Nepal Earns Over Rs 125 Billion Annually from IT Service Exports

Nepal’s information technology (IT) sector is generating more than Rs 125 billion annually through service exports, industry stakeholders said on Wednesday, underscoring the sector’s growing contribution to the national economy.

Speaking at an interaction programme titled “Status, Opportunities and Challenges of Nepal’s IT Industry”, organized by the Society of Economic Journalists-Nepal (SEJON) in Kathmandu, participants said Nepal has significant potential to expand its IT footprint in the global market.

Gaurav Raj Pandey, President of NAS-IT IT (Nepal Association for Software and IT Services Companies), cited a study showing that Nepal exported IT services worth Rs 67 billion in 2022. He said the sector has been earning more than USD 1 billion annually since then through service exports.

Presenting a paper on the prospects of digital services and artificial intelligence (AI), Pandey said strengthening IT services could substantially boost the national economy. He urged the government to harness the country’s potential and avoid missing out on the ongoing IT-driven revolution, as Nepal did during earlier industrial revolutions. He also called for an investment-friendly environment to attract both domestic and foreign investment.

Alisha Shrestha, General Secretary of NAS-IT, said the number of IT companies and skilled professionals has been steadily increasing in recent years. She said 80 companies are currently affiliated with NAS-IT, a non-profit organization that promotes innovation and entrepreneurship in Nepal’s software and IT industry.

Similarly, NAS-IT Treasurer Abhay Paudel said the IT sector has established itself as a service-based industry in Nepal and deserves greater policy support for its development and promotion.

Paudel outlined an ambitious target of increasing annual IT service export earnings from the current USD 1 billion to USD 30 billion and creating 500,000 jobs over the next decade. To achieve this goal, he stressed the need for strong government backing.

He proposed significant tax incentives, including reducing income tax to below 5 percent for at least 10 years, to encourage IT professionals to expand their operations and bring in more foreign currency. He cited countries such as Vietnam and the Philippines as examples of nations that achieved remarkable growth in the IT sector through similar tax benefits.

Paudel also urged the government to prioritize Nepali IT companies in software procurement projects worth up to Rs 100 million. For larger foreign contracts, he suggested that at least 30 to 40 percent of the work should be carried out in partnership with Nepali companies to facilitate skill and technology transfer.

He further emphasized the need to introduce IT and AI education from Grade 5 onwards and called for bridging the gap between university education and industry requirements, noting that many graduates still require industry-specific training.

Additionally, he proposed establishing a dedicated IT Promotion Board, similar to the Tourism Board, to address sectoral challenges and promote Nepal’s IT industry globally. He also suggested that the government consider signing double taxation avoidance agreements with major markets such as the United States, the United Kingdom and Australia to attract more foreign investment. – RSS