Nepal in Information and Digital Technology

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Nepal in Information and Digital Technology


In the fiscal year 2022/23, Nepal grappled with a staggering trade deficit of 1.454 trillion rupees. It is now evident that the key to mitigating this deficit lies in diversifying the export portfolio to include information technology, digital technology, electricity trade, and tourism services.

Nepal's export portfolio encompasses a diverse array of some 10 items, including palm oil, ready-made garments, pashmina, and handicrafts. Facilitating the export of these commodities requires navigating a labyrinth of intricate provisions and procedures inherent in international trade. Success is contingent not only upon completing these complexities but also on domestically producing and exporting goods and services that can assert themselves in the cutthroat global market. Despite much effort by the government, Nepal's export performance fell short, amounting to a modest Rs 157 billion last year. The challenge persists in effectively positioning and marketing domestic products abroad in substantial quantities. In response to this conundrum, the information and digital technology (IDT) service sector emerges as a promising avenue. Beyond its role as a catalyst for earning foreign exchange, this sector stands poised to mitigate the escalating trade deficit.

In 2022, the nation garnered foreign currency amounting to 515.4 million US dollars (Approx. Rs 68 billion) through the export of IT services—a sector hitherto relegated to the sidelines by government focus. Notably, this substantial revenue stream is exclusively derived from formal banking channels. Industry experts assert that an additional 500 million dollars is estimated to be contributed through informal channels. 

Regrettably, the nation is squandering significant opportunities to accrue substantial foreign currency through the export of IDT services. This oversight can be attributed to the government's failure in streamlining and optimizing the processes associated with IDT export services.

In the fiscal year 2022/23, Nepal grappled with a staggering trade deficit of 1.454 trillion rupees. It is now evident that the key to mitigating this deficit lies in diversifying the export portfolio to include information technology, digital technology, electricity trade, and tourism services.

A recent report titled "Unleashing IT: Advancing Nepal’s Digital Economy, Expanding Jobs and Exports," released by the Institute for Integrated Development Studies (IIDS), sheds light on the missed opportunities. In 2022, Nepal successfully exported IT services totaling 515.4 million US dollars—an improvement from the 303.9 million US dollars reported in 2021, underscoring the sector's growth potential.

In 2020, Nepal realized a noteworthy export achievement in the IT sector, recording an export value of 308.3 million US dollars. Fast forward to 2022, and the export of IT services demonstrated remarkable growth, surging by 64.2 percent compared to the preceding year. Despite this promising trajectory, Hempal Shrestha, an IT practitioner, emphasizes that Nepal is yet to fully capitalize on the immense potential for earning substantial foreign exchange through the export of IDT services. The state's inability to harness the benefits of this burgeoning sector remains a critical impediment to maximizing its economic potential, he says.

“As per the findings of the IIDS study, the export of IT services stands over half a billion dollars, accounting solely for transactions conducted through formal channels. This underscores the significant potential that Nepal possesses in exporting IT services to international markets," remarked Manohar Bhattarai, an IT expert who has previously served as the vice-chairman of the Information Technology High-Level Commission. “The call to action is clear: the government must formulate policies and programs that facilitate the export of information and digital technology, fostering collaboration with the private sector. The imperative is to propel the nation towards a trajectory of increasing exports in the realm of IDT services,” he added.

The IIDS study has unveiled the vast potential that Nepal holds for the export of IT services. Nonetheless, it is acknowledged that the study might not comprehensively encompass all pertinent areas. IT practitioner Shrestha asserts that rather than dissuading the export of information and digital technology services, the government should pivot towards a proactive stance of promotion over the next few years. "This presents an opportune moment for Nepal to extensively propagate IT and digital services within the next two to three years," he emphasized. 

Ranjit Kumar Poddar, the President of the Computer Association of Nepal Federation (CAN Federation), highlights the burgeoning trend of outsourcing from Nepal to foreign countries. “Skilled IT professionals from Nepal are actively delivering services to residents of New York City in the United States, all from the confines of Kathmandu,” said Poddar, “Despite being a landlocked nation, borderless services have already become a reality.” However, Poddar points out that the erratic policy landscape in the country impedes the effective export of IT services from Nepal.

The Dream of Digital Nepal

The IDT landscape in Nepal lags significantly behind, despite a burgeoning demand. IDTs play a pivotal role in the daily lives of individuals and the operational processes of business organizations. Recognizing this, nations globally are channeling substantial investments into Information Technology (IT) and Digital Technology (DT), encompassing the design, manufacturing, and software development aspects of these technologies.

