Nepal’s IT service exports reach estimated Rs145 billion annually

KATHMANDU: Nepal’s information technology (IT) service exports have surged to an estimated Rs145 billion per year (around USD 1 billion), according to the Nepal Association for Software and IT Services Companies (NAS-IT).

Speaking at an interaction program organized in the capital by the Society of Economic Journalists Nepal (SEJON) on Wednesday, NAS-IT President Gaurav Raj Pandey said the country’s IT sector has recorded rapid export growth in recent years.

He stated that Nepal’s annual IT service exports are estimated to have reached USD 1 billion in 2025, a sharp rise from Rs67 billion recorded in a 2022 study conducted by the Institute for Integrated Development Studies (IIDS). While no recent formal nationwide study has been completed, Pandey said multiple informal assessments and industry estimates suggest exports are now around the Rs145 billion mark.

Government Targets and Employment

The government has set an ambitious target to achieve USD 22 billion in cumulative IT exports over the next 10 years and create 500,000 new jobs in the sector. Based on the current growth trajectory, Pandey said the target appears achievable.

According to NAS-IT, around 100,000 people are currently employed in Nepal’s IT industry. Industry leaders say the country’s demographic structure — with a large youth population — strong English language proficiency, and favorable time zones compared to markets such as Australia, Japan, and Europe, give Nepal a competitive edge as an emerging IT outsourcing hub.

Policy Stability and Tax Issues

NAS-IT Treasurer Abhaya Poudel stressed the need for a clear and stable 10-year policy framework to develop the IT sector as a full-fledged industry.

He called for reducing the corporate tax rate to below 1 percent for at least 10 years and simplifying the VAT refund process for IT companies. Poudel said tax provisions remain unclear for foreign investors, creating barriers to investment.

He also noted that Nepal’s lack of double taxation avoidance agreements with key markets such as the United States, United Kingdom, and Australia has made it harder to attract international clients and investors.

Priority for Domestic IT Firms

During the event, stakeholders also urged the government to give priority to domestic IT firms in public procurement. NAS-IT has proposed:

• Making it mandatory to award software contracts worth up to Rs100 million to domestic companies
• Ensuring at least 40 percent participation of Nepali firms in large IT contracts

Industry representatives said this would help conserve foreign currency, strengthen local capacity, and promote knowledge transfer.

Call for IT Promotion Board

NAS-IT has also called for the formation of an “IT Promotion Board”, similar to the Nepal Tourism Board, to support policy coordination and international promotion of Nepal’s IT industry. Pandey said such a body could coordinate with different ministries and Nepal Rastra Bank to address sector-wide issues through a single mechanism.

Push for Investment in AI

Pandey described artificial intelligence (AI) as a transformative technology, even more impactful than the invention of fire or electricity. He warned that Nepal has already missed earlier industrial revolutions and cannot afford to lag behind in the fourth industrial revolution driven by AI and big data.

With countries like the United States and China investing billions in AI, he said Nepal must treat the sector as a national priority.

NAS-IT General Secretary Alisha Shrestha said the association, which began with 32 companies, now represents more than 80 large and mid-sized IT firms, working to improve market access, financial access, and workforce development.