Higher internet demand boosts IT firms' half-yearly profits

Nine, out of the ten listed IT firms that have published earnings for the July to December period of the ongoing 2022-23 fiscal year, have posted profit growth year-on-year, and the credit goes to an ever-growing demand for the internet in the country.

According to industry people, IT-enabled services (ITES) in the country are increasing rapidly because of higher demand for the internet, automation of various public and private institutions, and extensive use of IT in financial transactions and educational institutes.

From the pandemic time, companies from pretty much every sector have been leaning more towards automation in order to reduce costs, which has created more business for the IT sector companies.

Even small-scale merchants like coconut sellers, jhalmuri sellers, and cobblers are also turning to cashless transactions. Recently, about 1,200 such merchants in the capital's Motijheel have signed up for digitalisation.

Now coming to the listed IT firms' performances, Aamra Networks reported the highest 161% profit growth in the first half of FY23. The company's earnings per share (EPS) stood at Tk2.35.

During the period, the firm's revenue also increased because of an increase in its IT and software related services, as well as internet sales.

ADN Telecom also posted an impressive 63% profit growth in the July to December period of 2022, compared to the same period a year ago. Its EPS stood at Tk2.01.

The company's Managing Director Henry Hilton told The Business Standard "The demand for internet is increasing by around 30% year-on-year in both enterprise and retail segments. Recently, we started a business in the retail segment and got impressive results from there".

"Besides, we are working on some government projects which are helping us to maintain profit growth," he added.

Besides, IT Consultants, Agni Systems, and Daffodil Computers posted double-digit profit growths of 30%, 21%, and 14% respectively. 

According to Export Promotion Bureau (EPB) data, in the July to November period of 2022, the export earnings from computer-related services – such as bandwidth, International Gateway services, software exports, etc. –  jumped by 38.73% to $231.34 million, from $166.76 million in the same period previous year.

In FY22, it jumped by 94.91% to $592 million, which was $303.76 million in FY21.

Md Mazharul Islam, chief financial officer (CFO) at eGeneration Ltd said companies in various sectors of the country are preferring automation. Even small businesses are becoming increasingly interested in the use of IT.

"Already, the National Board of Revenue has started working on automation and on increasing their capacity, which is engaging more IT companies," he added.

"The country's main export sector – ready-made garments – is also relying more on automation, which is helping to reduce their production costs."

Also, many global IT giants are trying to hire Bangladeshi IT firms and professionals through the Offshore Development Center (ODC) model, he further said.

Non-listed firms like Smart Technology (BD) Limited and Orange Solutions Ltd have also reported growth in their business.

Smart Technologies' Head of Software Business Mirsad Hossain said the IT sector has been growing for several years now. But it grew the most during the pandemic as everything became online. And since then, this sector is seeing growth.

"The main reason behind this growth is the government's positive attitude towards the IT sector. Entrepreneurs are able to launch companies at a relatively low cost, and also avail various benefits including tax," he added.

During the pandemic, not only software, but hardware business also soared by 60% to 70%, he informed.

Most of the private schools in Dhaka have become automated. If a school is closed throughout a year due to situations like the Covid-19, classes can still continue online.

Same is the case for various businesses like shops, restaurants, pharmacies, and supermarkets, where stuff can be ordered online helping the IT sector to grow.

Tanvir Md Ishteaq, managing director of Orange Solutions said, "Our business has grown well after the pandemic. But the customers' confidence in the local IT-related products has not increased much, which is why they tend to buy foreign products of the same quality at higher prices."

"Hence, the competition is mainly with the international software companies," he added.

He believes that customer confidence can increase if the branding of local IT products is done properly.