Nepal’s IT exports prove global competence, empower local startups for innovation

KATHMANDU: Annual income from IT service exports in Nepal has surpassed 67 billion rupees, as revealed by a recent study conducted by the Institute for Integrated Development Studies (IIDS).

The study highlights that approximately 66,500 IT professionals are actively engaged in exporting information technology services to foreign clients, contributing significantly to Nepal’s economic growth.

According to the IIDS report, the IT sector in Nepal has earned a substantial sum of 67.465 billion rupees (equivalent to $515 million) in 2022 through service exports. This figure accounts for 1.4 percent of the country’s gross domestic product and 5.5 percent of foreign investment reserves.

The report emphasizes that IT service exports, along with tourism, hydropower, and remittances, play a vital role in bolstering Nepal’s GDP, foreign exchange reserves, and overall economic development.

The study identifies 16 out of 7,637 IT companies in Nepal that have been actively involved in service exports by 2022. These companies collectively employ 66,509 IT professionals, including 14,728 freelancers.

The report attributes the success of the IT sector to the high-quality services provided by Nepalese manpower in the international market.

Mainly, the IT services exported from Nepal encompass programming, coding, designing, software development, and testing. A considerable portion of Nepali companies (78 percent) receive project-based work.

Notably, around 77.8 percent of Nepali companies hire professionals from the United States, with increasing opportunities also emerging from Japan, United Arab Emirates, and South Korea.

Despite foreign clients’ satisfaction with Nepali companies’ service delivery, local IT entrepreneurs have raised concerns about the lack of opportunities within Nepal itself. They complain that Nepali companies are often excluded from bidding for major IT projects and contracts.

This exclusionary practice was evident in a recent letter of intent issued by Nepal Bank Limited for the procurement of core banking system equipment and software.

The report suggests that investment in infrastructure, such as high-speed broadband internet, can boost the productivity of outsourcing and freelancers.

Additionally, enhancing the skills and qualifications of the IT workforce in Nepal will further stimulate sector growth. The report recommends that Nepal formulate policies tailored to the IT industry’s needs, increase investments in IT startups, and prioritize quality education while promoting and branding the IT sector.

The study highlights the significant involvement of young people aged 20 to 29 in Nepal’s IT sector. To capitalize on this potential, the report encourages implementing youth-centric policies to harness their skills effectively.

Currently, 79.5 percent of the 9,000 IT graduates produced annually in Nepal complete their graduation, with 93.7 percent studying within the country.

In response to the report, Minister of Communication and Information Technology, Rekha Sharma, underscores the government’s commitment to prioritize information technology. The government plans to launch new programs and revise existing ones based on expert recommendations.

Efforts are being made to foster a startup ecosystem that nurtures innovation and entrepreneurship, promote flexible labor policies for IT and innovation-based industries, provide free registration for new companies, and facilitate online registration and cancellation processes.

Overall, the study showcases the immense potential of Nepal’s IT sector in contributing to the nation’s economic progress, while also highlighting areas for improvement and future focus.