Nepali Times
This is IT


Step into the first floor of Sigma House in Balaju any morning and you will see 40 youngsters tapping away at their keyboards, listening intently to the headphones connected to a special communications set. Fast forward to 2 pm, and you see all of them, the MD included, taking time out in the company cafeteria. Come evening and they're on the company grounds, playing volleyball or badminton. Welcome to the world of IT-enabled services and a new breed of white-collar workers.

After failing for years to get foreign software development jobs in Nepal, IT entrepreneurs are now gunning for IT-enabled services, which are usually labour intensive jobs like medical transcription, call-centre services and data entry. There are already seven such companies in Nepal, two of them full-fledged operations and the others start-ups.

The first movers in IT-enabled services were Geographical Information System (GIS) and data creation companies, Geo Spatial Systems and Digital Meikein. The Japanese-funded Geo Spatial Systems were the first in, venturing into converting old hand-drawn cartographic maps into digital format.

Then came in the medical transcribers-Himalayan Info Tech and Unlimited Numedia. Both companies have completed their first phase of recruitment, and are now training their workers. The medical transcribers listen to recorded accounts of diagnoses and surgery and then transcribe them to be stored in computer databases. Countries have specific rules about how medical records should be transcribed, so quality is a matter of highest concern here.

The third business catching on in Nepal is the call-centre service. There are three firms trying their hand at this. Himalayan Telecommerce is already in beta, and has started test calling, and the other two, Serving Minds and, are in the early stages.

The call-centres are the top-of-the-line IT-enabled service providers. To understand how it works, say, for examples, you live in the USA and want to know the balance on your credit card, promise a payment, or just apply for one, chances are you'll ring the toll-free number and hear what sounds like an American accent, but is actually a Nepali voice giving you all the information you need. Anand is now Andy. Or you could be making airline reservations, complaining about a faulty product, or asking for help in putting together your child's new toy. The same goes for telemarketing -people all over South Asia work all hours, offering strangers in the USA or Canada, information like the latest in blanket vacuum-sealing technology. It's much cheaper for firms overseas to outsource such work to countries like Nepal.

What make these companies important is that they currently provide around 1,000 Nepalis with hi-tech jobs. Employees don't necessarily need to have hi-tech backgrounds-the companies have trained even high school graduates for the jobs. "We want people who understand English, and can maintain a certain quality of work. Their level of education is not very important," says Juddha Gurung of Himalayan Info Tech. His company received more than 5000 applicants, but only 480 were selected. The workers, most of them urban youth, start at around Rs 6000 on completing the the training programme. Once the companies start full-fledged production services, the salary and benefits are sure to go up.

Initial investment in IT-enabled services has already crossed Rs 500 million, and as the companies grow and more come in, the investment amount will also rise. The projected annual revenue from the operation of a single call-centre with 40 people is around $1 million. Medical transcription is potentially an equally lucrative business, with an average rate of 5 cents per line of transcription. Most companies work only single shifts now, but are aiming at round-the-clock services. If properly planned, revenue from such services can easily touch Rs1 billion annually, and provide jobs to at least 5,000 people.

The obvious question then is why Nepal should be an attractive destination for firms overseas to outsource such work when IT giant India is right next door. Entrepreneurs have different answers, but the general consensus is that Indian companies are moving towards global e-commerce-oriented services. Nepal is just entering the info-tech arena and lacks skilled manpower for advanced services, but has a workforce that can be trained in ancillary services and so has a slight price edge over India. Raghu Shah of Himalayan Tele Commerce, a call-centre operator, also cites business ethics and customer service as reasons Nepali companies will get business. "Some companies like smaller outfits like ours, because we will give priority to even the smallest of clients," he adds.

Entrepreneurs are doing their best, but it isn't all smooth sailing. The biggest problem seems to be, as always, government indifference. The IT-enabled services sector is not regarded as an industry and doesn't receive any export concessions. "We pay 20 percent tax compared to 0 percent in India. It's difficult to remain competitive," says Shah.

Entrepreneurs don't want just tax-breaks though; they want to be recognised as a valid, viable export industry. Without that they cannot bring in their export earnings in the form of foreign currency, points out Umesh Bajghai of Geo Spatial Systems. "We've not yet paid any tax, because we applied for our export income to be tax-exempt. But even after a year and a half, the problem hasn't been solved." The various ministries concerned just pass the buck. According to export regulations, companies need to submit, among other documents, a "yellow paper"-a document issued by the customs when goods are shipped. But what of wireless exports? IT entrepreneurs have long demanded that this rule be amended. There's finally an IT policy, but still no legal provision for knowledge and service exports. Tax reduction at source is another bone of contention. The tax office wants companies to deduct tax at source even when paying for satellite bandwidth. "This is ridiculous," says Shah.

For IT-enabled service businesses the 1999 Communications Policy, was a shining star. The liberalisation of telecom services allowed private parties to have their own V-SAT (Very Small Aperture Terminal) terminals, which means they do not have to rely on service providers for bandwidth. But the Policy also dictates that users must have devices installed by local companies, and also buy the equipment locally.

Yet, for all that businesses are still excited and remain open to new ideas. As the Internet has grown, new avenues have opened up. Entrepreneurs here hope-and are certainly acting on the premise-that there will be a trickle-down effect. In such a large and diverse global market, they feel, Nepal can definitely corner a niche somewhere. And developing the requisite expertise in IT-enabled services, will perhaps help the country move into other IT arenas. With a little help from friends in high places and a sustained emphasis on quality, Nepal's IT boom could be just around the corner.

(11 JAN 2013 - 17 JAN 2013)