Written By Syed Md. Rakeen, Team MBR

A rapidly changing business environment has thrust forward the efforts of businesses to adopt disruptive measures and improve operations in their respective fields to stay ahead of the growing competition. This led to the need for digital transformation in organisations, which was largely met owing to the growing number of software-as-a-service (SaaS) companies. SaaS is cloud-based software revolving around the distribution of software by a third-party provider who assumes the responsibility of hosting applications and granting customers access to them via the internet. Its lucrativeness resides in its subscription-based services, which prompt more users to avail themselves of them. Google Workspace, Microsoft Office 365, Salesforce, Oracle, Cisco, and Slack are just a few of the many examples where SaaS models are deployed.

Although Bangladesh is at a nascent stage in the software industry, local organisations are gradually delving into this industry, particularly in the export segment, in a bid to exploit its full potential. The usage of SaaS services has split into crucial sectors of Bangladesh, such as ICT, pharmaceuticals, RMG, food, education, e-commerce, etc., and is largely expediting the growth of the aforementioned sectors through automation.

On-Premise Software Models vs. Software-as-a-Service Platforms

There are two distinct approaches that organisations adopt in order to deploy and utilise the necessary software for their business operations: on-premises and software-as-a- service.

Figure 2: Deployment of the On-Premise Software Model and the SaaS Model

In the on-premises model, the organisation procures and deploys the software within dedicated data centres located on its premises. The internal IT deployment of an organisation is responsible for overseeing and maintaining the necessary infrastructure to ensure the secure and efficient utilisation of your software on a large scale. The acquisition and subsequent upkeep of server hardware would be undertaken by the user. In addition to the development and maintenance of software, configuration, installation, and upgrading of any necessary add-ons and plugins and regular updating of the underlying operating systems on which the software operates are also required.

In contrast, software-as-a-service is a software delivery model that operates on cloud infrastructure, enabling the provision of applications to end users via an internet browser. SaaS vendors play a crucial role in the modern digital landscape by providing a platform for organisations to access and utilise various services and applications. These vendors act as hosts, offering the necessary infrastructure and resources to enable on-demand access to these software solutions. By leveraging the SaaS model, organisations can conveniently access and utilise these services without the need for extensive onpremises infrastructure or software installations. This approach offers flexibility, scalability, and cost- effectiveness, making it an attractive option for businesses of all sizes. In the context of softwareas-a-service, users are relieved of the burden of considering the intricacies of service maintenance and the management of the underlying infrastructure. The primary consideration revolves around the utilisation of the software.

The Current State of the Software Industry in Bangladesh

Bangladesh is emerging as a crucial player in the Information Technology (IT) industry, with a huge IT market in South Asia. According to the latest report of the Global Location Service Index, Bangladesh currently ranks 21 in IT outsourcing, while it is also the second largest producer of IT freelancers in the world. However, software exports account for a small portion of the growing IT industry, with the figures rising to USD 60 million in 2021–22 from USD 51 million in 2020–21, as reported by the Export Promotion Bureau (EPB). The Bangladesh Association of Software and Information Services (BASIS) reported that 34% of the software created domestically was exported to the United States, 13% to the UK, and a mere 4-5% to European countries.

According to the Business Standard, ten firms operating in Bangladesh led the way in terms of export volume in the last five years, namely Secure Link Services (SELISE), Taskeater, Cefalo Bangladesh, Kaz Software, Golden Harvest Infotech, ServicEngine, BJIT, Graphic People, Therap (BD), and Brain Station 23. The export volume by the firms during the 2018–2022 period stood at around USD 170 million, and their exports amounted to USD 35.54 million alone in FY22.

Factors contributing to the growth of SaaS in Bangladesh

The local firms in Bangladesh now possess abundant human capital due to a huge influx of Computer Science and Engineering (CSE) graduates from myriads of local universities. Several programming contests are held every year to help aspiring software engineers showcase their coding skills on global platforms. This translates to the development of coding skills through the practice of solving real-life problems effectively and efficiently. Due to increasing demand for ERP software both locally and internationally, Bangladesh, with its resources, is now in a prime position to capitalise on building software-as-aservice solutions. The demand for hiring software engineers from Bangladesh is experiencing an upward trend owing to the cost advantage coupled with the skilled employees available for overseas companies when hiring from Bangladesh.

The increasing presence of local software and ITES companies that offer SaaS solutions across various product categories is now building Bangladesh’s competitiveness. The local companies offer a range of software-as-a-service solutions, encompassing various areas such as accounting and financial software, POS and inventory, HR and payroll, marketing and sales, integrated business applications and ERP, e-commerce and web portals, customised software development, office management, mobile applications, and education institute management applications. These SaaS offerings cater to the diverse needs of businesses, providing them with efficient and integrated solutions for their operations.

