IT is itNepal's digital products have the potential to be even bigger
Netflix’s One Piece is arguably one of the most successful live action adaptations, so much so that it was renewed for a second season just two weeks after its release.
While viewers revel in Luffy’s quest to find Gold D Roger’s treasure and become the Pirate King, they may not know that Nepali animators worked on the visual effects of the film.
Gone are the days when Nepal just exported palm oil, pashmina, carpets or hydropower. With growing IT and its adjacent industries, 20% of Nepal’s export last year was in IT services.
A recent report by the Institute for Integrated Development Studies (IIDS) estimated Nepal’s IT exports at $515 million in 2022, making up 1.4% of Nepal’s GDP and 5.5% of foreign currency reserves.
“IT and films are two areas that have huge potential in Nepal but have been overlooked by policymakers,” says Kiran Bhakta Joshi whose Incessant Rain Studio worked on the live action for Netflix. “The focus is still on hydropower etc, but IT and films have viable potential for Nepal’s economic growth.”
Joshi worked at Disney for 18 years before establishing Incessant Rain in 2008 in Nepal because he felt there was great scope for digital art and animation by Nepalis in the untapped market. Incessant Rain currently employs 250 people, and 98% of customers are from Hollywood including Netflix, Walt Disney Studios, Fox Studios, Universal Network, Paramount, Warner Brothers, Amazon, and others.
“The volume of work is very high, and we have not been able to take it all up because of the lack of skilled people,” says Joshi, who was forced to outsource some work to India. Which is why Joshi has started a training academy and an internal team to develop its own software.
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People in the industry think the actual figure for IT exports could be much higher than the IIDS estimate. Explains Sanjib Rajbhandari of Mercantile Office Systems: “That figure just represents the amount that comes in through official banking channels. There are many companies that are operating under the radar.”
Outsourcing IT products to Nepal is not new, but in the recent decades the scale of operations and the companies involved have increased. With salaries for Indian engineers going up, more and more companies are looking to Nepal.
The growth can also be attributed to the Nepali diaspora which has been setting up firms overseas, and have their operations in Nepal. Those who return after study and work abroad are also involved in IT startups.
“Nepal provides a whole spectrum of services from business process outsourcing to knowledge process outsourcing,” says Hempal Shrestha, former chair of the R&D Committee, Federation of Computer Association of Nepal. This means Nepali companies are involved in tech support, customer relations to software development, app maintenance, and database management.
Added up, the IT sector presents employment for talented Nepali IT specialists, and props up the economy.
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Sameer Maskey of Fusemachines that works with AI products and as a solutions provider to clients mostly in the US, is confident that his company and Nepal have a bright future in the IT sector.
“With remote work, the IT industry has suddenly become a gateway to transcend geographical constraints,” Maskey said in an email interview from New York. “Our own distributed teams from across Nepal, North America and Latin America deliver cutting-edge AI solutions for diverse international tech companies and the path forward seems even more promising.”
From Nepal, Fusemachines caters to international customers in healthcare, banking and finance, retail, communication media and technology, human resources, education, aviation, food and beverage, travel and tourism.
Although Nepal still has a long way to go before becoming a big player in the international IT sector, its skilled workforce, the high quality of service that companies here provide, and the cost-effectiveness has helped place the country on the world map.
“People are not going to come to you just because you are cheap,” said Vancouver-based Rajbhandari. “You have to build trust and that can only be done with the quality and reliability of your work. Cost-effectiveness with quality work has helped Nepal gain some traction in the international market.”
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One challenge is to retain the talent pool in the country because many young engineers are leaving.
Sameer Maskey says the way to reverse this trend is to diversify IT courses and training while also applying their learning in quality projects and experiences.
“The IT sector possesses the potential to generate a multitude of high-quality, high-paying jobs, spanning roles from software developers and engineers to project managers and analysts,” Maskey said. “Doing this enables students to put their focus on acquiring specific IT proficiencies, and discovering their unique niche. They can bring the income back to Nepal, turning home into a source of income and success.”
Indeed, IT exports present a chance for Nepal to generate higher revenues from international clients, and diversify from the country’s reliance on remittances, and have a multiplier effect on infrastructure and other sectors of the economy.
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Unlike hydropower or tourism, IT is not disruptive to the environment, and the nature of work being basically borderless means Nepal’s IT industry can grow rapidly as long as the government is not too heavy-handed, and issues like double taxation are removed.
Says Hempal Shrestha, “The government can help by curating and incubating the IT sector rather than regulating it for the next 5-10 years. This is an industry that has the potential to create jobs for every household in Nepal.” live-action
Sahina Shrestha is a journalist interested in digital storytelling, product management, and audience development and engagement. She covers culture, heritage, and social justice. She has a Masters in Journalism from New York University.