government developed the National Portal which currently contains more than 45,000 websites and services of different government offices. E-governance is the next step in driving the Digital Bangladesh engine forward whereby the government has been proactively pursuing the digitalization of all of its portals. For instance, the process for passport and visa applications have been streamlined and the government are looking to do the same for all other public services by 2023. Furthermore, through the establishment of a Digital Service Accelerator to expedite and facilitate the e-services of all ministries, the country has managed to issue more than 100 million biometric, microchip embedded, smart national identity cards to its citizens, which is one of the highest volumes in the world. In 2021, the BTRC won a World Summit on the Information Society (WSIS) award in recognition of the BTRC’s Central Biometric Verification Monitoring Platform. WSIS has also awarded Bangladesh a host of prizes over the past seven years for a number of digital and e-government initiatives, which were carefully designed to cater for the younger tech-savvy generation, the middle-aged generation who have adopted technology; and the minority who stay away from technology. The scale of digital governance in Bangladesh has had a tremendous impact on the transformation of the nation.

Starting in 2007, the Access to Information (a2i) now renamed to “Aspire to Innovate”, is a program initiated by the Bangladesh government with support from the UNDP and USAID. The primary goal of a2i is to introduce citizen-centric quality public service delivery by increasing transparency, improving governance, and reducing inefficiencies in delivery in terms of time, cost, and number of visits. In November 2010, the first Digital Centre was inaugurated on a remote island on the southeast coast via video conference. Since then, more than 6,500 have been opened, which combine a2i’s focus on digitising public services and access to them. These one-stop information and service delivery outlets are micro-enterprises run by over 10,000 local entrepreneurs in conjunction with elected local government representatives. By the end of 2017, over 323 million public and private services were provided. Public services include 75 million birth registrations, 2.1 million passport and overseas job applications, and access to land records. Private services include 4 million mobile-banking services, and over 100,000 youth vocational and computer-based training. Over half of the Digital Centres have active agent service points which have allowed for 145,200 people to open bank accounts. In essence, the a2i programme aims to improve quality, widen access, and decentralise the delivery of public services in such a way as to address the issue of digital divide by ensuring the underprivileged, particularly in rural areas, regardless of education or ICT literacy, can access information and services in a reliable and in an affordable manner.

Education and Human Resources

In 2009, the government adopted the National Information and Communication Technology (ICT) Policy with the aim to build an ICT-driven country and give rise to a knowledge-based society. ICT subjects have also been integrated into the secondary school curriculum and are now viewed on par with other core subjects such as Mathematics, English and Science in terms of their value. Although computer and internet-based technologies have been used in the education sector, this has been done in a dispersed and limited way, particularly for e-learning and distant learning in primary, secondary, and higher-level education. This was evident at the start of the coronavirus pandemic, when the government closed all educational institutions on 17 March 2020. The government struggled to establish an e-learning or online education system to cater for the millions of students who lost out on face-to-face teaching, particularly as it had neglected, underinvested, and failed to adopt a modern educational management system that provides equal access and opportunity to students from all backgrounds. Nevertheless, because the internet is awash with free training materials, people from poorer rural and low-income households have used the opportunity to develop ICT literacy skills, which presents the opportunity for them to join the growing online workforce. The government is investing in ICT infrastructure to facilitate access to information to empower its citizens. However, it has a long way to go to enhance democratic values and norms.

Historically, the education sector in Bangladesh promoted a memorisation pedagogy to its students, thereby making the system quantitative rather than qualitative. To prepare for the Fourth Industrial Revolution (4IR) and the challenges it brings, an integrated large scale vocational and practical training program is needed for the existing education system to prepare the future generation. According to a recent study report by PricewaterhouseCoopers, depending on the level of education of workers, 44% in low education, 36% in medium education, and 11% in higher education across all countries will have their jobs displaced as a result of automation. To address this, around 43,000 people were given training under the a2i program in 2020, and almost 400,000 people received training under the Skills for Employment Investment Program in the same year. However, Bangladesh lags far behind other countries in terms of computer lab facilities, high-quality internet connectivity, and adequate infrastructure, issues which hinder the education sector from fully benefitting from the ICT revolution. To facilitate the 4IR, the government must reform the education sector and focus on issues such as life-long learning, blended studying, personalisation of education, and most importantly focus on project-based learning in science, technology, engineering, and mathematics. Only through this can the country ensure a skilled and developed workforce is in place for advanced technological jobs.

