Can Bangladesh compete with India’s $13 billion IT outsourcing empire?

According to Gartner, Inc.'s latest forecast, global IT spending is projected to reach $5.74 trillion in 2025, reflecting a 9.3% rise from 2024. Companies across various industries worldwide typically outsource a significant portion of their IT services. The expansion of the IT outsourcing market is primarily fuelled by macroeconomic factors such as globalisation, technological progress, and a rising need for specialised IT services.

Furthermore, the Covid-19 pandemic has accelerated the shift to remote work and boosted the demand for IT outsourcing services. The global IT outsourcing market is expected to experience significant growth, with revenues projected to reach $591 billion by 2025. This growth will continue at a compound annual growth rate (CAGR) of 8.28%, reaching $813 billion by 2029.

India has long dominated the global IT outsourcing landscape, boasting a $12.7 billion industry supported by a skilled workforce, robust infrastructure, and a well-established reputation. While Bangladesh is showing promising growth in IT outsourcing, competing with India with its $790 million industry seems unlikely.

However, Bangladesh is well-positioned to capture niche markets and serve as a complementary player in the global IT outsourcing ecosystem. With continued investment in infrastructure, policy support, and workforce development, the country may emerge as a formidable competitor in the longer term.

What's so remarkable about India?

India's dominance as a service provider in the global IT outsourcing market stems from a combination of early adoption, strategic investments, and favourable socio-economic factors that its neighbours have struggled to match. India entered the IT outsourcing sector in the early 1990s, capitalising on economic liberalisation and the global demand for cost-effective tech solutions.

Companies such as Tata Consultancy Services (TCS), Infosys, and Wipro became pioneers, establishing long-term relationships with Fortune 500 clients. This head start allowed India to build a robust ecosystem while its neighbours were still developing their tech sectors.

India's population
 

ndia's ~1.5 billion population, with a median age of 29 years, represents a demographic dividend for its economy. A population of this scale creates a massive talent pool, offering immense potential for industries that rely on human capital. The sheer number of young people in India is a driving force behind its economic and technological growth. 

Moreover, India's diversity in language, culture, and regional experiences fuels creativity and innovation, contributing to its role as a global leader in the digital economy.

India's emphasis on IT education

India's rapid expansion in IT education has been a key factor in its rise as a technology powerhouse. The country has made significant strides in building a robust educational infrastructure that aligns with global IT demands, producing an ever-growing number of highly skilled professionals. India boasts some of the most prestigious engineering and technical institutions in the world. 

The Indian Institutes of Technology (IITs), Indian Institutes of Information Technology (IIITs), and National Institutes of Technology (NITs) are among the top choices for aspiring engineers and IT professionals.

With over 1,000 engineering colleges nationwide, India produces millions of STEM graduates every year. The sheer number of graduates, combined with the quality of education in these institutions, has established India as the world's leading source of software engineers and IT professionals.

The massive online education revolution in India

In recent years, India has experienced a massive online education revolution, significantly transforming the way education is delivered. Platforms such as BYJU's, Unacademy, Coursera, and Udemy have democratised education, offering flexible and affordable learning opportunities. These platforms provide access to high-quality IT education, allowing students in remote areas to develop the skills needed to thrive in the global IT sector.

This shift has been driven by several factors, including the widespread availability of internet access, the rise of affordable smartphones, and the growing demand for specialised skills in the digital economy. Online education platforms are not only making learning more accessible but also enabling students across India, including those in remote or underserved areas, to acquire high-quality education at their own pace and convenience.

Bangladesh's journey to becoming an IT outsourcing hub in South Asia

Bangladesh is rapidly emerging as a prominent IT outsourcing hub in South Asia, positioning itself as a key player in the global market. With an expanding digital economy, robust GDP growth, and a young, skilled workforce, the country is carving out a competitive edge in the global IT services industry.

The growth of Bangladesh's IT sector is a direct result of strategic investments in digital infrastructure, government initiatives to support the digital economy, and a rising global demand for IT outsourcing services. By 2025, Bangladesh's IT outsourcing market is projected to generate nearly $790 million, expected to reach $1.4 billion by 2029.

Bangladesh's cost-effective and highly skilled workforce is a key driver behind this growth. The country has an abundant talent pool with many IT graduates emerging from top universities such as the Bangladesh University of Engineering and Technology (BUET) and Daffodil International University.

Moreover, the government has supported the sector with incentives, tax benefits, and workforce development programs to nurture top-tier IT professionals. Companies from developed nations are increasingly turning to Bangladesh for IT outsourcing, attracted by its competitive pricing and high-quality service.

Bangladesh's IT outsourcing industry stands out for its ability to offer value-added services such as cloud solutions, software development, and data analytics, positioning the country as more than just a low-cost labour market. Companies such as Brain Station 23, Enosis Solutions, and BRAC IT serve international clients while expanding their service offerings.

The foundations for Bangladesh's ascent as an IT outsourcing powerhouse are firmly in place. With its young, tech-savvy population, increasing investments in technology, and a supportive business environment, Bangladesh is well on its way to becoming a dominant player in the global IT services market.

While Bangladesh faces significant challenges competing with India's $13 billion IT outsourcing empire, it has considerable opportunities to carve out a strong niche within the global market. India's head start, extensive talent pool, and robust infrastructure offer a substantial advantage, and Bangladesh's smaller scale and resources may initially limit its ability to match India's dominance. 

However, Bangladesh's rapidly growing IT sector, bolstered by a young, skilled workforce and cost-effective solutions, presents a unique value proposition to international clients.

Aminul Ihsaan Islam is a Senior Content Developer at Enosis Solutions. Email: aminislamihsaan@gmail.com 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.