All this, and much more has happened in last one decade, thanks to the advancement in the domestic information and communication technology (ICT) sector. Digitisation of the economy is under way.
However, Nepal still has miles to go. It is at the 137th position (2012) in the ICT Development Index, as per the International Telecommunications Union, a UN body for global telecommunication matters. It clearly shows no matter how much advancement Nepal has made in the ICT sector, other economies are advancing at a faster pace.
The progress made so far has been driven by the private sector. Despite being located between two fast growing economies—India and China—Nepal has failed to take advantage. The northern neighbour, China, dominates the global ICT hardware trade, while the southern neighbour, India, is known for software development and is known as one of the best destinations for business process outsourcing (BPO).
“Compared to hardware, we can do far better in BPO and software development, mainly for clients looking for a cheaper labour destination,” says Binod Dhakal, president of the Computer Association of Nepal (CAN). “In the case of utilising ICT for development, the country is yet to exploit its true potential.”
According to a study carried out by the CAN, the Nepali IT industry was worth $42 million in 2008, with an average annual growth rate of 8 percent.
There is no any exact data on the size of investment and IT sector’s contribution to the economy, but based on the CAN study, it can be estimated that the IT industry has an estimated turnover over $110 million now, including hardware/software trading and BPO exports.
Progress and Potential
ICT has become an integral part of one’s daily life. And, it is not only the private sector that is going hi-tech, but also the government is gradually adopting online service delivery systems. Some examples include online company registration launched by the Company Registrar Office, use of ICT in the issuance of voter ID cards and recording their data during the Constituent Assembly elections, and adoption of e-tendering.
The Ministry of Information and Communications has formed a taskforce to carry out a feasibility study to develop the country as a free WiFi zone. The panel under the coordination of Mahesh Prasad Adhikari, board member of the Nepal Telecommunications Authority, has been given 30 days to complete the study. It will suggest the government on funding and technical requirements for the scheme.
Also, under its ICT Development Project, the Department of Transport Management is gearing up to implement electronic driving licence and blue book system. Basically, the local market is considered as the consumer of services produced in the international market. But this notion is changing. Innovative services like CahOnAd (smart phone application) have been successful in attracting global attention, while a number of BPO firms have successfully attract businesses from developed economies like the United States, the United Kingdom, Australia and Japan.
With the entry of the private sector operators a decade ago, the domestic telecommunication market has grown notably. Mobile telecom service, which used to be considered luxury until a decade ago, has now become a necessity. Moreover, the convergence in technology has helped use mobile devices for multiple services like mobile banking and payments.
In the local context, this has become possible due to a significant rise in the number of smart phone and data users, according to Bhesh Raj Kanel, former chairman of the Nepal Telecommunications Authority (NTA). As of October 2013, mobile phone penetration rate of the country has increased to 72 percent.
Development of innovative mobile applications within the country suggests how big the potential of mobile technology is. Although the local market is far behind in the hardware segment, in terms of BPO, software and mobile applications, it holds huge possibilities.
About four months ago, CashOnAd was launched, raising eyebrows of not only domestic but also international marketers. The smart phone application has revolutionised market segmentation and targeting. CashOnAd has so far recorded 90,000 downloads. What is more interesting is the application offers Rs 1 for watching a commercial that plays on the smart phone screen every time a call rings.
The developer has said it will take the product to the global market by this year. “We are targeting to reach around 70 countries and record 5 million downloads within 2014,” said Biswas Dhakal, president of CashOnAd.
Domestic IT forms, which mostly focused on outsourcing, have started to get demands from the domestic market as well, especially for smart phone applications. For an instance, BrainDigit IT Solution, which was originally started as a BPO in 2007, now also serves the domestic market. “BPO is just another business for us as we have started focusing on the local market as well,” said Nitesh Gorkhalai, business development director of the company. He said the company is set to launch two new concepts on product and service promotion—Predicting Game and Ramailo Mart.
The progress in the overall ICT in the country is mainly driven by the private sector, while the government has not been able to catch up with the trend. Even as the government adopted e-governance concept in 2006, the results so far have been negligible even as the time has come to move from e-governance to m-governance.
IT Park in Banepa built around a decade ago has failed to yield desired fruit. “The sector is one of the most neglected one by the government,” said Biplov Man Singh, chairman of the ICT Development Committee of the Federation of Nepalese Chambers of Commerce and Industry.
Given the potential in the BPO sector, Singh said the government should first encourage local firms by giving incentives like tax waivers and addressing problems like load-shedding. Although the majority of BPO firms are yet come under the government record, it is estimated they export services worth $50 million (Rs 5 billion) annually, according the CAN.
A study carried out by the then High Level Commission for Information Technology in 2004, BPO exports stood at $7.2 million annually, with an average annual growth rate of 20 percent. Currently, the global outsourcing market is worth over $90 billion, with Indian and the Philippines being the major BPO hubs, according to media reports. Since Nepal’s workforce is cheaper, the BPO sector has a huge potential for earning foreign currency and generating employment.
Challenges and Way Ahead
There are an estimated 200 firms involved in the BPO sector. However, around only a dozen are visible in market. Also, hardly 50 such firms are registered with the government authorities concerned.
Although the CAN annually organises SoftTech, an event to promote BPO firms and software developers, participation is very low, says CAN President Dhakal.
Even as the government has listed BPO and software as exportable items, both the government and the private sector have failed to promote the country among global clients. Last year, the government had assured of bringing a separate policy to help promote the BPO sector. But the despite formation of the IT Council headed by the Prime Minister and a separate IT Department under the Ministry of Science, Technology and Environment, no progress has been made on this front.
CAN President Dhakal said the government has failed to abide by its own policy. “The policy is perfect, but there is no action plan to move ahead,” he said. Be it finance, health or education, every sector is related to IT one way or the other. At the same time, technology is changing every day. To catch up with the fast changing trend and capitalise on its potentials, the authorities concerned have to be more proactive and change the rules and regulation accordingly. In Nepal, ICT issues are looked after by agencies like Ministry of Science, Technology and Environment, Ministry of Information and Communications and the NTA.
Sudhir Parajuli, CEO of Subisu Cable Net, said convergence in technology has made it possible to provide data, voice and video services from a single cable. “But we are required to take separate licence for all these services,” he said. His company is providing cable TV service and internet service from the same cable, but has acquired two separate licences.
There is still confusion regarding the jurisdiction of the Communications Ministry and the Technology Ministry. The IT Department is under the Technology Ministry, but areas like voice and data service and IP TV falls under the sector is being governed by the Communications Ministry. In a bid to formulate policies, the IT Council was formed but it too has failed to accord priority to the sector. “HLCIT was at least trying to move gradually building local and international relations,” says Dhakal, adding the policy-level confusion and the government’s negligence has badly affected the sector.
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