A Case Of It Industry In Bangladesh

Published Date: 02 Nov 2017

Outsourcing is a major international phenomenon in business today. Global IT outsourcing industry has been steadily in the last decade. In the competitive environment of global business and evolving technology era, it is now become a challenge to remain cost and increases efficiency and productivity .Most of the company is trying to shirk IT budget in order to compete with rivals in providing the lower cost advantages to customers. The most of the companies started to explore opportunities global sourcing of IT services in order to reduce cost and profit margin being the primary driver for offshoring service .With today’s challenging economic conditions and increasing cost pressure, more companies are considering at effective use of external providers and are being prefer to offshoring outsourcing to developing countries to take the benefit of comparative advantages.

Bangladesh, despite being ranked among less developed country with over population, would continue to emerge as a favorable destination for information technology and business process outsourcing (BPO). In order to aim at promoting a ‘Digital Bangladesh’, the government has been taking to initiative to develop the information economy and support to laying the groundwork for a successful outsources market. According to KPMG (2012), The IT service of Bangladesh has been growing serving domestic and international in banking and telecom sectors .Now the employ of this sectors 20000 and exporting services to Europe, North America and East Asia. Bangladesh freelancer community had been IT exported to US$7 million in 2010.Many global players, like Samsung, AMD, VizRT and World Bridge Global setting up their operation in Bangladesh.

The main goal of the study will be finding out the influencing factors that influencing the foreign company to thinking investing or outsourcing IT business to Bangladesh.

1.2: Motivation

After completing my MBA program, I will start an IT outsourcing business in Bangladesh, one of developing countries of this world where about 65% of people are changing their lifestyles. I would like to contribute to the economy of country and would like to solve the unemployment problems.

1.3 Relevance of the Study

The relevancies of this research are as follows:

The study will add to existing knowledge relevant theoretical perspective related to outsourcing IT business.

The paper will discuss the scope of outsourcing cover a broader spectrum offering the opportunity to create value to the firm’s business value chain.

Significantly, the researcher will suggest to policy makers how government and other policy such as holiday taxes, subsidiaries can help to increase

The objective of this paper is to improve understanding to the location decision relating to IT business by drawing on theory and past research on location attractiveness.

2. Literature review

2.0 Introduction

The literature will provide a guide to the study: ‘Determinants of outsourcing decision in the IT industry: A case of IT industry in Bangladesh ‘. It will provide information related to business model that will be relevant to IT inventors in their effective use of finance. Furthermore, the literature will help in the identification of the gap needed to be filled in the study. The review will base on journals and articles relevant to the study. The literature will be categorized according to sections.

2.1 Determinants of outsourcing decision in the IT industry

Relatively little academic research has addressed in the international location decision of service firms. Richardson and Marshall (1999) identified eight major location considerations: availability of advanced telecommunications, telecommunication cost, labor pool of sufficient quality, labor costs, government financial incentives, attractive living environment, low occupancy cost and cost-per-seat.

2.2 Challenges faced by the IT industry while carrying out outsourcing decision

Nowadays many companies appreciate the benefit of outsourcing but hesitant to outsource because of security issues .With the growth of outsourcing, security and trust has become an important concern for internal and external stakeholder, other players in IT business outsourcing .

According to a 2003 Forrester Research study of 99 companies, 64% cited intellectual property concerns as the reason for their company deciding not to outsource offshore (McCarthy). Security services offering protection from security threats are: identification, authentication, confidentiality, integrity, access control, and non-reputation. Today, e-business applications are doing more than ever to increase efficiency and

This paper attempts to answer some of strategies and best practices for firms concerned with managing offshore data security risks from both sides of the relationship are presented.

2.3 Possible solutions to the challenges faced by the IT industry while carrying out outsourcing decision

To go beyond the list, we need to place these considerations into a theoretical context. In particular, Dunning (1988) identified three determinants of location. These include infrastructure, country risk and government policy. Graf .Michael & Mudambi.Sussan M (2005) included human capital into this theoretical context. However, Graf .Michael & Mudambi.Sussan M (2005) framework does not include risk security and trust dimensions and these are more important for IT business due to increasing risk, including competitive pressure, hacking and other criminal risks.

