The supply of Information and Digital Technology (IDT) in Nepal is lagging far behind, even though the demand is growing rapidly. IDTs are not just the technologies that individuals and businesses use for their needs; they are separate business sectors themselves. They support the daily lives of individuals and the management processes of business organisations. IDT is similar to business support services provided by small firms with few human resources.
IDT businesses operate not only on the local and national levels but also on a regional and global scale, employing hundreds of people in their workforce and functioning as multinationals. However, this concept does not seem to be widely accepted in Nepal which may explain one of the reasons why this sector is experiencing stunted growth here. Countries are heavily investing in both areas – Information Technology (IT) and Digital Technology (DT). They invest in designing and manufacturing their own devices as well as developing software for those devices. In Nepal, though, almost all the devices are imported. Some, however, are developing software and exporting it. Nevertheless, for most critical activities, both the government and the private sector rely on foreign suppliers. This is despite the fact that Nepal produces a large number of technical professionals from its universities and colleges.
Clearly, retaining human resources is the major challenge for Nepal. The primary reason behind this is the substantial wage gap for such professionals in Nepal compared to abroad. A recent study report by the Institute for Integrated Development Studies (IIDS) has shown that Nepal exported IT services worth Rs 67 billion ($515.4 million) in 2022, a whopping 42% of the total goods exported that year. The report also highlights several problems hindering the development in this field. All these problems stem from the regulatory environment which has kept the price of infrastructure (such as broadband internet) very high and has made it difficult to register and operate IDT businesses in Nepal. Many young IT professionals complain that when they visit the Office of the Company Registrar to register their firms, there is always confusion in finding a suitable category to register their firms. While the world is already testing 6G, the telecommunication system in Nepal has not yet fully upgraded to 4G.
The main reason for the regulatory problems is the lack of sufficient knowledge among bureaucrats. Those who possess the required knowledge are few. If those professionally competent bureaucrats genuinely want to improve the system, they often face resistance from others. The lack of proper regulations results in dishonesty and breeds distrust about Nepali IDT companies and professionals. Consequently, foreign IT companies are often hired even for small needs. This explains why most major businesses, including the government, turn to foreign companies for their requirements.
Some IDT firms in Nepal are engaged in substantial business but cannot report their activities to the authorities because their type of business is not allowed under the country's law. Examples include internet-based gaming. However, since it is not permitted by law, this business remains entirely absent from official statistics. Nepal also lags behind in AI, Robotics, and Blockchain. Although some AI and robotics products are developed in Nepal by a few, progress is stalling, primarily due to regulatory gaps. Blockchain technology holds great potential in various fields, from agriculture to commerce, yet Nepali regulators appear reluctant to engage with it, possibly because they associate it with cryptocurrency, which they cannot regulate. This situation calls for new initiatives from the private sector and IT professionals to engage in effective lobbying efforts as previous attempts have not yielded the desired results.