Contrastingly, Nepal predominantly relies on imported digital devices, although a few companies are making strides in developing digital software for export. However, a notable disparity exists as both the government and the private sector in Nepal continue to depend heavily on foreign suppliers for crucial IDT services. This reliance persists despite the annual production of a substantial number of technical professionals by Nepali universities every year for the past few years.

Certain IDT firms in Nepal conduct significant business operations, yet they face a unique challenge—reporting their activities to authorities is hindered due to legal restrictions on their specific type of business. This is notably evident in sectors such as internet-based gaming. Manohar Bhattarai notes, "Some individuals engage in internet-based gaming, but due to the absence of legal authorization, this business segment remains entirely omitted from official statistics. Internet-based gaming is just one example."

Nepal faces a noticeable lag in the fields of artificial intelligence (AI), robotics, and Blockchain. While certain companies within the nation are actively involved in developing AI and robotics products, progress is hindered by regulatory gaps. The promising potential of Blockchain technology, spanning sectors from agriculture to commerce, is hindered by hesitancy on the part of Nepali regulators to embrace this transformative technology. This reluctance is possibly linked to their apprehension about cryptocurrency, an aspect of Blockchain that falls beyond their regulatory purview.

Engineer Bikash Gurung, president of the Robotics Association of Nepal (RAN), reports the existence of over 100 robotics startups in Nepal, dedicated to manufacturing robots, drones, and various digital tools, including AI devices. With an investment exceeding one billion rupees in this sector, Gurung acknowledges that while robotics in Nepal trails behind developed nations, it is on par with other developing countries in the field.

Gurung emphasizes the practical applications of these technologies, noting, "Drones are already being used in the installation of transmission lines, water filling technology etc. We already have seen robots working in restaurants. Similarly, we've witnessed robots serving in hospitals during the Covid-19 pandemic. The production of such drones and robots, which aren't overly complex, is possible within Nepal."

Gurung also shared that four Nepali startups were awarded a sum of USD 40,000 through the recently-organized ‘ADB Hackathon for Sanitation Workers’ to manufacture high-tech robots that could perform tasks like cleaning safety tanks. “We hope that such robots will be employed to clean safety tanks in Bharatpur and Nepalgunj in the near future as a pilot project,” said Gurung. 

"Securing and retaining human resources poses a significant challenge for information and digital technology companies in Nepal," observes Bhattarai, former Vice-Chairman of the Information Technology High-level Commission. He attributes this challenge to the considerable wage gap that exists for such professionals in Nepal when compared to their counterparts abroad.

The IIDS report sheds light on various impediments obstructing progress in the field. A predominant factor contributing to these challenges is the regulatory environment, which not only keeps the cost of crucial infrastructure, such as broadband internet, at elevated levels but also complicates the process of registering and operating IDT businesses in Nepal. “The internet is the most expensive in Nepal in the entire South Asia. Doesn’t that say a lot?” asks Bhattarai.

A common grievance among young IDT professionals is the perplexity experienced when attempting to register their firms at the Office of the Company Registrar. The lack of clarity in identifying a suitable category for registration adds a layer of complexity to an already intricate process.

Despite grappling with various challenges, Nepal's business landscape is gradually experiencing a digital transformation, witnessing the emergence of technology startups. The country's IT sector is dynamically evolving, focusing on application development, consulting, and system integration services, with a notable increase in IT services exports. With over 350 startups spanning software as a service, travel, health, education, real estate technology, and e-commerce, Nepal's entrepreneurial ecosystem is gradually taking shape.

The COVID-19 pandemic acted as a catalyst for startup activities, propelling the launch of mobile money, e-commerce, online learning, and telehealth applications. The IDT services sector, relatively unhindered by traditional constraints like physical infrastructure gaps and logistics challenges, holds the potential to generate employment opportunities for skilled youth, enhance productivity across sectors, and foster good governance.

The private IT sector's growth aligns with the government's strategic objectives outlined in the Digital Nepal Framework (DNF), a transformative program adopted in 2019. The DNF, the government’s plan for realizing the dream of Digital Nepal, aims to position digital development as a pivotal driver of growth and resilient, inclusive development, fostering innovation and competitiveness within the private sector.