The development of the ICT sector has been supported by the Bangladesh government from 2000 onwards when it enacted an Intellectual Property Rights (IPR) law that included copyrights for software and other intellectual properties. In 2001, the government instituted an ICT Task Force and approved an ICT Policy in 2002, as well as established an e-governance program under the ICT Task Force in 2003. Having laid down the groundwork for the sector, the aspirations of the government is for Bangladesh to be a global digital gateway. For this to become reality, the government has initiated multiple projects to develop and maintain a skilled and digital-ready pool of talent, by utilising a young national demographic as its driving force. The country’s public and private universities churn out more than 500,000 graduates every year, and to ready the talent pool to deliver value on a global scale, 65,000 young professionals received ICT-related training in 2018. According to the Oxford Internet Institute, Bangladesh has the second largest pool of online workers in the world involved in software development, creative multimedia, and professional services. To further enhance ICT skills, specialised computer labs were established in all of the country’s 130 universities. Furthermore, Bangladesh is partnering with global technology leaders such as IBM to establish technology centres of excellence with strong emphasis on training professionals in emerging 4IR technologies such as, Artificial Intelligence (AI), the Internet-of-things (IoT), blockchain, virtual reality, Big Data and analytics, and robotics and automated platforms.

Global Trade and ‘Made in Bangladesh’

With the 4IR gathering significant pace, large technology companies will dominate the global market in the field of international trade, especially as the system will heavily rely on software. The impact of the coronavirus pandemic and global recession has led to a fall in revenue for the ICT sector in Bangladesh, which according to industry insiders could be between 20-25 percent for 2020. At the same time, opportunities have been created for companies that deal with business process outsourcing (BPO) of medical and legislative data for North American companies and the medical sector in general. Many North American and European businesses continue to favour BPO as a preferred service delivery model, which is why more than 120 companies export ICT products worth nearly $1 billion to 35 countries. The governments ‘Made in Bangladesh – ICT Industry Strategy’, aims to turn Bangladesh into a world class ICT products manufacturing hub, create employment in the sector, attract foreign investment, and boost export of local products. The draft strategy is structured into three timeframes – short-term (2021-2023), medium-term (2021-2028), and long-term (2021-2031). The aim is to implement 65 action plans over these three periods. Four vital pillars would need to be strategically prepared before the action plans are implemented, and these are: 1) Build local public and private capacity; 2) Create awareness and branding; 3) Research and innovation and 4) Stimulus and policy support. On the whole, the growing strength of the ICT Industry underpins the vital pillars that will support Bangladesh’s transformation to a digital economy by 2021.

In addition to established locations such as India and the Philippines, large outsourcing companies further look to expand to newer locations to save costs, increase efficiency, and address country-related risk issues. This new paradigm has emerged with the rise in new attractive locations which large outsourcers are currently assessing, particularly as a single destination may not offer all of the advantages of efficiency savings. Strategic decisions based on choosing the right outsourcing destination are based on complex series of evaluation and trade-offs and a host of criteria that include: Overall business environment and investment friendly policies; cost and quality of services; government support and incentives; data and intellectual property security; as well as privacy legislation. Today, Bangladesh is silently evolving from a new start-up location to be a serious contender in the global outsourcing market, particularly in South Asia. The advent of cloud computing as a delivery model has made this possible as costs for infrastructural development have reduced. The outsourcing industry in Bangladesh has been formed by different factors as compared to those of India and the Philippines. Its growth has been founded on the domestic market with the increase in demand for ICT services as well as external markets accessed by the global Bengali diaspora. Low labour costs, high programmer productivity, as well as improved proficiency in the English language and analytical ability have enabled Bangladesh to become one of the more attractive destinations for outsourcing.

