Abstract
This case study was inspected to grasp the facets of information technology (IT) industry in Bangladesh by taking Accenture, a multinational management consulting, technology services and outsourcing company as a subject of study. The purpose was to determine the importance of technology and IT for economic agents, namely, countries, companies and customers. Rapid growth and increase in demand for internet technology in all layer of activities stimulated country-wide development in IT infrastructure. The concept of a digitalized Bangladesh was dedicated to prioritize the IT sector in order to precipitate concurrent business growth and to facilitate both domestic and international relationship with concerned institutions. The ideology was reflected on other industries as these industries began to rely on a great deal of IT support to implement their operational activities. In such an environment, the Accenture Bangladesh case discussed its long-term plans for expanding its business horizon in Bangladesh.
Accenture could face various regional or local needs that would not be neglected. While the pursuit of ‘one global firm’ by Accenture was admirable and probably necessary, a one-size-fits-all approach without allowance or encouragement for local adjustments was unlikely to produce the desired results.
Introduction
Internet was incepted in Bangladesh in 1996 and since then it has been widely used to serve multiple purposes (Ahmed et al., 2015). New information and communication technologies (ICT), in particular high-speed internet, were changing the way companies did business, transforming public service delivery and democratizing innovation. With 10 per cent increased in high speed internet connections, economic growth had been increased by 1.3 per cent (World Bank, 2014). While the challenges faced by each developing country was largely determined by its local, cultural, political and economic conditions; some favourable factors were also there to aid in implementing successful information technology (IT) strategies (Ahmed et al., 2014). Internet penetration rates in the developing countries continued to lag far behind than that of the developed ones. Over the past decade, developing countries had witnessed rapid but uneven growth in ICTs’ access and use (World Bank, 2011). In corporate arena, the dominance of ICT could be defined by its impact on cost efficiency and productivity. ICT was critical to any company’s growth because it incorporated standardization, scalability and minimalism in the business model (Ahmed et al., 2014). Companies were using specific information technologies to manage human resources, office management and vehicle management as well as to support their regular hardware and software requirements. From 2008 to 2013, over a 40 per cent growth rate was achieved in software and information technology-enabled services (ITES) industries resulting from high demand for IT automation in domestic industries and improved IT infrastructure in Bangladesh. ICT brought about amelioration on speed, diligence, versatility and accuracy in business processes that ultimately uplifted the overall performance of the company. Due to the abundance of talented workforce and relatively low wage rate, South Asia became one of the lucrative and cost-effective choices for IT outsourcing. However, most of the countries failed to capitalize the benefits except India which accounted for half of global IT-business process outsourcing (BPO) services (amounts to revenue of USD 59 billion in 2011) (The Economic Times, 24 August 2011).
Information Technology in Bangladesh: An Overview
Since 1980s, Bangladesh had commenced using computers as a research and data manipulation tool. Thus, emergence of IT in Bangladesh was brought into the ground. A series of steps were taken in 1997 in order to gear up the IT sector in motion by emphasizing exports of software and IT services (Ahmed et al., 2015, 2016, forthcoming). The industry had a worth of USD 400 million and employed approximately 70,000 professionals (Ahmed, 2014). The IT sector of Bangladesh was backed up by an unprecedented progressive policy where government allowed total duty-and-tax-free import of all computer hardware and software which encouraged the usage and applicability of computers and related activities; hence, promoted the enlargement of IT industry (The Daily Star, 6 January 2010; Wordpress, 2013). The local market had been the focus of some 110 IT companies competing to grab a chunk (Ahmed et al., 2015, 2016, forthcoming). However, the exports by this sector amounted to be around of USD 100 (annualized) during the period 2012–2013 (Ahmed, 2014). This optimism could be secured by the presence of favourable factors such as trend of automation in local companies, large demand in global offshore market and outsourcing industry etc. (The Daily Star, 6 January 2010). This sector had long left the stance of being a hardware vendor industry and renewed itself by revolving around three major activities—application services, engineering services and business process services. About 8 per cent companies were established through joint-venture with overseas companies or as an offshore development centre, which were funded fully by foreign investment. Availability of qualified and experienced young graduates from various academic disciplines at a low wage rate made the IT sector very prospective and lucrative to entrepreneurs. The existence of high numbers of young entrepreneurs made the sector very distinctive from others and these young entrepreneurs were mainly tech savvy young local graduates along with many home returning foreign graduates. In confronting both local and global economic competition, these young IT entrepreneurs were invigorated the whole sector by conducting exceptional IT projects to put up successful and sustainable IT businesses. The telecom sector, along with financial institutions, pharmaceutical companies, and RMGs had all initiated large scale business process automation projects to broaden the scope of software and ITES companies (Shinkai & Hossain, 2011). Local availability of required qualified IT skills (improved proficiency in English language and analytical ability) at a relatively low-cost-enabled Bangladesh to become one of the alluring destinations for outsourcing. In addition, investment friendly policies, e-governance projects and rapid development of internet technologies were initiated by Bangladesh government to provide added incentives in this arena to deal with increased demand for IT services (Access to Information Programme, 2011; Financial Express, 10 January 2009; Karim et al., 2011). As a result, IT industry in Bangladesh had exhibited tremendous performance in terms of employment creation, rapid growth and contribution to country’s GDP.