However, Nepal's IDT sector confronts several constraints, including a shortage of higher-level technical and managerial skills, regulatory issues such as weak intellectual property enforcement capacity, limited access to finance, and gaps in digital infrastructure. These challenges signify missed opportunities for the growth of Nepal's digital economy. Notably, a significant hurdle is the scarcity of skilled and employable individuals, with gender-specific skills gaps limiting women's participation in digital jobs and entrepreneurship. Addressing these constraints is crucial for unlocking the full potential of Nepal's digital economy.

Digital Nepal Framework

The government unveiled the ambitious 'Digital Nepal Framework (DNF)' in 2019 as a strategic initiative aimed at propelling economic transformation and modernization through the extensive utilization of digital technology. The DNF, endorsed by a Cabinet meeting on October 22, 2019, is designed to enhance service delivery, production, and productivity within the nation.

The primary objectives underlying the introduction of the DNF include laying the groundwork for a knowledge-based society and digital economy, leveraging digital technology to achieve developmental and prosperity goals, and ensuring the provision of simplified and accessible public services to citizens.

“The DNF includes 80 activities divided into eight categories – digital foundation, agriculture, health, education, energy, tourism, finance and urban infrastructure,” says Anil Dutta, a joint secretary at the Ministry of Communication and Information Technology (MoCIT). Dutta who has an over 25-year experience in the IT sector and heads the IT initiatives by the MoCIT, further says, “The Digital Foundation dimension within the DNF is structured around three key pillars: Digital Connectivity, Digital Skills, and Digital Governance.”

The surge in Digital Connectivity in Nepal is noteworthy, propelled by a substantial increase in mobile and internet penetration in the country in recent years. According to the Nepal Telecommunications Authority, the total broadband penetration stands at 126.72% as of mid-February 2022, with mobile broadband at 97.42% and fixed broadband at 29.30%. Notably, over 1.97 million households in Nepal are equipped with internet subscriptions, and the government is actively testing 5G technology.

Despite these advancements, challenges persist in the form of affordability, digital divide, access limitations, and digital illiteracy across various regions of Nepal. Regarding Digital Governance, the government has taken strides in digitalizing public services, including the digitization of land revenue office data, the introduction of the Nagarik App, the launch of the Nepal National Single Window (NNSW) system, and the implementation of the National ID card. However, the effectiveness of these initiatives is hampered by the inadequate capacity of installed technologies and inefficient management of systems, creating hurdles for service seekers.

Within the Agriculture-related framework of the DNF, focused endeavours revolve around technological solutions aimed at augmenting production while curbing agricultural input. The envisioned impact is the elevation of farm productivity and sustainability to meet the escalating demands for food and enhance farmers' incomes. Ambitious concepts, including eHaat Bazaars, agricultural tools sharing, digital disbursement of subsidies, smart irrigation projects, smart livestock and wildlife management, Tele vet medical centers, and Agriculture Product Quality Tracking Systems, among others, have been conceptualized.

Regrettably, these initiatives are yet to witness successful implementation. While farmers can access agricultural information on the internet, and a few mobile applications have been developed to provide them with requisite information, the outreach remains constrained. This limitation stems from the prevalent digital illiteracy among those engaged in the agriculture sector, coupled with inadequate internet accessibility.

The health projects under the DNF align with the government's overarching objective of providing high-quality basic healthcare to all citizens. Leveraging digital technologies, such as videoconferencing, e-learning, and mobile health, the government aspires to address critical issues in healthcare accessibility, affordability, and quality for the Nepali population. The onset of the COVID-19 pandemic served as a catalyst, propelling digital health services forward. The proliferation of web-based online consultations for physical and mental health during this period showcased the potential of digital platforms. Simultaneously, the pandemic provided the government with an opportunity to enhance its digital health information management system.

Despite these advancements, ample opportunities for digital transformation persist within Nepal's health sector. Further progress in leveraging digital solutions can significantly contribute to the overall enhancement of healthcare services in the country.

Education initiatives under the DNF are designed to equip the workforce with the skills needed to seize emerging economic opportunities. This involves integrating digital technologies into classroom learning to support teachers, enhance the learning experience, and elevate educational outcomes. The lockdowns imposed during the COVID-19 pandemic provided the government and education stakeholders with an opportunity to reassess teaching and learning methods.

In response, the Ministry of Education, Science, and Technology introduced a Guideline for Facilitating Student Learning by Alternative Means and launched Sikai Chautari, an online learning platform. However, studies conducted by various organizations revealed that online education faced challenges in effectiveness, as a substantial number of students were excluded from virtual learning due to limited access to online learning materials and the internet.

