Nepal’s Booming IT Sector

Charting a Brighter Future

In 2001, the Government of Nepal established the National Information Technology Center (NITC) and Government Integrated Data Center (GIDC), which marked the beginning of a new chapter in information and communication technology. Although initially created to record data for government offices, ministries, and departments, it quickly became a gateway to developing and expanding ICT infrastructure.

One of the main agendas in Nepal is to generate local employment opportunities, providing alternatives to reduce the number of youth migrating to foreign destinations for work. The IT sector presents significant potential for employment, and the Government has listed IT and business process outsourcing as priority export services sectors under the Nepal Trade Integration Strategy. With the growth of internet access, recent years have seen a boost in the IT sector's growth, creating a vibrant career opportunity. The IT industry has rapidly grown, not only in Kathmandu but also outside the city, with the aim of putting Nepal on the world IT map by 2005. Nepal has become tech-savvy, paving the way for a promising future for the IT industry and tech enthusiasts, ultimately benefiting Nepal's economy.

According to the Nepal Rastra Bank, the contribution of IT services to the country's total exports increased by 17.1 percent in the fiscal year 2020-21, despite the pandemic. This growth can be attributed to the increased demand for online services and IT-related jobs, as more businesses shifted to remote work and online operations. Currently, due to the fast-paced IT development, Nepal’s e-commerce is experiencing over 40 percent growth per annum, according to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Investment Memorandum report for FY 2020/2021.

Creating a new profile in a niche market

The widespread use of technology in today's era has transformed business models, making society increasingly dependent on it. As a result, there has been a shift in market dynamics, leading to the emergence of numerous job opportunities in the IT sector due to continuous development. Nepal's policymakers have acknowledged the global trend of technological expansion and formulated plans and policies to integrate it into the country's development agenda. As a result, Nepal is gradually becoming a hub for IT outsourcing services.

According to the Department of Labor and Occupational Safety,workers from around 100 countries are currently engaged in various projects in Nepal, with Chinese nationals making up the highest proportion. Notable numbers of workers from the UK, the USA, South Korea, India, and Japan are also present. Since 2017, over 7,500 Chinese nationals have obtained labor permits for Nepal, including 2,594 renewals. Foreign workers typically hold technical positions such as project engineering, tunnel and hydro-engineering, maintenance engineering, and mechanical engineering, according to the Department.

The IT sector has emerged as a revolutionary field for employment in Nepal, second only to tourism. According to the Report of Investment Board Nepal, around 500 IT services companies currently exist, with a few having more than 300 employees each to cater to emerging IT elites. With new policies, skilled youngsters, and training, Nepal offers the prospect of lower development costs and access to a vast tech talent pool, making it a perfect offshore outsourcing location for companies from Europe and America. Several IT companies have consolidated their business in Nepal, allowing them to develop a niche market for their products and create a new profile in the IT industry.

App Economy and BPO Services

The Information and Communications Technology (ICT) sector is one of the fastest-growing sectors in Nepal and has great potential for continued growth in the near future as well. The ICT sector comprises the following sub-sectors, and services; Communications Services (Internet, telephone, mobile communication), IT services (IT Enabled Services (ITES) Business Process Outsourcing (BPO)).

Some of the popular companies offering BPO services in Nepal include Verisk Information Technologies, Deerwalk, Javra Software, Leapfrog, F1Soft, Incessant Rain Animation, and Cloud Factory. Many of the companies in Nepal are providing services for other companies in Europe, America, Australia and other countries of Asia. IT-BPO can be a catalyst to Nepal’s tech-based job creation on the lines of neighboring India, the Philippines and Vietnam while adding to the services sector.

With improvement in IT infrastructure, the start-up sector can enable the app ecosystem in Nepal, which combined with mobile devices can unlock an entire new segment of employment. The impact on the job market has been impressive where for each job in the App economy created 2.9 jobs in direct, indirect and induced forms.

From ordering food, applying for citizenship, and paying electricity bills, to booking appointments with healthcare personnel, we all finish up our work and make transactions online using mobile apps. Through this swift digital economy namely digital payment, e-commerce, app economy is increasing. There are many apps like Khalti, e-Sewa, HamroKrishi, Daraz etc. Moreover, even financial institutions have their own specific apps to keep all the data updated, make transactions easy and accessible to all their customers. The higher demand for the development of such apps due to the ever-growing dependency has directly called for the need of candidates who know and are interested in complex programming languages or skilled with digital tools and techniques, ultimately providing innovative youths to get an app developers job.

Empowering Nepali youths

With the growing viability of the IT industry in Nepal, there is an expected strong demand for skilled IT professionals in the coming years. IT professionals in Nepal often earn higher salaries than those in other fields, and IT education can help individuals develop technical and problem-solving skills. The IT industry is constantly evolving, allowing individuals to continue learning and growing.

There are many different career paths available in the IT field in Nepal, including software developer, web developer, digital marketing, data scientist, startup founder, AI and machine learning expert, information technology director, project manager, DevOps engineer, database administrator, VFX artist, computer programmer, and IT officer/network administrator.

"The IT sector in Nepal has generated alternative career opportunities for Nepali professionals in high-paying jobs in areas such as software development, data analysis, IT project management, and cybersecurity. It encourages entrepreneurship by providing a favorable environment for tech startups to thrive and supports remote work, giving Nepalis an opportunity to work for global companies from the comfort of their own homes. This altogether contributes to the overall growth of the economy and the retention of local talent," said UrishaBajracharya, Project Manager at Technorio Inc.