3. Problem definition and research questions

3.1 Problem Statement

It is a fact that despite high expectation, over last decade the software and IT service industry could not perform according to its potential in the export front. The export value is still scanty compared to other outsourcing countries in the region. As reasons behind this poor performance, industry experts have identified a number of problems including lack of proper infrastructure, shortage of qualified IT resources, absence of international branding & marketing activities, negative perception and the role of the government ("Bangladesh Beckons," 2012).The study will establish the possible solutions to IT offshoring challenges in Bangladesh.

3.2 Research questions

3.2.0 Introduction

The research questions will be used to achieve both the general and specific objectives of the study. The objectives are as follows;

The general objective of the study is to find out the determinants of outsourcing decision in the IT industry

The specific objectives of the study are;

-To identify the challenges faced by the IT industry while carrying out outsourcing decision

-To document the possible solutions to the challenges faced by the IT industry while carrying out outsourcing decision

3.2.1 Major research question

What are the determinants of outsourcing decision in IT industry?

3.2.2 Minor research questions

What are the challenges faced IT industry while carry out outsourcing decisions?

What are the possible solutions to challenge faced by IT industry in effecting their outsourcing decision?

4. Research methodology

4.1 Nature of the study

The study will base on the already existing knowledge and concepts, and will be deductive in nature. The theories used in the study will help to establish the determinants for outsourcing decision in the IT industry.

4.2 Research Strategy

Due to limited time and resources, a single case study will be used. A focus will be made on IT industry in Bangladesh.

4.3 Type of Data

The study will focus on qualitative data. This will be collected from respondents in the IT industry in Bangladesh.

4.4 Data collection

The primary data will be collected by use of Self-administered-closed ended questionnaires. Both demographic and non-demographic data questions will be designed by the researcher and fed into the questionnaires. The questionnaires will be designed by use of a Five-point Likert scale that will contain the following characteristics:

1 = strongly disagree

2 = Disagree

3 = Not sure

4 = Agree

5 = strongly agree

4.5 Measurement: Validity and Reliability

Pretest method will be used to test the questionnaires for validity and reliability. A selected number of respondents will be requested to fill some questionnaires before the main research is carried out, so as to ascertain whether there are any errors in the questions

4.6 Data access and ethics

To obtain data from the IT industry in Bangladesh, a letter of introduction to the field will be obtained from Maastricht School of Management. The data to be collected from the IT industry will be purely for academic purposes and will be treated confidential.

4.7 Units of analysis, units of observation

4.8 Sampling

A sample of 50 respects will be a selected from the IT industry. The sample will be selected from employees and managers from the selected IT industry. Both purposive and random sampling methods will be used. Purposive method will be used.

4.9 Data analysis

The primary data will be analyzed by use of SPSS, a Statistical package. By using the SPSS, the mean and standard deviation will be generated under the descriptive statistics. The standard deviation will be used to ascertain how the data is spread from the mean. In addition, the relationship between the dependent and independent variables will be established by use of regression analysis.

4.10 Data Presentation

The study results will be presented by use of graphs, tables and pie charts. These will be used to in the interpretation of the research findings so as to be able to make a rational conclusion.

5. Limitation of Study

The possible limitation to be faced in conducting this research will be the accessibility of information directly related to Bangladesh. There are very few research papers written on IT outsourcing in Bangladesh. However, comparison can be done with other countries like India.

6. Structure of the Thesis

The structure of the paper as bellow:

Chapter 2, literature review will highlight the most important and relevant literature on this topic

Chapter 3, will briefly discuss the IT structure of Bangladesh to enable us to understand the nature

Chapter 4, research methodology which will discuss the framework, how data was collected, the research design, problems with data collection, target population and sample size.

Chapter 5, data analysis will focus on data presentation, analysis and findings

Chapter 6, will focus on research conclusions, recommendations and pointing out areas for further study.

6. Planning

The Master Thesis period will run from November 2012 to September 2013. The details of the period are represented below;

No.

ITEM

PERIOD

1.

1st Thesis writing workshop

November 28, 2012

2.

2nd Thesis writing workshop

January 30, 2013

3.

Submit Research Proposal Synopsis(1 page)

February 18,2013

4.

Allocation of Research supervisor

February 22,2013

5.

Submit Research Proposal (10 page)

March 28, 2013

6.

Research Proposal Presentations

April 4-5, 2013

7.

Conduct Research

April-July 2013

8.

Write Research Paper

July-Aug 2013

9.

Submit Final Research Paper

August 12, 2013

10.

Research Paper Presentations

August 19-23 ,2013

11.

Graduation

September 5, 2013