Within the energy industry, digital initiatives are geared towards establishing a sustainable energy infrastructure that not only mitigates costs but also fortifies energy networks. Noteworthy examples of smart solutions include customer-centric approaches, intelligent transmission systems, and distribution networks, all intricately connected to enhance overall efficiency. In this context, the Nepal Electricity Authority has been actively advocating for the adoption of smart meters, underscoring the industry's commitment to embracing digital advancements.

Digital tourism initiatives in Nepal aim to elevate the country's international profile, attract visitors, and generate employment opportunities for the local population. This involves deploying omnichannel marketing solutions, leveraging e-commerce platforms, and integrating disruptive technologies like augmented reality to bolster the tourism sector. The overarching goal is to promote tourism, enhance skills within the tourism industry, and elevate the overall tourist experience.

Despite efforts to digitize tourism services, such as the introduction of visa kiosk machines at the Tribhuvan International Airport, operational inefficiencies have resulted in challenges for arriving tourists. Lengthy wait times to obtain visas have become a prevalent issue. Furthermore, the absence of point-of-sale machines necessitates tourists to carry USD 200 in cash for visa payments at the airport, highlighting the substantial digitalization gap within Nepal's tourism sector that warrants further attention and development.

Leveraging digital technologies and the robust telecommunications infrastructure, the DNF aimed at advancing the financial services sector seek to address the significant unbanked population in the country. Notably, the financial sector stands out as one of the most digitally transformed segments. Pioneering initiatives, including the National Payment Gateway, Credit Ratings, Mobile Wallet services, and the promotion of digital payments and e-commerce, have made considerable strides.

Monthly statistics from Nepal Rastra Bank underscore the impact of these initiatives, with over 3 million transactions occurring through Connect IPS on average each month. Additionally, mobile banking records an impressive 13.5 million transactions, while mobile wallet transactions and QR-based payments average 13.3 million and 1.7 million, respectively, each month. This robust digitalization within the financial sector signifies a positive trajectory towards financial inclusion and accessibility for a broader segment of the population.

Slow implementation of DNF

Despite the comprehensive nature of the DNF, it's been four years since its approval by the Council of Ministers and subsequent release. While progress has been made, the full realization of the Framework's goals and initiatives is still an ongoing process, underscoring the sustained commitment required for the successful implementation of this transformative vision.

A notable development on the technology front is the imminent completion of 5G internet expansion in Nepal, with Nepal Telecommunication Authority granting permission to Nepal Telecom for 5G testing. Despite challenges, positive outcomes have been observed in sectors such as education and health, particularly catalyzed by the recent Covid-19 pandemic.

Netra Prasad Subedi, another Joint Secretary and spokesperson for the Ministry of Communication and Information Technology, acknowledges that the implementation of policies and programs in the information technology sector has been partial. He points out the deficiency in digital literacy infrastructure within the sector. Additionally, there is a lingering skepticism about the prioritization of the information technology sector by the state. However, Subedi highlights the emergence of new possibilities amidst these challenges and expresses optimism that this will send a positive message, paving the way for future advancements.

Unstable Tax policy

In the fiscal year 2022/23 budget speech, the government outlined a policy imposing a 1 percent tax on the foreign currency earnings of individuals, companies, and organizations engaged in the export of services, particularly in the IT sector. This move was aimed at fostering an environment conducive for companies exporting IT services from Nepal. However, less than a year after the introduction of this policy, the financial bill for the current fiscal year has amended it, imposing a 5 percent tax on individuals earning foreign currency.

Effectively, individuals in Nepal earning foreign currency through platforms like social media are now obligated to pay a 5 percent tax to the government. IT practitioner Shrestha observes that the government's shifting policies are introducing complexities into the IT services export industry. He notes, "The government has escalated the income tax from 1 percent to 5 percent within a single year, strangling the nascent export of IT services. This kind of policy adjustment creates a scenario of double taxation."

Unstable FDI policy for IT sector

The government's stance on attracting foreign investment in the information technology sector appears volatile, contributing to a lack of substantial inflow into this crucial domain. Notably, the foreign investment policy has undergone three revisions within a span of four years, indicating a lack of stability in regulatory frameworks.

During the tenure of then Prime Minister KP Sharma Oli in 2076 BS, the government elevated the foreign investment threshold from Rs 5 million to Rs 50 million. However, facing significant opposition from the private sector, the government, in 2079 BS, revised the Foreign Investment and Technology Transfer Act, reducing the Foreign Direct Investment (FDI) threshold back to Rs 20 million.

