Hiring Software Developers in Bangladesh: Talent, Contracts, IP, Tax and the EOR Route in 2026

Hiring software developers in Bangladesh: the 2026 position

Hiring software developers in Bangladesh gives foreign companies access to a large, English-speaking engineering workforce in a time zone that bridges Europe and East Asia. The legal work is in the structure. A developer can be a contractor, an employee of your own subsidiary, an employee of an employer of record or a member of a team inside a hi-tech park, and each route carries different rules on IP ownership, tax, foreign exchange and termination.

This guide covers the talent market, the employee-or-contractor decision, IP and confidentiality, the 2026 status of IT tax incentives, paying in foreign currency, the Hi-Tech Park option, retention and ESOPs, and how the EOR route works.

Summary: Bangladesh has thousands of software firms and a deep pool of engineers. Most developers are "workers" under the Labour Act 2006 as amended in 2026, so a long-term, full-time developer is usually an employee in substance. IP vests in the employer or commissioning party only absent a contrary agreement, so written assignments matter. The IT and ITES income tax exemption runs to 30 June 2027, salaries remain taxable, and wages to local staff are paid in taka through Bangladesh payroll.

Key point: The cheapest structure on day one is often the most expensive later. A full-time "contractor" who works only for you, on your tools and your hours, is likely to be treated as a worker, with resignation compensation, notice and tax consequences that accrue from the first year.

At a glance

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Table of Contents

The talent market for hiring software developers in Bangladesh

Bangladesh hosts more than 4,500 software and IT-enabled service companies, about half of them members of the industry body BASIS, employing over 300,000 professionals; BASIS puts total ICT sector employment at about 500,000.[1] Official ICT exports were USD 724.6 million in 2024-25, with computer services accounting for USD 629.5 million, and industry leaders argue the real figure is higher because freelance earnings are poorly captured.[1] Supply is replenished each year by an estimated 80,000 to 90,000 engineering graduates.[1]

In our experience demand is strongest for web and mobile development, quality assurance and data engineering, and most teams are based in Dhaka. Senior engineers and engineering managers are scarcer and change jobs more readily, which is why retention design matters from the first offer letter.

Employee or contractor?

The 2026 amendments widened the definition of "worker" in section 2(65) of the Labour Act to cover anyone employed for wages in skilled, technical, business development or clerical work, directly or through a contractor, by whatever name called. The only carve-out is a person with managerial, administrative or supervisory responsibility under section 2(49)(b).[2] Most developers do technical work, so a full-time developer under your direction is likely to be a worker whatever the contract calls them.

Genuine contracting remains a legitimate option when hiring software developers in Bangladesh. A developer who runs their own practice, serves several clients, sets their own hours and delivers defined outputs is an independent service provider. The warning signs of misclassification are exclusivity, fixed hours, company equipment and email, line management, open-ended engagement and monthly fixed fees that look like salary. Our guide to hiring and firing laws in Bangladesh explains what follows if a contractor is reclassified.

Why the label matters for tax

The Sixth Schedule exemption for IT services covers income derived from listed businesses, such as software development and IT freelancing, not salary.[7] The Finance Act 2026 also exempted freelancing income generally.[8] A developer who is in substance an employee earns employment income, which is taxable at the individual slabs, with a Tk 400,000 threshold for general taxpayers and a top rate of 30 per cent, and which the payer must withhold under section 86.[7] [8] Misclassification therefore creates a back-tax problem as well as a labour one.

IP assignment and confidentiality

The Copyright Act 2023 treats software and other digital works as their own category, expressly including source code.[5] Under section 15(1) the author is the first owner of copyright. Section 15(2) then gives first ownership to the employer for works made under a contract of service, and to the person who engaged someone to create an information technology-based digital work, but each exception applies only in the absence of an agreement to the contrary.[5] Moral rights to authorship and integrity under section 78 survive assignment.[5]

The practical rule is never to rely on the default. Every developer, employee or contractor, should sign a present assignment of all IP created in the engagement, a waiver of moral rights to the extent the law permits, a confidentiality undertaking covering code, credentials and client data, and an obligation to hand over repositories on exit. Where an employer of record employs the developer, the chain must run from developer to EOR to client, with the EOR agreement assigning onwards. Our guide to copyright law in Bangladesh explains ownership in more detail.

Non-competes

Section 27 of the Contract Act 1872 makes any agreement restraining a person from exercising a lawful profession, trade or business void to that extent.[6] Post-employment non-competes are therefore weak in Bangladesh. Protect the business through confidentiality, IP assignment, non-solicitation of clients and staff during the engagement, and paid garden leave within the notice period.

Tax incentives for IT and ITES in 2026

Paragraph 21 of Part 1 of the Sixth Schedule to the Income Tax Act 2023 exempts income from nineteen listed businesses, including software development and customisation, SaaS, mobile app development, AI and blockchain solutions, cyber security, data analytics and IT freelancing, from 1 July 2024 to 30 June 2027. The condition is strict: all income, expenditure and investment of the business must pass through bank transfer.[7]

The exemption has not been extended. At a Dhaka seminar after the 2026-27 budget, industry representatives said the budget gave no indication of an extension beyond June 2027.[9] A Bangladeshi development company planning beyond mid-2027 should model ordinary corporate rates, which are 27.5 per cent for most private companies, or 25 per cent where all transactions are through bank transfer.[8] The Finance Act 2026 also gave qualifying startups a nine-year growth period with nil turnover tax, and cut withholding on inward remittances of service fees to 5 per cent.[8] None of these reliefs reduces the tax on developers' salaries.

