IT exports from Bangladesh rose marginally in July but it failed to live up to expectations as the sector continues to underperform compared to its peers in the rapidly expanding technology market around the world.

According to the Export Promotion Bureau, earnings of domestic IT firms from the external source rose 3.37 percent year-on-year to $45.65 million in the first month of the current fiscal year.

Revenues generated from the shipments of IT-enabled services (ITESs), which include tasks such as graphics designing, image editing and business process outsourcing, increased 8.03 percent to $40.43 million in July.

Receipts from software exports inched up 1.99 percent to $3.58 million.

The shipment of computer consultancy services fell 43.97 percent to $1.72 million while installation, maintenance and repair of computer and peripheral equipment services witnessed a decline of 63.64 percent to $0.12 million.

As a result, the export proceeds fell short of the strategic export target set by the government for the month by 12.63 percent.

IT exports from Bangladesh slipped for the first time in five years in the last fiscal year, an ominous sign for the government's export diversification efforts as the country is failing to produce big IT firms. Earnings declined 7.42 percent to $548.10 million in 2022-23.

The drop could deal a blow to Bangladesh's target of raising the shipment of IT and digital products and devices to $5 billion by 2025.

"The companies around the world have cut their expenses on technologies due to the global economic slowdown. This has affected orders," said Raisul Kabir, chief executive officer of software company Brain Station 23.

"However, some new local IT firms have emerged in recent times and they are performing brilliantly, enabling Bangladesh to maintain growth in the export market in recent months."

Rashad Kabir, managing director of Dream71 Bangladesh Ltd, says it is a positive sign that the export in IT and ITES has gained momentum.

"Due to higher global inflation, tech companies in the US and Europe have cut jobs and have gone for offshore development. This has created a good opportunity for Bangladeshi IT companies to grab work orders."

Besides, he said, Bangladeshi companies have started exporting software to some untapped markets in Africa and the Asia-Pacific.

"This contributed to the export volume in July."

A director of the Bangladesh Association of Software and Information Services, Rashad thinks rather than focusing only on conventional technologies, Bangladeshi tech companies should focus on advanced technologies such as artificial intelligence, blockchain, big data and robotic process automation.

"There is a lot of demand worldwide for these technologies, and if our IT companies can focus on these areas, they might get an early mover advantage."

Countries such as Kenya, Nigeria, Ghana, Ethiopia, Bhutan, and Cameroon are taking initiatives to digitalise their government services that could offer more opportunities for over 100 companies in Bangladesh that have specialisation in the area.

"Our IT companies can have a closer look at the opportunities," he said.

Revenue in the global IT services market is projected to reach $1,241 billion in 2023, according to global data service provider Statista. IT service outsourcing dominates the market with a projected volume of $460 billion.

India's ITES exports stand at more than $200 billion and Pakistan's $2.5 billion.