Information Technology/ ICT

Sector Overview

The IT sector is an emerging area in Nepal. The Government of Nepal has identified IT and business process outsourcing (BPO) as one of the 5 priority potential export service sectors in the Nepal Trade Integration Strategy (NTIS) 2010. IT has the potential to generate high growth, investment, and significant profits in the coming years and is expected to be one of the most significant growth contributors to the Nepali economy.

Business process outsourcing is a major emerging area in IT in Nepal. These IT entities are often referred to as ITES-BPO (informational technology enable services-business process outsourcing). The existing players in ITES-BPO in the market serve both the domestic and international market. Three types of companies are involved in the ITES-BPO sector: local solution providers focusing on the local market, export-oriented providers (e.g., offshore centre), and hybrid providers (both local and export oriented).

An IT Park is being established in Banepa in Kavre District. The total investment in this venture is estimated to be around NPR 270 million (USD 2.70 million). The government is preparing to give a 50% tax subsidy to companies operating in the Park. The Park is expected to develop software, promote IT-based business and provide services, as well as promote investors in related fields. 

Opportunities

Low development costs

• IT developer costs are, in general, lower in Nepal than in other South Asian countries.
• Nepal has been able to propel itself into the international market to become an alternate offshore outsourcing location to India, Pakistan, and other Asian countries. 
• The Nepali time zone is favourable for companies looking to outsource from America and Europe.
   

Business consolidation

• Many companies have consolidated their business in Nepal and developed a niche market for their products internationally (e.g., Verisk Health, Incessant Rain, Cloud Factory, D2Hawkeye, and Deerwalk)
   

IT Park

• The Government of Nepal has shown serious commitment to establishing an IT Park with tax and other incentives. 
• First mover advantages can be reaped by investors interested in this sector.

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