The Ministry of Industry, Commerce, and Supplies introduced a notable amendment through a public notice in the gazette on October 9, stating that the minimum limit would not apply when approving foreign investment in information technology-based industries via the automatic route. In response to concerns about procedural obstacles hindering foreign investment attraction, the government, paradoxically, expanded the scope by approving foreign investment up to 500 million rupees through the automatic route. This dynamic regulatory environment poses challenges and uncertainties for potential investors in the information technology sector.

The Ministry of Industry, Commerce, and Supply has instituted a strategic policy to facilitate foreign investment through the automatic route, utilizing the authority granted by subsection 1 of section 42 of the Foreign Investment and Technology Transfer Act. This novel arrangement empowers investors from any corner of the globe to obtain online initial investment approval seamlessly by submitting applications through the online platform.

Baburam Gautam, Director General of the Department of Industry, elaborated on the initiative, stating, "Foreign investors, regardless of their location, can apply to invest up to 500 million rupees. Through the online system, investors automatically receive pre-approval, and notably, we have refrained from imposing any investment limit to attract foreign capital into the information technology sector. We are optimistic that this provision will undoubtedly stimulate foreign investment." The move signals a commitment to streamlining the investment process and fostering an environment conducive to attracting global capital into the information technology sector.

IT sector receiving Rs 12 billion annually in FDI 

The Nepal Rastra Bank's Foreign Direct Investment Survey Report for 2021/22 reveals a noteworthy surge in foreign direct investment (FDI) within the communication and information technology sector in recent years. In 2020, the sector attracted a substantial FDI amounting to 12.61 billion rupees. The momentum continued in 2021, with an influx of 10.85 billion rupees, and further escalated in 2022, reaching 12.73 billion, reflecting a notable increase of 17.3 percent.

The survey report, unveiled on September 27, highlights the service sector's prominent role, constituting 37.3 percent of the total FDI inflow, which amounted to 264.33 billion rupees in Nepal. This underscores the growing significance of the communication and information technology sector in attracting foreign investment, contributing significantly to Nepal's overall economic landscape. 

Within the service sector, the information and communication subsector holds a substantial 48 percent share of Foreign Direct Investment (FDI). In the fiscal year 2020/21, companies in the information and communication sector, under foreign direct investment, remitted a total of 13.98 billion rupees as dividends, according to data from the Nepal Rastra Bank. However, in the subsequent fiscal year 2021-22, this figure decreased to 5.4 billion rupees. Remarkably, the communication sector stands as the second-largest contributor to dividends repatriated from Nepal to foreign countries, following the manufacturing sector.

The Department of Industry reports that in the fiscal year 2022/23, 16 industries within the information and technology sector were registered, pledging investments amounting to 1 billion 72 million rupees. It is anticipated that these registered IT companies will generate 896 jobs. In the same fiscal year, a total of 323 industries were registered with the Department of Industry.

ICT sector’s contribution to GDP stands at 1.9 percent

As per the National Statistics Office's annual report on national accounting statistics for the fiscal year 2022/23, the information and communication sector contributes 1.97 percent to the Gross Domestic Product (GDP). The estimated GDP size, based on consumer prices, for the previous year stands at Rs 5.381 trillion. Notably, the gross value addition (GVA) of this sector is anticipated to experience a 4.07 percent increase in the fiscal year 2022/23 compared to the previous year, driven by the expansion of internet service providers and wireless communication.

According to data from the Nepal Rastra Bank, the financial growth of the information and communication sector has been evident over the years. In the fiscal year 2074/75 BS, the sector's share amounted to 70.27 billion rupees, progressively increasing to 74.12 billion in 2075-76 BS, 82.69 billion in 2076-77 BS, and maintaining the same figure in 2077-78 BS. Subsequently, in the fiscal year 2078-79, it rose to 87.95 billion rupees, with the latest recorded figure in 2079-80 at 92.61 billion rupees. This trend reflects the sector's sustained growth and its increasingly pivotal role in the economic landscape of Nepal.

In the monetary policy outlined for the fiscal year 2023/24, Nepal Rastra Bank has taken strategic measures to streamline physical infrastructure and enhance legal and regulatory frameworks pertaining to electronic transactions, with the goal of simplifying, securing, and optimizing the electronic payment landscape. As part of efforts to foster electronic payments, the NRB has forged partnerships with international gateways and underscored the importance of employing cutting-edge equipment and technology.