Bangladesh Association of Software and Information Services (BASIS) 1 and Bangladesh Computer Samity (BCS) 2 were two industry bodies representing the IT sector of Bangladesh. According to BASIS (2015) there were 898 registered software and ITES companies (in addition to many unregistered small and home-based software and IT ventures) employing over 20,000 professionals. According to another survey on 300 BASIS companies, almost 70 per cent of the companies were engaged in development and maintenance of software and almost 50 per cent of them were also providing various IT-enabled services such as data/form processing, graphic/web design and content management. Wider internet access, better connectivity and introduction of online payment method worked like catalysts to ensure an equal opportunity platform for all players. Bangladesh Telecommunication Regulatory Commission (BTRC, 2015) points out that, at present, around 95 per cent (51.982 million) use Internet through mobile network and 5 per cent (2.076 million) use broadband Internet. Socio-demographic changes were inevitable when growing number of internet users pushed the IT industry to the next level.
Local market was considered to be the major part of business for the software and IT service (ITES) industry. Approximately 63 per cent of BASIS member companies were focused only in local market that had demonstrated a healthy growth of around 25 per cent. While ITES companies were accounted for 56 per cent of the total revenue generated in the industry, rests were provoked by software companies (BASIS, 2014). As mentioned before, there were 898 existing software and ITES companies in Bangladesh; however, only 20 per cent of them employed their devotion in exporting products and services to over 30 countries. The industry experienced a 28.14 per cent growth in export in the year 2011, creating more optimism for the companies operating in the sector (BASIS, 2014). Although the US market, notably North America was the major importer of IT products from Bangladesh, other countries such as UK, Australia, Japan, India, Netherlands and UAE were gradually coming in the picture (Shinkai & Hossain, 2011).
Accenture Bangladesh: The Business in Brief 3
Accenture and GPIT came up with an agreement on 27 June 2013 to sell the stock for USD 10 millions in order to form Accenture Bangladesh (previously operating as GPIT) as a new venture. It is one of the leading organizations in the world providing management consulting, technology and outsourcing services. They have offices and operations in more than 200 cities in 56 countries with approximately 319,000 employees. It earned net revenues of USD 30 billion for fiscal year 2014 (Accenture, 2015). Accenture’s four growth platforms: Accenture Strategy, Accenture Digital, Accenture Technology and Accenture Operations were the innovation engines through which it built world-class skills and capabilities. It also developed social and knowledge capital by harnessing and managing key assets central to the development of integrated services and solutions for its clients. Accenture promised to provide end-to-end solutions for banking and non-banking financial institutions, FMCG companies, pharmaceuticals and other telecom companies. It started to recruit a team of talented individuals internally and externally. The talent pool of Accenture was solely dedicated to creativity, service and efficiency. They were devoted to deliver client’s noticeable transformations in their operational efficiency and strived to provide end-to-end IT solutions in unsurpassed value and quantity (GPIT, 2014). Accenture’s vision, as passed on by GPIT, was to ‘become the most reliable Bangladeshi IT company providing best value solutions both locally and globally’ and their mission was to ‘Help transform business through best IT solutions to reach new apex in productivity and efficiency’ (GPIT, 2014). These goals gradually shaped their strategy to be an outsourcing agent for international firms and system integrator for both local and global businesses. Before being acquired by Accenture, GPIT Ltd. had been modifying (starting from 2010, based on situational factors such as the introduction of 3G communications in 2013) its strategic concerns to adapt with the rapid changes in the market. Initially, it targeted Grameenphone (GP) 4 as its only gigantic client to safeguard financial security. However, it eventually realized to expand its customer base internationally through constructing a rigorous business strategy that assembled its strengths, opportunities and organization-wide commitment (all of which can be considered significant competitive advantages for any IT firm).
