Nepal's IT exports near $1bn, but the official books record a fraction

Ask the central bank how much Nepal earns from selling software and digital services abroad and it will give one number. Ask the industry and it will give a number several times larger. The gap between the two is the most useful thing to understand about the country's fastest-growing export.

Two sets of numbers

Nepal Rastra Bank's balance-of-payments data put IT and telecommunications exports at Rs 22.33bn (about $144m) in the fiscal year to mid-July 2025, according to figures reported by the Kathmandu Post. A study by the Institute for Integrated Development Studies, by contrast, estimated that IT exports had already reached $515m in 2022, roughly 1.4% of GDP. Industry bodies now say the figure was close to $1bn in 2025, having more than doubled in three years.

The reason for the discrepancy is mundane. Freelancers and many smaller software houses are paid through overseas platforms, foreign bank accounts or companies registered in third countries. When the money is brought home, it frequently arrives through the same channels as a labourer's wages from Doha. Gaurav Pandey, president of the Nepal Association for Software and IT Services (NAS-IT), has said that payments often come in labelled as remittance, which makes the sector hard to track. The result is that a business which, on industry estimates, earns more than Nepal makes from refined soybean oil, its largest goods export, barely registers in the official ledger.

Who is earning

The work is varied. B360 lists Leapfrog Technology, TechKraft, CloudFactory, Logpoint Nepal, Trackon Nepal and F1Soft among the companies that have built export businesses. The industry's revenue comes from software development, outsourcing, data processing, AI services, healthcare analytics for American firms and home-loan processing for Australian lenders. The workforce has grown from a little over 70,000 people in 2022 to about 100,000, and around 90% of those jobs sit in Kathmandu.

Growth has run at 15 to 20% a year. Set against Nepal's wider service trade, that matters. In 2024/25 the country exported Rs 238.66bn of services and imported Rs 329.6bn, leaving a deficit of about $590m. Spending on education abroad alone came to Rs 138.48bn, a sum that grows by roughly 18% a year. A decade ago Nepal ran a small surplus in services. IT is one of the few lines that could narrow the gap.

What the budget changed

The government has set itself large targets before. The 2024/25 budget spoke of Rs 3trn in IT exports over ten years and 500,000 direct jobs. The budget for 2026/27 did more of the practical work the industry had asked for. According to B360, it grants a 50% income-tax exemption on IT service exports, cuts the top personal income-tax rate for professionals from 39% to 29%, and promises automated VAT rebates and more double-taxation treaties. It also allocates Rs 5.93bn to information and communications technology and announces a sovereign AI computing centre at Syuchatar in Kathmandu.

NAS-IT welcomed the measures, saying they should raise exports and create higher-quality jobs. It has not got everything it wanted. The association is still asking for a 1% income-tax rate for IT firms, export incentive credits, preference in government procurement and a national IT development board.

The harder problems

Tax relief only helps if the earnings are visible. Analysts quoted by B360 argue that the priorities should be a simple tax regime for freelancers and small firms, banking and reporting systems that classify foreign receipts correctly, and courses that match what employers need. Industry leaders also complain that tax rules change almost every year, which makes it difficult for foreign clients and investors to plan. Foreign direct investment into the sector remains small.

A realistic target, by B360's reckoning, is $5bn to $6bn in annual exports by 2034. That would require compounding growth at today's pace and, more importantly, persuading thousands of individual earners that routing their income through Nepali banks is worth the trouble. For a country whose economy already runs on money sent home from abroad, see how remittances outran the budget, the difference between a remittance and an export is more than an accounting matter. One is a sign of people leaving; the other of a business that could keep them.