Freelance work in IT allows for a flexible work schedule, which can be particularly beneficial for young professionals seeking a balance between work and personal life. One can work from home or anywhere with an internet connection and can work according to one’s own schedule. It provides an opportunity to work with clients from around the world and exposes one to different cultures, working styles, and perspectives, helping you develop skills and broaden your horizons.

"With the option to work from home for reputed companies, individuals can earn a decent salary while staying in Nepal. This has helped retain talented professionals in the country and reduce brain drain while also contributing to the growth and development of the IT sector in Nepal," states RojalBati, a 28-year-old Software QA Automation Engineer at Plerion.

Source of income during crisis

The COVID-19 pandemic has had a significant impact on the job market in Nepal, with many businesses shutting down or reducing their workforce. However, the IT sector and online freelancing have emerged as a silver lining, providing new job opportunities for Nepali professionals who were struggling with unemployment.

In particular, the demand for IT jobs in online marketplaces like Upwork, Freelancer, and Fiverr increased significantly during the pandemic. According to Upwork's Q4 2020 report, Nepal was one of the fastest-growing countries on the platform, with a 166 percent increase in the number of freelancers registered compared to the previous year. This growth can be attributed to the increasing number of Nepali professionals who are now working remotely for clients worldwide in various IT-related roles, including software development, web design, and digital marketing.

The establishment of IT and Telecommunication companies in Nepal has created job opportunities for IT, computer, software, and electronics engineers. Even individuals who are not IT graduates but have completed academic qualifications in related courses such as web designing, programming, or application development can also find good job opportunities as professionals. This played a crucial role in sustaining Nepal's online workforce during the COVID-19 pandemic.

Challenges galore

Inadequate IT literacy is a major issue in rural areas of Nepal, resulting in a digital divide and limiting opportunities for those who lack exposure to IT and computers. Many government schools do not have the necessary infrastructure to provide IT education, resulting in a significant difference in the knowledge and skills of students. In addition, low digital literacy, especially among the rural poor, and a lack of information in the Nepali language have also become significant problems.

"Both physical and digital infrastructure, including electricity supply, internet connectivity, and access to technology, can limit the growth of the IT sector and hinder its expansion," says Bajracharya. Although an Information Technology (IT) Park was established in Banepa in 2003 with the aim of promoting information technology and services, political instability has prevented it from functioning properly.

While the IT sector is growing in Nepal, there are still some challenges to overcome. For example, there is a skill and communication gap, limited innovative thinking, and a mindset of working solely for others. There is also a lack of government support and incentives, a shortage of software engineering experts, no proper association for IT professionals, and difficulties in receiving cross-border payments.

"Especially with regards to security and technologies like IoT and robotics, we are still lagging behind," says PrakashDahal, a 26-year-old software engineer at Cotiviti. "We do not have good hardware resources and have to import them. Government policies are still not tech-friendly, as shown by the fact that Bitcoin and crypto are illegal. We have a backward mindset as we do not focus on creating new products for ourselves or the world because we are being paid enough through outsourcing projects. I mean to say that we could create products like Facebook and Amazon."

Way ahead

Nepal must develop a comprehensive national strategy to become a significant player in the global IT industry. This should include specific programs, policies, and institutions aimed at building skills and markets. While self-reliance may not be feasible, having a clear vision of local needs is crucial to avoid becoming a repository for outdated technologies from other countries. The government should mandate that technology is evaluated with a Nepali perspective to ensure its suitability for the country's unique context. To support and encourage IT professionals and companies, the government can provide incentives and invest in digital infrastructure. Additionally, revising heavy taxation on Nepal-based IT companies can make them competitive in the region. An association for IT professionals can also be established to coordinate and support each other.

Promoting Nepali IT products can be done through organizing fairs and exhibitions, facilitating reciprocal visits by leading software and IT companies to attend symposiums and seminars hosted by Nepali authorities. Close contacts should be established with the major suppliers in neighboring countries to develop subcontracting opportunities and links to their markets. According to the Digital Nepal Framework report, the telecom and e-commerce sectors are early job facilitators. Nepal's e-commerce sector is valued at close to US$30 million, with over 40 percent growth per annum. The revenue from Nepal's e-commerce is expected to cross $192 million annually by 2023. The telecom sector is also a major employer, with the potential to grow Nepal's job market in the form of skilled workforce requirements for technical work, installation, and maintenance. Growth across internet and ICT-based verticals will enable a larger IT-BPO sector in Nepal, with the potential to add another US$4.0 billion in the fifth year of implementation.

Infodevelopers ICT awards, Computer Associations of Nepal (CAN), Nepal Association of Software & IT Services Companies (NASIT), boot camps, and training programs have helped to flourish the IT sector. The sector is attracting international clients, leading to an increase in the country's exports of IT products and services. This creates new career opportunities in international business, trade, and export management. The development of the IT sector is driving innovation and digital transformation across various sectors, such as healthcare, education, tourism, and finance. This creates new career opportunities for individuals with IT skills and expertise in these sectors. Overall, Nepal's booming IT sector is creating numerous career opportunities, promoting innovation and entrepreneurship, and contributing to the overall economic growth of the country. With the right investments in education, training, and infrastructure, Nepal's IT industry is poised to create up-and-coming employment opportunities in cloud computing, artificial intelligence, computer security, automation, computing, Internet of Things (IoT), software development, IT infrastructure, digital marketing, data analysis, and cybersecurity in the near future.