Accenture Bangladesh: Management Objectives at a Glance
Since its inception, Accenture Bangladesh has been struggling to develop its value propositions. The growth of IT-dependent businesses (10 new financial institutions every year), de-pricing of internet cost and penetration of internet connectivity forced the company to undertake development initiatives through rigorous marketing of IT solutions. It organized its services and people mainly in three cross-functional teams. Accenture’s client engagement team typically consisted of a combination of industry experts, capability specialists and professionals with local market knowledge. In 2015, they focused on an operational strategy consisting of five major trends:
‘The Internet of Me’—a more personalized world; ‘Outcome economy’ where products became meaningful from the results they produce; ‘Platform revolution’: Platform-based companies are capturing more of the digital economy’s opportunities; ‘Intelligence enterprise’ with big data software intelligence will make it easier for machines to make better informed decisions; ‘Workforce re-imagined’: machines and humans are amplified to do more conjointly (Shamsuddoha, 2015, p. 3).
The Critical Issues: Changing Times
The idea of GPIT was conceived by Oddvar Hesjedal, the CEO of GP during 2008–2010. He envisioned establishing an outsourcing hub in Bangladesh. With increasing labour costs in India, and the decreasing cost of capital in Bangladesh, the country was on the verge of becoming a popular outsourcing destination. The company was initiated to capture international contracts and acted as a system integrator for local industry. Operating at local market was a necessity for the company’s initial stages of survival. Accenture was working to realize the vision of being leader in the local market for enterprise grade IT software and was also supervising to manage solutions for quality mobile software in terms of design, maintenance and training. It also had selective partnerships with international IT giants such as Huawei, Oracle, Dell, Cisco, Hewlett-Packard and Microsoft to insert the international standard product and service offerings for all of its deliverables. In order to sustain its performance in Bangladesh, Accenture had to deal with the following critical factors.
Frequent Changes in Management
Accenture Bangladesh including its previous identity had relatively decent operation in Bangladesh with 400 employees during 2010–2012; it had already witnessed many changes regarding quality and quantity of workforce size. Within that short span of time, the company had experienced three CEO’s, two COO’s and three head of marketing and numerous other top- and mid-level changes. Therefore, every time a CEO or a COO had been changed, strategic priority and cultural aspects were also altered accordingly. In addition, it caused a very rapid conversion of existing management team as well as subordinates, pushed the company in creating job insecurity and caused delay in applied operational activities. As a result, stability of the company was also hampered.
Living Under the Shadow of Accenture
GPIT had confronted an identity problem from the very beginning when it was inaugurated. It was mostly perceived as an IT division of GP, rather than regarded as a separate entity which was a sister concern of GP. It was so because of the age, size, scope and influence of GP’s business activities in local market. However, the issue was resolved when Accenture acquired the key control of ownership as it already had earned reputation of becoming global leader in its industry. So, Accenture could be able to come out from the shadow of GP to articulate its fortune with own image.
Accenture integrated its business operation with technology in order to form a technology-enabled strategy. Its business strategy, technology strategy and operation strategy revolved around its operational model to drive up value. A matrix structure form was found as operational model of Accenture, where the first axis was dedicated to operating groups, or industries of its clients. Broadly, the five operating groups were:
Communications, media and technology Financial services Products Resources Health and public services
The five operating groups further comprised 19 industry subgroups. The accountabilities of these subgroups were to bring about industry evolution through familiarizing new applicable technologies and focusing on other business issues.