The coronavirus pandemic changed consumer behaviour by forcing them to rely on online purchases. According to latest BTRC data, Bangladesh has just under 100 million internet users, many of who made the cohort of first-time e-commerce shoppers when many shops began to have an online presence as a result of lockdowns. In 2019, Bangladesh was globally ranked 46th in e-commerce revenue despite it being the 8th most populated country in the world. According to the e-Commerce Association of Bangladesh, e-commerce sales have increased by 70 percent in 2020 compared to the previous year. The combined value of the e-commerce market in Bangladesh in 2019 stood at $1.65 billion dollars, and by 2023 the market share is expected to reach over $3 billion dollars. The e-commerce retail sector is contributing to the growth as it is significant source of foreign investment, which raised approximately $41 million dollars in 2020, the third highest funded sector in the country. Bangladesh started its e-commerce journey without a statutory framework and because of this, issues of trust such as scams and fraud, fake and low-quality products, unexplained delays in delivery, and unsympathetic customer services have plagued the sector. In response, the Ministry of Commerce has launched Digital Commerce Operations Guidelines 2021. The guideline aims to address licence and Tax Identification Number issues as well as instruct e-commerce operators to deliver products within five days once advance payment has been made by the customer. These measures are a start and should give confidence to consumers.

Software companies in Bangladesh have been gradually improving and at present, at least 19 companies have so far achieved Capability Maturity Model Integration (CMMI) at level 3, and 3 at level 5 – DataSoft, LeadSoft, and Southtech. CMMI measures the quality of software with the highest score for this measurement being level 5. Although Bangladesh is currently overshadowed by its Indian peer which has more than 300 companies that have achieved level 3 or higher on the CMMI scale, with improving ICT infrastructure, Bangladesh is fast becoming a significant software exporter. Since its inception in 1998, DataSoft has been in the core field of ICT catering for enterprise, governance and the economy. In 2016, DataSoft introduced an IoT based toll management system in the Democratic Republic of Congo. In the following year it implemented an AI-driven smart house in a large apartment complex in Japan. With knowledge transfer going from Bangladesh to Japan, it speaks volumes for DataSoft’s capacity and ambition as it embarks on this high-end IoT challenge to create a new way of smart living. In 2020, it partnered with Johnson Controls – Hitachi Air Conditioning in Tokyo and launched the made-in-Bangladesh IoT application airCloud Pro, which remotely manages large heating, ventilation and air conditioning systems. DataSoft is also working with Face Recognition Systems for a number of schools in Florida, United States as well as providing monitoring technology for central water management in Makkah, Saudi Arabia. More Bangladeshi ICT companies are involved with 4IR technologies like IoT, AI and blockchain, and as long as they can manage quality of service and innovation, they can make a global impact despite being a late entrant to the sector.


Bangladesh has identified ICT as an important future economic driver of growth for the country and is eager to exploit the opportunities offered by the Digital Age. Through the concept of Digital Bangladesh, the government is promoting a digital ecosystem and prioritising the ICT sector, while simultaneously facilitating business growth for a successful domestic and international outsourcing model. Bangladesh has entered the low value ICT outsourcing space by serving companies in the US, Europe, and South East Asia. The recent boom in the ICT sector indicates that Bangladesh can harness the potential opportunities of digital technologies to not only compete with its regional rivals, but also increase pace to catch up with high-income countries. However, there is still a perception in many overseas markets that the country remains a risky place to do business, the quality of physical infrastructure is not up to standard compared to some other destinations, and that Bangladeshi ICT companies could struggle with sophisticated BPO tasks. Nevertheless, Bangladesh has positioned itself as a key operationally attractive location, an abundant supply of qualified manpower at significantly lower costs, investment friendly policies and rapid development of internet technologies. However, Bangladesh has yet to fully address IPR concerns, which according to the Property Rights Alliance and its flagship publication, The International Property Rights Index, in 2020 Bangladesh’s global ranking was 126 out of 129 countries.  As more companies use Bangladesh as an BPO outsourcing destination, the country’s competitive advantage further enhances, which it has been exploiting by slowly marking its presence as a lucrative and cost-effective choice in the global outsourcing marketplace.

Omar Zahid acknowledges the insights and support of Kofil Ali in writing this article.

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The Global Policy Institute is a research institute on international affairs. It is based in the City of London, and draws on both a rich pool of international thinkers, academics as well as policy and business professionals. The Institute gives non-partisan guidance to policymakers and decision takers in business, government, and NGOs.