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The Financial Express

Bangladeshi software firms take a hit from Covid

| Updated: September 24, 2021 17:04:07


Bangladeshi software firms take a hit from Covid

Like most of the businesses in Bangladesh, the pandemic Covid-19 has brought the software and ICT sector, especially the smaller and medium ones, to its knees.

Over a third of computer software firms have suffered so severely during the pandemic that they could not even renew membership with their business association.

They were supposed to renew membership with the Bangladesh Association of Software and Information Services (BASIS) by February 2021 but some 28 per cent did not do so until August.

According to the apex body of software traders, 1,212 out of 1,672 members, which is nearly 72.49 per cent, renewed their membership to date.

BASIS insiders said at least 10 members shut their business entirely due to Covid-19, but none officially informed the association of the matter.

According to a BASIS internal survey, some 81.50 per cent of the members suffered a substantial revenue decline, thanks to the pandemic.

Slapped by revenue losses, declining work orders and the absence of a dedicated stimulus package, 50.29-per cent of members had to cut human resources by 10-50 per cent to sustain their businesses.

It, however, finds that 49.71-per cent of members kept recruiting in the hope that the situation would rebound for IT/ITESIT and IT-enabled businesses with a dedicated incentive or any special grant.

BASIS president Syed Almas Kabir says the outbreak of the deadly virus has badly affected the software and ICT sector like any other sector.

"We earned $1 billion from exporting software and ICT products last year. But 70-80 per cent of our global work orders have been cancelled this year for Covid-19 and the subsequent countrywide shutdown."

"We estimated that around $800 million equivalent of international work orders was cancelled as well as $500 million worth of domestic work orders," Mr Kabir cited.

The sector cumulatively lost $1.3 billion worth of business due to the pandemic, he uttered. The survey also finds that 5.78-per cent of members failed to obtain any loan under the government's stimulus package, forcing them to apply for traditional high-interest loans.

Only 12.14-per cent members could receive loans from banks at 9.0-per cent interest, thus putting ICT business in a more vulnerable situation, Mr Kabir said.

He says the situation can be eased and better only if the government thinks of initiating a dedicated stimulus package for the ICT industry.

However, software export suffered a blow as it dropped 30 per cent year on year to $47.44 million between July and May, according to the export promotion bureau.

The earnings stood at $73 million in the corresponding period in fiscal year 2019-20.

Mr Kabir said software exports mainly declined due to the closure of offices in the European nations amid bouts of lockdowns.

According to former BASIS president Habibullah N Karim, half of the BASIS members, mostly small and medium businesses, suffered from the cash flow crisis.

"The situation is improving this year, but last year was extremely difficult for the businesses," he said.

Mr Karim said the sector has not got any sector-specific stimulus package for cash injection.

Digital Bangladesh is the government's thrust, but the sector has not received any state financial aid during the overwhelmingly unusual period, he added.

The software sector will rebound soon if the government executes public-sector procurement at a speedy rate.

The businessman also exhorted the private sector to invest in software and IT services. "It's the best time to invest in the sector."

The ICT sector has been growing by 40 per cent annually since 2010, as per the July 2019 report by the United Nations Conference on Trade and Development (UNCTAD).

Unlike the software sector, Mr Karim says, some IT-enabled services and e-commerce portals have made good progress during the pandemic.

"New local and foreign investment and full resumption of international work orders for software products will help the sector recover soon," he hoped.

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