The International Market: With a New Entrant
Accenture had established itself as a leader in global marketplace. It was well known for its offerings and capitalizing on evolving management trends and technologies to benefit its clients. The company wide system integration and business integration led the deployment of enterprise resource planning (ERP), customer relationship management (CRM) and electronic services. It was much easier for Accenture to expand into international markets with the image they had. Since Accenture was the leader in their area, it would become easier for them to attract more clients from different parts of the world. Moreover, taking control of the Bangladeshi market was more convincingly done by the management team inherited from GPIT. The combination of local knowledge, international recognition of Accenture Bangladesh and the availability of more resources were promising better performance for Accenture in future.
Lack of Structured Marketing Efforts
Accenture Bangladesh including its previous identity faced the challenges of delivering structured message of its vision through proper promotional campaigns. Moreover, it lacked a planned marketing team while operating in the fastest growing and most competitive arena in Bangladesh. Accenture only did its marketing through IT seminars, fairs and sponsorship of some local software expos, which could barely highlight its full potentiality. Merely a primal website was used to accomplish marketing communication, well evidenced for inadequate marketing efforts until the end of 2011. The marketing budget and efforts had begun to increase significantly since 2012, and the company was being able to unify finally in terms of long-term strategic objectives. The company started investing in market research, and focusing its efforts on becoming more attractive in local and global markets through continuous advertising and awareness campaigns.
Accenture Bangladesh: IT Challenges and Beyond
According to Jon Fredrik Baksaas, 5 ‘Accenture has the competence to offer modern services and we have our own network and market to provide digital services jointly. By this, we can also find new investment avenues in the ICT and telecom sectors’ (The Daily Star, 13 May 2015). In Bangladesh, different strategies had been availed for successful development and implementation of IT. While internet penetration rates were rising with growing number of users in the last decade (Ahmed et al., 2014), Bangladesh lagged behind in facing dreadful challenges in the IT sector. Absence of proper operational practices and guidelines for data standardization and security made the overall procedure lengthy and difficult. The major obstacles in its path of creating digital society were full utilization of capacity and scope at a time of upgrading ICT infrastructure. Moreover, ICT facilities were asymmetrically distributed where the large segment (rural area) of Bangladesh lacked access to basic technologies (Ahmed et al., 2014) in comparison to the urban area.
Raihan Shamsi, CEO of Accenture Bangladesh stated that ‘the target for USD 1 billion set by the IT industry can be achieved if the following three issues are address such as human resources, infrastructure development and policy support’ (The Daily Star, 4 November 2014). The three issues would be considered as challenges for Accenture Bangladesh and hereby precisely discussed below.
Human Resources
Focusing on developing human resource in the field of IT is one of the most important issues in management (Tohidi, 2011).
Infrastructure Development
According to Techopedia (2015), IT infrastructure refers to the composite hardware, software, network resources and services required for operating and managing IT environment of an enterprise. It allows an enterprise to deliver IT solutions and services to its employees, partners and customers. Generally, it is internal to an organization and deployed within owned facilities. It can be used for internal business operations, developing customer IT needs and business solutions. Typically, a standard IT infrastructure consists of the following components:
Hardware includes servers, computers, data centres, switches, hubs and routers. Software consists of ERP, CRM and productivity applications. Human users such as network administrators, developers, designers and generic end users with access to any IT appliance and service. It is also part of an IT infrastructure, specifically with the advent of user-centric IT service development. Network refers to internet connectivity, network enablement, firewall and security (Techopedia, 2015).
Over the last decade, Bangladesh has promoted the idea of an ICT. It made significant progress in the telecommunication sector except ICT.
