Exploring the Information and Communication Technology (ICT) sector of Nepal

Nov. 29, 2023, 5:29 a.m.

Abstract 

 

This research explores the diverse dimensions of Nepal's Information and Communication Technology (ICT) sector and its significant contributions to the national economy. Findings reveal a surge in outsourcing and freelancing opportunities. This research has collected data to understand the overall picture of the IT industry in Nepal.


 

Findings

Telecommunications:

 

Telecommunications companies provide services such as voice and data communication, internet connectivity, and mobile services.

 

NTC and Ncell are the two main Telecommunication services providers in Nepal. NTC is publicly traded in NEPSE and is majority owned by the Nepal government. 

 

NTC’s most used services are phone calls and 4G internet. Although it has attempted to enter into other services such as Wi-Fi, it failed and got outcompeted by many private Internet Service Providers such as Worldlink. 

 

NTC’s market capitalization is Rs 1.5 Kharba (150 billion) as of latest data available.

 

Ncell is privately owned. When it first started, competing with government owned NTC was a huge risk. With its entry, Nepali consumers had options and witnessed a remarkable progress in the telecommunications sector due to competition in the market. It was able to provide superior service to NTC in many ways, but the public generally wasn’t very trusty of Ncell because of its frequent hidden charges. Ncell has been publicly criticized a lot for Tax evasion[1]. 

 

Around 2015, Ncell had a larger market share (48%) compared to NTC (44%) [3]. That seems to have changed lately as Ncell has only 40% while NTC has 53% [4].

 

Another entity called Smart Cell was a big failure in the Nepalese Telecom industry. Government has taken control of Smart Telecom[2]. 

 

Internet Service Providers (ISPs):

 

As of 2021, WorldLink had the most internet customers, with 451,766 people using their services. They had 32.34% of the market. Next is Subisu with 13.17% market share. Vianet has 9.45%. Classic Tech comes fourth, holding 9.11% market share. [5] 

CGnet has recently entered the market in an aggressive manner.



 

E-commerce and Online Services:

 

This sub-sector involves businesses that operate online platforms for buying and selling goods and services. It includes online retailers, marketplaces, and various web-based services. 

 

Daraz is the most successful online marketplace in Nepal. 



 

Digital Media and Entertainment:

 

This sub-sector includes companies involved in digital content creation, streaming services, gaming, and other forms of digital entertainment. 

A lot of Nepalese content creators make their living off platforms like YouTube and Instagram. Budha Subba Digital, 2B Gamer, Laka Gaming, The Cartoonz Crew, Indreni.Com, etc are the most popular Nepali Youtubers. [20] 

Nimsdai, inayat_.16, m_koirala, routineofnepalbanda, promisetamang, etc are the most followed Nepali Instagrammers. [21]



 

ICT Education and Training:


 

There are many colleges in Nepal that offer IT related courses. Besides that, many institutions also provide short training to prepare people for jobs. 

 

Only around 7,500 students take up IT-related courses each year and every year,

around 5,500 graduate from IT colleges in Nepal. Out of this, merely 20% join the

IT industry in Nepal while the rest either move abroad or choose different career

paths. Even out of the 20% who remain in the industry, only a limited number of

technicians are willing to start new ventures or join local tech firms. [10]


 

Hardware Manufacturing:

 

This sub-sector involves the production of computer hardware components such as processors, memory, storage devices, and networking equipment.
Manufacturing is a very small part of the Nepalese economy. Most of the equipment needed for the IT sector is imported from abroad. 

 


Contribution to GDP:

 

ICT contributes around 13% to India’s GDP [7]. But for Nepal, it's only about 2% [6]. With the right policies, the potential is limitless.

