With government’s focus on ICT sector in last few years, the industry has grown manifold. More and more companies are getting interested in joining the industry and be a part of this ongoing historic journey towards a ‘Digital Bangladesh’. Most of these young companies are technically sound, yet they lack the business acumen and skills needed for a sustainable growth. The number of young member companies of Bangladesh Association of Software & Information Services (BASIS) exceeds 50% of its total membership. This is definitely an encouraging sign for the industry where more and more new blood gets infused every day. The responsibility of BASIS should be to keep this young blood healthy by providing them with necessary support.
The most common requirements for the new companies are,
(1) Access to finance
(2) Access to legal support
(3) Developing a proper business process
(4) Branding & positioning
Getting finance for a smooth operation of the business as well as for investment to expand has always been a problem for IT companies. Unlike in other sectors, the companies in this industry usually do not possess tangible assets that can be kept as collateral with banks or other financial institutions. The assets of these companies are their software or their services, which are intangible and in almost all cases, unacceptable by the banks as secured collateral. Until we start the process of IP Valuation and including it on the balance sheet, banks cannot really risk their loan on these IT companies. Till then, we need to find a way to help the young (and old) IT companies to access the fund they require. BASIS will enter into an agreement with Non-Banking Financial Institutions like Midas to extend small to medium to large loans without any tangible collateral. The amount will depend on the feasibility of the business plan of the member company. BASIS will certify at regular intervals if the company is in operation.
Another difficulty that the member companies (young & old alike) experience is ready availability of legal opinions or legal counseling. Legal opinions are frequently needed in operations of an IT company, especially in cases of unethical employee migration, theft of source-code, hijacking of clients, etc. BASIS member companies will be able to obtain preliminary legal opinions from a retainer law firm, who will advise them on these issues free of charge. As such, an agreement has been made with a renowned law firm. The member companies will be able to call a hotline number and seek legal opinions without paying any fee. For protecting the Intellectual Property (IP) of their software, member companies will be able to take the assistance of Bangladesh IP Forum, with whom an agreement has been signed. Without copyright, trademark or patent registration, an IT company is helpless in safeguarding its main assets.
It is widely noticed that our IT companies have great technical resources, but lack management and business skills. BASIS has recently started working with a Dutch consulting company who will train the member companies on an optimum business process. They will also advise on HR development issues, marketing and strategy planning, accounting and auditing, etc. The consultants will hold at least two such workshops in a year, where the member companies will be able to participate and go through this capacity building exercise.
BASIS will also enter into an agreement with a renowned chartered accountant firm who will extend their services to the member companies in maintaining their books of accounts. This is very crucial for the young companies for their future growth. It is often seen that technically sound entrepreneurs run these companies who have little knowledge of bookkeeping. This leads to bleeding of funds making these companies sick within a short period. Cash-flow analysis, budgeting, working capital provisioning, etc. recurrently get ignored and that makes many of the BASIS member companies barely afloat. The chartered accountant firm retained by BASIS will provide consultancy on these money management issues and help the companies plan for growth.
As said before, most of our IT companies are adept at technology and many can boast their expertise in latest and sophisticated know-hows. Yet, they cannot properly present their products or services that would attract the attention of a potential client. Their lackluster branding is also responsible for the failure of good products & services. This becomes even more evident when our IT companies participate in international expositions and events. BASIS will have arrangements with professional marketing companies who will help the member companies position themselves appropriately. They will also advise on how to brand the products & services.
For the new companies including the startups who will become BASIS members will get some extra push. BASIS is negotiating with the Bangladesh Hi-Tech Park Authority to allocate at least one floor in each STP for these new companies at either free-of-charge or a nominal rent. There will be a One-Stop Window for these new or potential members from where assistance for application & renewal of trade license, TIN certificate, VAT registration, etc. will be provided.
This eco-system for BASIS member companies will make their foundations robust and enable them to flourish their businesses. This will result in a dynamic and vigorous ICT industry in the country which has always been the primary objective of Bangladesh Association of Software & Information Services since its inception two decades ago.
Syed Almas Kabir
CEO, MetroNet Bangladesh Limited
President, Bangladesh Association of Software & Information Services (BASIS)