Policy Support
According to Jon Fredrik Baksaas, ‘a predictable and consistent regulatory framework is needed for sustainable growth’ (The Daily Star, 13 May 2015). In 2009, the National ICT Policy was broadly reformulated across areas including education, science and technology, infrastructural development, employment generation, private sector development, agriculture, health and nutrition (Nyenrode Business Universiteit, 2014). The government introduced an e-governance vision and promotion programme for the ICT sector. This vision should support the aim of delivering significant gains in terms of productivity and employment for both domestic as well as foreign investors. The Government of Bangladesh (GoB) amended copyright laws for software and other intellectual properties in 2000. It introduced ICT Task Force and ICT policy in 2001 and 2002, respectively, and also established an ICT incubator along with an e-governance programme under the ICT Task Force in 2003. The IT sector was declared a key priority by the previous government (2007–2013) since it fits their ongoing campaign to create a ‘Digital Bangladesh’ by 2021 (Ahmed, 2014). According to Nyenrode Business Universiteit (2014) report, in order to further develop the ICT sector and realize the export potential of the sector, the government recently took several noteworthy initiatives such as
All software and ICT-based companies, including those under foreign ownership exempt from income tax until 2015. Both a government sponsored long-term equity fund and short-term working capital financing are offered to ICT companies. A special hi-technology and software technology park is being built by the GoB to facilitate the development of the entire infrastructure needed by companies that outsource activities to them. Furthermore, the government has established the Bangladesh Hi-Tech Park Authority to operate the Hi-Tech Park.
Besides, International Trade Support Institutions (ITSI) plays an important role in creating business opportunities for Bangladeshi ICT and ITES companies. Over the years several initiatives have contributed to the growth of the ICT sector in Bangladesh (Nyenrode Business Universiteit, 2014).
However, there are some issues which must be addressed before establishing software companies and new initiatives like Accenture Bangladesh can flourish in this industry. Poor infrastructure including frequent power crisis and slow and unreliable Internet connections are the most immediate problems for the software industry of Bangladesh (Ahmed et al., 2016, forthcoming). Similar to their counterparts, Accenture Bangladesh also comprehends the necessity of ‘an uninterrupted power supply and a second connection with high bandwidth’ (The Daily Star, 9 June 2011). Currently, Bangladesh is connected to a submarine cable network that provides an Internet bandwidth of 24 gigabytes, but more speed and an alternative connection are required in order to attract more overseas clients (Ahmed et al., 2016, forthcoming). Furthermore, there were quite a few barriers for any software company in Bangladesh but they were no means insuperable. Affordable IT infrastructure, uninterrupted power system and high speed Internet connectivity were central to the development of IT sector. At the same time, IT businesses most often could not secure their financial access in local financial institutions due to the intangible nature of ICT products. It was arduous for the Bank to measure the value of intellectual property accurately in absence of a framework for the intellectual property copyright. Moreover, there were few consequential gap between the existing education system and the industry practices. Therefore, greater industry collaboration was needed to bridge this gap (Rahman, 2015). A serious communication gap was evident between government representatives and the ICT sector as government officials had deficient knowledge on fundamentals of information technology.
The Future of Accenture Bangladesh
The new management of Accenture Bangladesh was composed of former GP and GPIT employees, foreign graduates and local IT experts. Accenture’s first step towards the future began with an analysis of current growth barriers. Those barriers were included global competitors, sales cycles, investment and risk averseness for long-term growth, narrow casting international markets, grey practices in local markets and other IT firms and venture capital investors. As far as internal factors were involved, the company set out to investigate its shortcomings in terms of bureaucracy, lack of efficiency in product design, pre-sales, pricing and processes and lack of experience in the BPO industry.
The vision for the future was precise and clear in determining each and every tier of the company. It engaged in setting key performance indicators (KPIs) that would focus on effective stakeholder management (strategic client, partner and customer) by adopting very specific and efficient operating strategy. The main strategic step was geared towards positioning Accenture in a way that would identify its core competitive advantages through specialized products/solutions and service excellence and expertise, not on price. Integration of departments was attained by asking department heads to take ownership of all the projects. It enabled all teams to work coordinately in completing commercial target. The company was also focusing on relatively less developed international markets such as Nepal and Bhutan, and offered its services as an original equipment manufacturer (OEM) vendor to foreign clients.
The new strategy was appeared to be paying off. As a result, the company had managed to establish itself at the forefront of the IT industry in Bangladesh. It served clients in over 15 countries and had partnership with the local government towards developing the IT infrastructure in Bangladesh. Accenture also inaugurated training and employee exchange programmes with many fortune 500 companies worldwide to facilitate knowledge transfer and acquisition.