Paying developers in foreign currency

For employees, section 124 of the Labour Act provides for wages in current coin or currency notes or by bank cheque, or, on the worker's demand, by electronic transfer to their bank account.[3] Local developers on a Bangladesh payroll are paid in taka. Bangladesh Bank's rules that let salary be credited partly in foreign currency are written for foreign nationals, who may receive up to 80 per cent of net income in a foreign currency account.[11] A foreign client funds the payroll by remitting the service fee to the Bangladeshi employer, which converts and pays salaries.

For contractors, Bangladesh Bank's FEPD-1 Circular No 22 of 22 July 2026 lets banks credit freelancers' service export receipts on electronic evidence, requires online Form-C (ICT) above USD 20,000, allows receipts through recognised payment gateways up to USD 10,000 per transaction, and lets software exporters retain up to 50 per cent of net earnings in a foreign currency retention account.[10] Retaining earnings abroad is a breach of the Foreign Exchange Regulation Act 1947.[10] Pay contractors only to their own Bangladeshi bank accounts, with a written contract and invoices, never through informal channels.

The Hi-Tech Park option

For a company hiring software developers in Bangladesh at scale, its own development centre can be located in a park run by the Bangladesh Hi-Tech Park Authority. BHTPA offers investors tax holidays, reduced corporate tax, VAT exemptions on domestic sales and services and leased land or ready-built office space.[13] The specific rates depend on the park and the enterprise's approval, so confirm them before committing. BHTPA is also the competent authority for work permits for companies in hi-tech and software technology parks, while companies elsewhere apply to Invest Bangladesh, which has operated since 23 August 2026 after the merger of BIDA, BEZA and the PPP Authority.[12] [14]

The park route suits a large, long-term commitment with local management and capital. It requires a Bangladeshi company, registrations, an office and full employer compliance from day one, so most clients test the market through an employer of record first.

Retention, notice and ESOPs

The 2026 Labour Act changes affect retention costs directly. A permanent worker who resigns now receives 7 days' wages per completed year for up to three years' service, 15 days for more than three and under ten years, and 30 days or gratuity after that. Resignation requires 60 days' notice, and termination by the employer otherwise than for misconduct requires 120 days' notice for a monthly-rated worker, with 30 days' wages per year or gratuity if higher.[2] See our guide to employment contracts in Bangladesh.

Equity helps retain senior engineers. Section 34 of the Income Tax Act 2023 taxes shares received under an employee share scheme as employment income in the year of receipt, at fair market value minus cost.[7] A resident employee paying an exercise price for foreign parent shares is making a capital account transaction that needs Bangladesh Bank permission, and residents who acquire foreign securities must report them within one month.[4] Cashless exercise, restricted stock units or phantom plans avoid most of the friction. Our guide to ESOPs in Bangladesh sets out plan design.

The EOR route for hiring software developers in Bangladesh

An employer of record lets a foreign company build a team without a local entity. TRW provides this service through its employment and labour practice: we employ developers in Bangladesh on the client's behalf, run payroll and statutory filings, and handle contracts, IP assignments, work permits and terminations under Bangladesh law. The client directs the work; TRW is the legal employer.

The model works for a single developer or a full team, and the team can move into a subsidiary later. Its legal value is that the developers are properly employed from the start, with compliant appointment letters, tax withheld under section 86 and an IP chain that runs to the client. For the governance questions, see our page on international remote work and employer of record governance. The steps we follow are below.

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Frequently asked questions

Is hiring software developers in Bangladesh as contractors legal?

Yes, if the relationship is genuinely independent. A full-time developer under your direction is likely to be a worker under section 2(65) of the Labour Act.[2]

How large is the developer talent pool?

More than 4,500 software and ITES companies employ over 300,000 professionals, and 80,000 to 90,000 engineering graduates enter the market each year.[1]

Who owns code written by a developer in Bangladesh?

The employer or commissioning party is first owner under section 15(2) of the Copyright Act 2023, unless agreed otherwise, so take a written assignment.[5]

Are non-compete clauses enforceable?

Post-employment restraints are generally void under section 27 of the Contract Act 1872. Rely on confidentiality, IP and non-solicitation terms.[6]

Is the IT and ITES tax exemption still available in 2026?

Yes, until 30 June 2027, subject to the bank-transfer condition. The 2026-27 budget gave no sign of an extension.[7] [9]

Are developers' salaries tax-free?

No. Salary is employment income taxed at the individual slabs and withheld under section 86.[7]

Can I pay Bangladeshi employees in US dollars?

Local staff on a Bangladesh payroll are paid in taka. Partial foreign currency salary credits apply to foreign nationals.[3] [11]

How should foreign clients pay Bangladeshi contractors?

Through the banking channel to the contractor's own account, under FEPD-1 Circular No 22, with Form-C (ICT) above USD 20,000.[10]

Do I need a company to use a Hi-Tech Park?

Yes. Park incentives and BHTPA work permits are for enterprises located in the parks.[12] [13]

What does an employer of record do for a development team?

It employs the developers, runs payroll and filings, and handles contracts, IP assignment, permits and terminations, while the client directs the work.