In the past decade, Nepal has seen a significant rise in outsourcing and freelancing IT projects, attracting global companies due to lower costs and a skilled talent pool. Noteworthy IT firms like Verisk Health and Cloud Factory have established a presence in the country. The popularity of freelance platforms, combined with clear government guidelines, has encouraged freelancers in Nepal to take on projects from both local and international clients. Currently, Nepal has over 250 IT outsourcing companies and 6,000 BPO businesses, with a 37% post-COVID growth in freelancers in the IT sector. IT jobs now contribute over 20% to the online workforce, and the gig economy is expected to flourish by 2025. [6]

Internet penetration

 

Internet penetration in Nepal in 2022 was 73%. It is comparable to neighboring countries like Bhutan(74%) and Bangladesh(77%) and significantly ahead of India(59%) [9].



 

IT Jobs

 

IT Jobs in Nepal average over 3X per capita income salary in Nepal.[6] This makes IT very lucrative as a career. 

 

For comparison, the job market overall is very bad in Nepal with UNICEF projecting 46 per cent school graduates in Nepal won’t have skills to get decent jobs by 2030. [11] 


 

IT Salaries in Nepal

Web developer: Nrs. 20k - 100k/ per month

Software developer: Nrs 20k - 200k/ month

Graphic designer: Nrs 30k - 50k/ month

System analyst: Nrs 35k - 124k/ month

Game developer: Nrs. 21k - 91k/ month

IT analyst: Nrs. 23k - 82k/ month

IT is considered as one of the secured careers in Nepal. [12]



 

IT companies


 

Homegrown e-commerce, digital services, and mobile wallets have become successful in

Nepal.

They have difficulties in retaining talent:

Growing BPO industry in Nepal discourages tech professionals from working for local tech

companies. Skilled and experienced will work for foreign companies because of higher pay.

For other sectors, firms that invest in ICTs are generally more productive, competitive, and

profitable. bank , school, commerce, etc.




 

e-Government:


 

Nepal currently ranks 125 out of 193 member states in e-Government Development Index

(EDGI).

Ecommerce

With over 40,000 e-commerce sites operating in the country, businesses and

individuals are now able to access a wide range of products and services at their

fingertips.

Accurate location systems and proper physical address systems are needed for

efficient product delivery.

Between 2003 and 2016, retail e-commerce globally grew 16.4% year on year.

From December 16, 2020, to January 13, 2021, e-commerce transactions were

NPR 843 million, rising to NPR 932 million between January 14 and February 12,

2021.  [13]


 

Fintech 


 

Mobile banking user growth:

In Nepal, each person has 5-6 mobile money applications that all do the same thing.

In India, Unified Payments Interface (UPI) has allowed banks to exchange information with

non-bank firms and enabled users to transact with all actors in the financial system.

NRB also prevents service providers from monetizing user data which means fintech companies have to charge higher fees. [14]

 

An average of over 3 million transactions are being carried out through Connect IPS each month.

Similarly, 13.5 million mobile banking transactions, 13.3 million mobile wallet transactions, and

1.7 million QR based payments are being carried out at an average each month.

The user base is rising exponentially. [15]


 

Cybersecurity 


 

Various Cyber Security companies have rose in Nepal such as Eminence ways, Vairav Tech,

Bugv, Cynical Technology. 

 

Most recorded cybercrimes in Nepal in the past four years are linked to Facebook (4,730),

followed by Tik-Tok (447), Instagram (434) and WhatsApp (181).The method is mostly the lure of easy money. [16]

 

NIC Asia’s SWIFT system was hacked by an unidentified hacker who

transferred USD 4.4 million to six different countries. The bank however claims that USD 4

million was later recovered by them. [17]


 

Government

 

The most appreciated work of Nepal Government has been Nagarik App which enables a lot of government related work for Nepalese citizens.



 

Artificial Intelligence 


 

Nepal is ranked at 139 among 181 countries in the AI readiness index in 2022. [18]



 

IIDS Report [19]

 

IIDS had published a detailed report on ICT and some of its highlights were:

 

64.7% of the freelancers have pursued IT-related courses, while 35.3% of them do not have an

IT background but have received some training in the IT sector. They are self-taught.

7,637 companies are registered in Nepal with the Company Registrar

Nepal produces 9,000 IT graduates each year.

