ABM - Nepal Commerce and Economic Podcast

From University Bench to IT Project: How Nepal is Bridging the ‘Skills Gap’


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At first glance, the success story of Nepal’s IT sector seems undeniable. In 2022, the country’s IT services exports reached an impressive $515 million, showing a staggering 64.2% growth compared to the previous year. The sector has become the country's main export product, accounting for 1.4% of GDP and 5.5% of foreign exchange reserves. Forecasts for the 2024/25 financial year predict a further increase in the contribution of ICT to GDP to 1.94%. This boom is supported by a vibrant ecosystem of over 100 IT services export companies and a huge community of freelancers who serve global giants in the US, Europe and Japan. Nepal is no longer just an emerging market; it has become a prominent and competitive player in the global IT outsourcing industry.

However, this optimism is tempered by the harsh reality hidden in human capital statistics. According to a World Bank report, a shocking 91% of Nepalese adults are unable to perform basic digital tasks such as copying and pasting text.6The country ranks a dismal 124th out of 134 countries in Wiley's Global Digital Skills Gap Index. While the IT sector is thriving, only 0.16% of the population has an ICT education and only 2% has a STEM (science, technology, engineering and mathematics) education. This creates a profound mismatch: the high-tech, export-oriented industry struggles to find skilled workers domestically. The situation is exacerbated by infrastructure problems: more than 30% of firms suffer from frequent internet outages, leading to significant losses.

This contradiction – rapid growth amid a severe shortage of basic skills – represents not just a gap, but a chasm. The current boom appears to be driven by a small, highly skilled elite. This growth model is inherently unsustainable. Without a broad pipeline of new talent, the sector will inevitably hit a ceiling, fail to scale, and become overly dependent on a few key workers. This is already leading to unhealthy wage inflation (100-200% increases when people switch jobs) and is undermining the sustainability of the entire industry. In the long term, this threatens to create a deep socio-economic divide, where a highly paid “tech elite” thrives while the majority of the population is left out of the country’s most promising sector of the economy. Thus, bridging the skills gap is not just a business challenge, but a matter of national economic security and sustainable development.

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ABM - Nepal Commerce and Economic PodcastBy Alpha Business Media