Samtel Tele marketing Intern report page 9

4.5 Prospects and Weaknesses of Software Industry

4.5.1 Strengths & Prospects

Certain strengths and advantages available in Bangladesh have made the country lucrative for building partnership among the ASOCIO economies. The most of its strengths are the unleashed English speaking youth force, skilled professionals working aboard, universities & other educational institutions turning out huge ICT graduates, substantial number of ICT graduates studying abroad and skilled workforce available at most competitive wages.

The prospects of this industry are as follows:

·      Business policy: Bangladesh has become an ideal ground for advanced ASOCIO economies to invest due to its business friendly policy for the foreign investors providing various incentives including tax holidays and simplified regulations.

·      Outsourcing: Day by day outsourcing is getting popular in Bangladeshi software industry. International organizations design a software model, outline the required components and provide that information in a universal format to the lower cost software farms to fill up the required body of the software. There is a good opportunity for Bangladesh in this field though this type of task does not make good software designers.

·      Software for local companies: Many of our local companies buy their software from foreign companies. If the local industry can standardize there product and if they can build effective marketing force they can grab this market.

4.5.2 Weaknesses

The software market of Bangladesh is a new evolved and a growing one. It is believed that software industry has the prospect as comparable to the garments industry of Bangladesh. But there is a big gap between expectation and reality.

The following weaknesses are considered significant:

·      Lack of skilled labor: A large amount of people working in the software development farms has lack of proper expertise. Many of them somehow get some training from some computer education center; which itself has deficiencies in train up people.  Thus a stream of ineligible people is getting involved in software industry.

·      Poor performance: There are several examples regarding the problem that the software produced by Bangladeshi farms does not meet the standard. They are full of bugs and merely stable. These poor performances have caused the potential software buyers to think bad about Bangladeshi software.

·      Government initiative: Bangladesh government is full of bureaucracy thus is takes a long time to execute any decision. High speed internet service is a must for software developers but the connection to high speed submarine optical fiber is delayed by more than ten years due to indecision of government.

·      Poor Infrastructure: The business infrastructure of Bangladesh is poor. Still people cannot think of automation in there life. As rate of illiteracy in Bangladesh is high, socio-economic contribution to software industry is very low.

4.6 Key Success Factors

The success of SGTL is dependent on its ability on:

• Innovation in product and process improvement in-line with technological changes
• Expertise in providing communication benefits to businesses on telecommunication platform
• Scale of economies for core module supported by flexibility to support a variety of businesses through plug-ins
• Anticipating changing client needs in advance and adapting Coretalk to those needs quickly
• Excellence in service and training though well trained employees
• Superior product design along with ease of operational procedure
• Developing visibility to generate business benefits by Coretalk
• Identifying new industries/corporations that require such type of communication tools and

5.0 Market Analysis

 

5.1 Target Market

The focused target market is the local Small to Medium Enterprises (SME).

5.2 Small & Medium Enterprises

Small and Medium Enterprises (SMEs) have historically been one staple of the enterprise landscape within economies globally.  Especially growth with clear benefits for poverty reduction puts a premium on integrating, productively and profitably, small and medium enterprises in the very process of economic growth.  The over-riding vision must be for setting up a market-based economic order with a level playing field for all enterprises, in which SMEs can aspire to opportunities of growth and wealth-creation commensurate with their own endowments and diligence, innovation and management commitment. In addition, the vision must lead to a priority in the delivery of government services so as to neutralize, on a continuing basis, the handicaps and irritants which, almost reflexively, tend to spring themselves upon SMEs in a selective manner. A historically accelerated pace of trade liberalization in Bangladesh since the early 1990s by spurring a veritable deluge of imports has quite significantly increased competitive pressures on SMEs in Bangladesh.  Rapidly falling cost of communications have by unifying global markets heightened the intensity of competition.  Trading is widely seen as a safer, richer, smarter and bulkier career to have than manufacturing---bad news indeed for industrialization. With this end in view, Government of Bangladesh formulated the National Industrial Policy 2005 by giving special emphasize for developing Small and Medium Enterprises (SMEs) as a thrust sector for balanced and sustainable industrial development in the country with the vision for facing the challenges of free market economy and globalization.

5.2.1 Categories in SME

In Bangladesh enterprises are categorized using the following definition (fixed investment implies exclusion of land and building, and valuation on the basis of current replacement cost only):

·      Manufacturing Industries: For manufacturing industries, the definition is:

 (a)  Small Enterprise: an enterprise should be treated as small if, in today’s market prices, the replacement cost of plant, machinery and other parts/components, fixtures, support utility, and associated technical services (such as turn-key consultancy), etc, excluding land and building, were to be up to Tk. 15 million;

(b)  Medium Enterprise: an enterprise would be treated as medium  if, in today’s market prices, the replacement cost of plant, machinery and other parts/components, fixtures, support utility, and associated technical services (such as turn-key consultancy), etc, excluding land and building,  were to be up to Tk. 100 million;

·      Non-manufacturing Industries: For non-manufacturing activities (such as trading or other services), the definition is:

(a)   Small Enterprise: an enterprise would be treated as small if it has less than 25 workers, in full-time equivalents;

(b)    Medium Enterprise: an enterprise would be treated as medium if it has between 25 and 100 employees;

As I have worked on Non Manufacturing Industries, I have chosen the organization according to the number of employees.

5.2.2 Role of SMEs in National Growth

According to UNESCAP, SMEs account for upwards of 90% of all firms in East and South-East Asia, as well as in Japan (Wattanapruttipaisha, 1999).  It is also the biggest source of the region’s employment, including three-quarters of the region’s employment, in particular its women and young workers.  The relative share of SMEs in total output and exports is typically much smaller, close to a third, or so.In Bangladesh, large enterprises account only for a small percentage of all business enterprises.  The percentage is much smaller in other than manufacturing than in manufacturing per se.

The manufacturing industry essentially comprises small and medium scale enterprises: by some accounts, 60% and 25%, respectively, of the workforce in manufacturing happen to be hired by small and medium enterprises.  It is hardly an overstatement to say that small and medium enterprises are pretty much synonymous with manufacturing industry.

5.2.3     Role of SMEs in the export economy

A sector can contribute to export receipts in two ways, namely, (a) directly; and (b) through the production of intermediates, processed and semi-processed goods. How important are Bangladesh’s SMEs in terms of their contribution to the exports receipts of the country?

No credible information was available to answer this question convincingly.  There is however a lot of stylized evidence for other economies that suggest that SMEs are the mainstay for employment and work opportunities within Asian countries.  In Bangladesh, SMEs account for some 80% of all enterprises, whether registered or not: they account for some 35% of the production of exportable goods of that country. In some of the most export-oriented sectors, such as ready-to-wear apparels, the percentage of the country’s exports from SMEs could reach pretty high figures.

5.2.4 Market Size & Market Growth

In Bangladesh market size is increasing with a stable growth. As well as the no. of employees are also increasing. Following table shows the growth in no. of units and employment within SMEs:

Year	No. of Units		Employment
	Medium	Small	Medium	Small
1981	24,590	321,743	322,110	855,200
1991	38,294	405,476	523,472	1,331,032
2001 (end of June)	55,916	511,621	808,959	166,724
Average Annual Growth Rate	6.4%	3.0%	7.6%	4.7%