Existing Obstacles Hampering SaaS Growth

The cost of failure is the strongest obstacle to progress and innovation. It makes sense that risk aversion is encoded into so many organisations; the upfront costs associated with digital transformations may be sky-high, and failure can be financially devastating, especially for small and medium-sized businesses. According to BASIS, Bangladesh currently imports software services worth around USD 1.5 billion to USD 2 billion annually while exporting only USD 60 million worth of software services. This increased reliance on imported software by local organisations has hindered the growth of local SaaS services, leading SaaS companies to focus on exporting their services to generate revenues.

According to BASIS, the export earnings from IT services surpass the figures reported by the Export Promotion Bureau (EPB). This disparity arises because the government’s official figures do not encompass the earnings of freelancers and service providers who bring their export proceeds through unofficial channels.

Some Prominent SaaS Startups in Bangladesh

Availing project management services from internationally known project management solutions such as Asana, Trello, Microsoft Teams, etc., can prove to be expensive for firms, especially for SMEs, which may not possess the luxury to afford these solutions owing to the exorbitant monthly subscription fees.

OneThread, the first project management software startup based in Bangladesh, seeks to address the aforementioned issues by offering a smooth multi-team project management tool for effective team collaboration while being cost-friendly to local companies. The software encompasses a range of notable attributes, such as dashboards, Gantt charts (widely employed in project management as a highly preferred and effective method for visually representing tasks or events in relation to time), a scheduling system, timesheets, project baselines, a communication plan, data analytics, real-time reporting, and invoicing features, among others. 

Alice is a software-as-a-service platform that utilises omni-channel conversational artificial intelligence (AI) technology. Its primary objectives are to enhance sales performance, minimise operational expenses. Through its diverse subscription-based customer service plans, the organisation collaborates with over 50 e-commerce stores and enterprises across the region. Some of the renowned entities include Unilever, Coca-Cola, Giordano, and Maybelline, among several others.

Nuport is a cloud-based supply chain platform that caters specifically to the needs of distributors and e-commerce brands. It is observed that prominent manufacturing enterprises allocate a significant portion of their time, approximately five to six hours, towards formulating comprehensive delivery strategies for substantial sales orders. Through Nuport’s supply chain automation, companies can optimise operational efficiency and eliminate the need for labour-intensive manual processes. The implementation of this solution has the potential to significantly reduce the time allocated to distribution planning by nearly 85%.

International Collaborations and Expansion

US-based global tech giants and some IT-led countries are switching their attention from India to other countries in the Asian region for accessing IT-related services. This opens a window of opportunity for Bangladesh to capitalise on the growing software-as-a-service industry. The stakeholders, which currently involve the government, industries, and academia, can form a coalition of initiatives to promote IT and IT training to boost software exports and enhance the industry’s promising growth.

So far, over 30 companies are availing of the software services of Bangladesh, which is expanding its horizons by exporting to countries like Egypt and Vietnam. DataSoft, Dohatec, eGeneration, REVE Systems, TigerIT, and Southtech currently have offices in Nepal, Bhutan, Malaysia, India, Japan, the UK, the US, and various African countries.

The widespread usage of software solutions in Bangladesh has accelerated the growth of software companies and their diverse product offerings, both local and foreign. Its profitability and scalability have created a symbiotic relationship between local and foreign companies, giving rise to huge IT exports abroad. By 2025, Bangladesh plans to export USD 5 billion worth of software products and services. Local software companies have repeatedly demonstrated their ability to handle complex international projects, yet the majority of public and commercial organisations still rely on imported software. However, reliance on software imports is gradually declining as 25 local software companies are now developing integrated business applications and enterprise resource planning (ERP) software, both of which used to be imported in the past. This increasing local market demand for softwareas-a-service offerings has facilitated a greater opportunity for enterprises to automate existing processes, experiment with minimal financial risk, iterate their approaches, and seamlessly expand their operations. Software-as-a-service has the potential to significantly mitigate the financial implications of failure and expedite the process of organisational transformation. Local companies have already ventured into offering SaaS services like supply chain automation, project management software, cloud-based ERP solutions for SMEs, and web development. The increasing presence of SaaS solutions in local companies is a strong indication of Bangladesh’s growing promise in the software industry and will undoubtedly propel the companies to expand their operations and craft building blocks for achieving the Smart Bangladesh Vision by 2041.