The results are tangible, with a noteworthy expansion observed in electronic transaction payments and withdrawals. This concerted effort by the Nepal Rastra Bank reflects a commitment to modernize and facilitate a seamless electronic payment environment, aligning with the broader global trends in financial transactions.

Negligible BFI investment in IT services export

Banks and financial institutions (BFIs) in Nepal have been cautious about making substantial investments in the information technology sector, citing perceived risks. While some BFIs have ventured into supporting information technology startups on a smaller scale, a general reluctance persists when it comes to significant investments. However, there is a notable emphasis on prioritizing digital banking transactions.

IT expert Bhattarai highlights the perceived higher risk associated with investing in the information technology sector compared to other industries, making BFIs hesitant to commit large sums to this domain. Bhattarai points out that BFIs allocate 10 percent of their total loans to the energy sector, indicating a precedent for sector-specific investments. He suggests the need to create an environment that allows for a dedicated percentage of loans, factoring in the risk weightage of the information technology sector, which could foster the sector's development.

Netra Prasad Subedi, Joint Secretary of the Ministry of Communication and Information Technology, concurs, noting that banks and financial institutions in Nepal have not yet made substantial investments in the information technology sector. He observes that information technology companies in Nepal largely rely on their own capital rather than seeking loans from BFIs. The current scenario signals an opportunity for fostering collaboration and establishing frameworks that incentivize strategic investments in the burgeoning information technology sector.

Nepal cannot afford further delays

The urgency for the government to earnestly formulate and implement policies and programs for the promotion of Nepal's IT sector cannot be overstated. IT practitioner Shrestha raises a critical concern, emphasizing that if the government fails to enact timely and targeted policies, there is a real risk of current opportunities being overshadowed by the rapid advancements in artificial intelligence (AI).

Shrestha underscores the need for a specific and timely policy on information technology, pointing out that AI has the potential to perform tasks currently handled by humans in just a few years. He advocates for immediate and well-planned actions, suggesting that the government engage in marketing and branding initiatives in the global market for IT services through its embassies and diplomatic missions abroad.

According to Shrestha, a specific plan within the next 5 years is crucial to prevent being supplanted by AI and other technologies. He stresses the importance of awareness and proactive measures at this juncture, asserting that the nation is well-prepared for progress in the IT sector if the necessary steps are taken promptly.

Govt’s policies and programmes to promote IT services export

In the budget speech for the ongoing fiscal year 2080-81, the government has taken significant strides to bolster the information technology industry. A notable announcement entails the removal of foreign investment limits within the sector. Moreover, a progressive provision allocates up to 10 percent of the foreign exchange earnings from an industry dedicated to exporting information technology services. This allocation is designated for establishing contact offices in third countries, as well as for the acquisition of software, programs, and installation of equipment.

The government's commitment to incentivizing the IT sector extends further, with a noteworthy 50% tax discount on income received in foreign currency for those engaged in exporting services such as information technology business process outsourcing, software programming, and cloud computing. Emphasizing the need for prioritizing the promotion of IT service exports, Subedi, Joint Secretary of the ministry, underscores that this focus is more critical than increasing tax limits for private entities within the information technology sector. This strategic approach aims to propel the sector's growth and global competitiveness.

IT companies and human resources

The landscape of IT-related skilled manpower in Nepal has witnessed significant growth in recent times. Many universities in the country are actively offering courses in information and technology, contributing to the rise in qualified professionals. The allure of IT jobs has been on the rise, driven by the convenience of work and attractive salaries.

According to an IIDS report, Nepal boasts more than 106 IT service export companies, collectively employing 14,728 individuals. Additionally, 51,781 people are affiliated with these companies as freelancers. The number of IT and computer-related companies registered at the Company Registrar's Office stands at approximately 7,000. Impressively, over 100,000 individuals are directly or indirectly involved in the IT industry and sector in Nepal.

In light of this expanding landscape, Subedi, Joint Secretary of the Ministry of Communication and Information Technology, underscores the necessity to register and collect data from companies operating in the information technology industry and sector. He notes that there are an estimated 3,000 to 5,000 workers in companies, including prominent entities like Nepal Telecom and World Link. This emphasis on data collection and registration reflects a strategic move to understand, regulate, and facilitate the growth of the dynamic IT sector in Nepal. 

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