Software Development Outsourcing to Bangladesh: Asia vs Other Destinations
Over the past decade, Bangladesh has been growing in popularity as an outsourcing and offshoring destination. In this article, we discuss the main reasons for the growth of IT offshoring to Bangladesh, the current IT sector state, the pros and cons of outsourcing IT services to Bangladesh, and what are the outsourcing alternatives to Bangladesh to consider.
Why Companies Tend to Outsource Software Development to Bangladesh
Bangladesh has long attracted business interest as a large and affordable resource for remote workers. Although unlike India, Bangladesh primarily provides sales and marketing professionals, thanks to continuous government support, it already supplies more than 16% of total online workers in the BPO sector, according to the Online Labour Index of Oxford Internet Institute. More and more companies that used to hire dedicated developers India are now weighing the possibility to expand or move their BPO and software development outsourcing to Bangladesh.
Although most of the local workers specialize in marketing, back-office, and customer support services, over the past years, the volume of software development outsourcing to Bangladesh has been rapidly growing as well as software development outsourcing in Thailand.
There’s still room for growth for the IT labor force pool and expertise. Yet, currently, the software development Bangladesh sector counts more than 40,000 specialists working in the BPO sector and 500,000 freelance IT specialists seeking one-time and long-term projects, as reported by the IndependentBD. As mentioned by the same source, the biggest IT services operators in Bangladesh include Genex Infosys LTD, Dutytaker, Fifotech, assisting world-famous corporations, such as Coca-Cola and Samsung.
The government is actively supporting the software outsourcing Bangladesh sector as the main potential for the development of the country’s economy and is trying to adjust all the relevant laws to attract foreign investors. Thanks to the continuous government efforts and support of the IT sector, a growing number of companies now considers IT outsourcing in Bangladesh as a lucrative option. The country offers incentives to stimulate the IT outsourcing sector, such as:
- Tax reduction for the work of foreign employees up to 50% in the first three years;
- Exemption from VAT when renting offices for software development outsourcing in Bangladesh;
- Restrictions on foreign capital ownership in Bangladesh have been removed.
Besides, Bangladesh is one of the cheapest labor providers, offering an hourly minimum wage of ৳210.00 ($2.47), according to PayScale, which is almost half the wages in the Philippines or India.
Since Bangladesh is a large country with over 163 million inhabitants, 65% of whom are young people, there’s a constant influx of young talent. Potentially, according to IndependentBD, by 2024 Bangladesh can become one of the central providers of low-cost labor resources in Asia and globally.
Let’s take a look at the main characteristics of the IT market in Bangladesh:
- Time zone: GMT+6
- Tech talent pool: 500,000
- Biggest tech hubs: Dhaka, Sylhet, Chittagong
- Popular technologies: PHP, .Net, Ruby, Node.js, Java
- Average monthly salary (middle-level developer): 23,900 BDT ($282)
Advantages and Disadvantages to IT Outsourcing in Bangladesh
When it comes to outsourcing IT services to any foreign country, there are some pros and cons to consider. Let’s explore the benefits of outsourcing Bangladesh and why the country comes as an attractive outsourcing destination:
- Cheap rates are the main advantage for businesses looking for an outsourcing location;
- A large, young, rapidly growing talent pool;
- Strong government support of the IT sector and IT outsourcing in Bangladesh, in particular;
- Clear conditions for business development and outsourcing;
- Convenient location and time zone difference for businesses located in Singapore, Japan, Australia, New Zealand, etc.
To sum up, software development outsourcing to Bangladesh offers a huge number of young and educated workers who are ready to provide quality work for little money.
However, despite the promising and welcoming conditions for outsourcing to Bangladesh, the country has several problems that should be considered before hiring IT experts or dedicated teams located in the country.
Among the disadvantages of outsourcing Bangladesh programmers, it’s worth to take into account the following:
- It’s hard to find senior-level IT experts, as the talent pool consists mostly of young specialists;
- Poor Internet connection across the country;
- Constant power outages;
- Frequent natural hazards;
- Low English proficiency, compared to other popular outsourcing destinations;
- Many local IT companies don’t have yet have international working experience;
- Lack of convenient payment systems for international transactions;
- Inconvenient time zone difference for companies located in the US and Europe;
Unfortunately, the pandemic has negatively impacted offshore software development in Bangladesh, shrinking the workforce due to quarantines. Most companies outsourcing and offshoring to Bangladesh have difficulty transferring employees to remote working due to poor Internet bandwidth when operating from non-central offices. Apart from a few large IT corporations operating in Bangladesh, others are struggling to operate on a full-time basis and provide business continuity while working from home.
