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Us Based Mnc Investing In Bangladesh

1506 words - 7 pages

Introduction:
In a global economy fueled by advances in telecommunications and information technologies, offshore outsourcing is evolving from conventional international-trade practices.

Every year US companies outsource their task to other countries where they can get their task done by labors at a cheap rate.

IT companies can save up to 30 percent in operational expenses when compared to a US-based operations.

So, setting up a business in those countries where labors are cheap can be beneficial for the company because of this trend.
The ICT industry saw a phenomenal growth over the last decade across the world due to the need of lowering cost and the ability to gain access to ...view middle of the document...

* - a joint venture between Danish company Groupcare and Bangladeshi company Datasoft and last year they had a revenue of US$ 400,000

Why bd?
* India has also became quite a bit expensive and big outsourcing customers like Walmart, Home Depot finds it to be 15% more expensive than it should be.
* Bangladesh is comparably better in the South Asian region with quality IT enabled services output at low cost.
* The government of Bangladesh as stated this sector as a thrust one and facilitate FDI’s in this sector.
* And there are also some of the other benefits for investing in Bangladesh , which are:
* So India is losing its competitive advantage in terms of low cost…
* The labor costs for BD services is 30% of the costs in the US or Europe. Much lower than our neighboring countries.
* tax holiday, tax exemption, venture capital support and some other extra facilities

Advantages in Investing in BD
* It has one of the lowest wages of IT professionals which follows international standards in IT enabled services.
* Lowest Space rent in the South Asian region, 20% less than Delhi.
* Friendly Fiscal and Investment policies and has zero corporate tax.
* Workforce is adequate , easily trainable and much more skilled now with the help of Universities which offers quality IT education.

* Salary of programmers in Bangladesh is 40% of that in India, 50% of Philippines and 70% of Vietnam.
* Incentives given to ease start up cost with the help of lowering utility and energy cost

Financial and tax incentives
* Tax holidays – Exemption from payment of tax is available for periods of five to seven years, depending on the location of the investment.
* Tax exemption on the interest on foreign loans.
* For 100% export-oriented industries, which IT enabled services are too , can be benefited from no duty on imported capital machinery.
* Facilities for the full repatriation of capital, profits and dividends.
* Foreign investors may set up wholly-owned subsidiaries or joint ventures with local partners.
* Incentives are mainly available to investors in the form of tax exemptions
* Other than all these, Bangladesh is now ranked with Top 20 destinations for IT outsorcing.
Industry Analylsis:
* With the help of Bangladesh Association of Software and Information Services (BASIS), the industry is in a vision of developing vibrant software & IT service industry in the country.
* The industry no more remains at the sideline and has joined the mainstream of the whole IT industry of the world.
* Not only the industry is contributing significantly in the national income, but also it has been playing very crucial role in creating highquality employment for a sizable portion of young graduates of the country.

Operation and Finance:
* It is easier to set up IT companies in Bangladesh than other types of companies because not much...

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