IT service export reached USD 515 million in 2022, representing a growth of 64.2% since 2021. 

 

Types of IT education level in percentage

No specific degree 18.5

Certification with IT tech skills 16.0

Diploma level 1.2

Bachelor level 61.7

Master level 2.5

 

Contribution to gdp

2021- 0.9%

2022- 1.4% 

 

There seems to be a lack of a standardized framework, or a specific category dedicated to capturing and recording IT service exports accurately. This ambiguity in data classification poses challenges in understanding the full extent and impact of the IT industry’s contributions

to the economy.

 

Total freelancers

2021 - 42,847

2022- 66,509

 

Annual Income of IT worker in Nepal in USD in 2022

Fresh Entry 2,810 ( Rs 3,73,265 ; 31,000 per month)

Mid Level IT worker 6,395

Senior Level IT worker 15,322 ( Rs 1,70,000 per month)

Freelancers 4,723

 

This data might include those that work for Nepalese companies. Those that work for Foreign

Companies likely have much higher salaries.

 

For comparison, Nepal’s GDP per capita is 1,208 (Rs 13,800 per month)

 

Vast majority of the IT workers are 20-30 years old .

 

IT Export of South Asian and Eastern European Countries in FY 2021-2022 

Volume USD in billion GDP

 

India 194 7.4%

Pakistan 2.1 3.9%

Sri Lanka 1.2 0.3%

Bangladesh 1.3 1.1%

Poland 3.1 8.0%

Ukraine 6.8 4.0%

Moldova 0.4 10.0%

Nepal 0.51 1.4%



 

References 



 

  1. Krishna Acharya, International body rules in favour of Nepal government in Ncell taxation case, https://kathmandupost.com/national/2023/06/10/international-body-rules-in-favour-of-nepal-government-in-ncell-case 
  2. Government seizes control of Smart Telecom, https://kathmandupost.com/money/2023/04/17/government-seizes-control-of-smart-telecom 
  3. Dhurba Gautam, NTC and Ncell: Telecommunication and Strategies https://www.researchgate.net/figure/Market-Share-of-NTC-and-Ncell_fig3_302984182 
  4. Nepal Telecom shines as Ncell’s market share shrinks in Sawan, https://english.insurancekhabar.com/2021/10/115387/ 
  5. Four companies occupy more than half of total internet service market share in Nepal, https://www.newbusinessage.com/Articles/view/13266 
  6. Software Developer Jobs in Nepal (hamrodevjobs.com) 
  7. India - Information and Communication - TechnologyIndia -Info Comm 
  8.  Social Media Stats Nepal Oct 2022 - Oct 2023 https://gs.statcounter.com/social-media-stats/all/nepal 
  9.  ASIA INTERNET USE, POPULATION STATISTICS DATA,  https://www.internetworldstats.com/stats3.htm#asia 
  10.   Sugam Nanda Bajracharya, Barriers to Local Digital Innovation in Nepal https://nepaleconomicforum.org/barriers-to-local-digital-innovation-in-nepal/ 
  11.  46 per cent school graduates in Nepal won’t have skills to get decent job by 2030: UNICEF https://english.onlinekhabar.com/46-per-cent-school-graduates-in-nepal-wont-have-skills-to-get-decent-job-by-2030-unicef.html 
  12. Reasons to study IT in Nepal  
  13. COVID-19 pandemic: Gateway for cashless possibilities in Nepal?  
  14. Interoperability in Nepal: Early innings for an industry heating up 
  15. How far has the Digital Nepal Framework come? 
  16. How Nepalis’ vulnerability grows amid changing nature of cyber crimes 
  17. Cyber Security in Nepal - Greentick Consulting Organization in Nepal 
  18. Artificial Intelligence in Nepal’s Education Sector 
  19. Unleashing IT: Advancing Nepal's Digital Economy 
  20. Top 1,000 youtube Influencers In Nepal | StarNgage Plus  
  21. Top 10 Instagram influencers in Nepal | Heepsy 



 

End