Alternatives to Software Development Outsourcing to Bangladesh
The outsourcing and offshoring to Bangladesh growth rapidly, turning the country into the second-largest Asian workforce provider after India. However, if you are looking for more stability and shorter distances, it may be beneficial considering other outsourcing destinations.
Taking into consideration all the advantages of software outsourcing in Bangladesh, it’s still not a ‘one-fits-all’ solution, and it’s absolutely okay to seek more suitable alternatives for your business.
Although Asia was one of the earliest IT outsourcing hubs, nowadays, Eastern Europe (and Ukraine, especially) is gaining momentum, and that’s for a reason. Here are the undoubtful benefits of outsourcing software development services to Ukraine, a bright representative of IT-skilled Eastern European countries:
- Huge IT labor force pool (200,000 IT specialists);
- Highly qualified, versatile IT experts;
- High education level (14 million people in Ukraine obtain higher education, as per the KPMG 2019 report);
- Good reputation of Ukrainian programmers, according to Mobilunity clients’ feedback;
- Affordable hiring costs;
- Convenient location for companies with European headquarters;
- Minimal time zone differences;
- Similar business culture;
- Ukraine shares European values;
- No risks of natural disasters;
- Full compliance with GDPR and other data protection regulations.
Why Is Ukraine a Perspective Alternative to It Outsourcing in Bangladesh?
Nowadays, Ukraine is a rapidly growing outsourcing haven, and more and more companies are interested in outsourcing IT services to Ukraine or even open R&D/SSC centers in the country.
Ukraine moved up to the 20th position in the Global Services Location Index, thanks to the rapid infrastructure development and improved business environment, becoming a more and more approachable and lucrative destination for outsourcing.
The latest KPMG report also mentions Ukraine as a convenient and labor-saving destination that shows the significant growth potential of the IT talent pool. Besides, the Deloitte 2020 survey indicates that numerous global companies, such as Samsung Electronics, Apple, IBM, have opened their R&D centers in Ukraine, which denotes the growing demand and interest in the country’s experts.
Here’s a list of the main characteristics of Ukraine as a beneficial outsourcing destination:
- Time zone: GMT+2
- Tech talent pool: 200,000
- Biggest tech hubs: Kyiv, Lviv, Dnipro, Kharkiv, Odesa
- Average monthly rate (for middle-level developer): $2000, based on Mobilunity’s Recruitment Team research on the local job markets
Summarizing Specifics of IT Outsourcing in Bangladesh Vs Ukraine
To provide a full picture of the possibilities and perspectives of outsourcing in Bangladesh vs. Ukraine, we have composed the most relevant information on both locations in the table below:
|Size of a tech talent pool||500,000||200,000|
|English proficiency||Low (#63 in EF EPI 2020)||Moderate (#44 in EF EPI 2020)|
|Average monthly rate (middle-level IT expert)||23,900 BDT ($282), according to PayScale||$2000, based on Mobilunity’s Recruitment Team research on the local job markets|
|Talent availability||High for Junior experts, low for Senior programmers||High|
|Risks related to natural hazards||High||No risks|
|Data safety and insurance||Moderate (#65 in global NCSI)||High level (#25 in global NCSI)|
|Quality to price correspondence||Moderate (cheaper cost for moderate quality)||High (high quality for affordable cost)|
|Ease of doing business||Hard (#168 in the 2020 World Bank’s Ease of Doing Business rating)||Relatively easy (#64 in the 2020 World Bank’s Ease of Doing Business rating|
As can be seen from the summary table, each country can boast of a number of advantages but delivers some possible pitfalls as well. Depending on your company’s needs, requirements, budget, and deadlines, you can choose the right outsourcing destination for your project.
Although it’s possible to find IT outsourcing services in Bangladesh for a cheaper price, the downsides and risks, such as low quality of work, poor internet stability, and low data security, make Bangladesh quite a risky move for global businesses. On the other hand, Ukrainian codes are known for impeccable programming skills and have a strong reputation on the global market.
Whether you decide to settle on Bangladesh, Ukraine, or any other outsourcing location, make sure to cooperate with a credible local IT services vendor to ensure smooth management and great performance of the hired IT specialists.
Mobilunity – Your Reliable IT Services Vendor in Ukraine
When you outsource IT services to another country, it’s crucial to work with a reliable service provider to help you with finding the right IT experts, based on your company’s needs and project requirements.
Mobilunity is a renowned IT company that assists small to large-scale businesses in finding highly qualified software developers with relevant experience in the field. For almost 9 years, we’ve been operating on the global market, and our experts know how to source top-rated programmers and build a highly effective remote team per request.
If you’re struggling with finding the right specialists and organizing outsourcing processes, feel free to contact Mobilunity experts, and we’ll be pleased to help you hire a dedicated team of well-versed software developers in the shortest time possible.