IT offshoring to Nepal: potency between mountains

Computable EXPERT

Bart van der Linden

Researcher / Analyst

Computable Expert on the topic Outsourcing

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This is the first article in a series on potential ICT-related nearshore and offshore locations. When we think of offshoring in the Netherlands from building software, India is usually the first location that comes to us . There are other interesting countries. Nepal is the first location I get under the microscope, using experts who have an establishment in that country. The italicized words are critical success factors.

With about 29 million Nepali Nepal is not known as a potential offshore country. Yet it would be interesting because of its location, namely above hotspot India. Reason for contacting Frank Möller (CEO) and René Verspuij (COO) of Javra Software. Javra Software develops applications for clients including the Netherlands, America, China and Australia. The "software factory" is in the capital of Nepal, Kathmandu and in total employs approximately one hundred people.

Internet

The offshore site came into view after a study trip to the country. The two Dutch and regularly visit Nepal at the time of the interview they were there too.A direct charter flight to the capital Kathmandu is rapidly achieved, although this line does not fly throughout the year (October to May). With nearly four hours time difference in summer was a bit count of time zones for the interview. There were problems with the Internet. Exactly when the question was how the internet connections in Nepal was made, the connection was again gone. Because the men from Nepal via the Internet called, it was clear that the connection is not very well in Nepal.

Later, this assumption proved to be untrue. It was a security on the router. Road anecdote about the slow connection. Besides the interview for this article Javra are only two companies approached, namely Coders4You and ByProxy. The latter company is in contact with Nepal by Martin Schoenmakers. He has been along the same study as the lords of Javra Software. Since early 2008, ByProxy Jan Kees van Mourik headed by a twenty-member constituent office in Kathmandu. Also Coders4you's twelve-man in that city since 2008. Dennis Evers, owner of the company, has something to say about Nepal. In an interview more than two hours tells the Dutchman living in Nepal and Nepal are passionate about it. The conversation was interesting and lasted for ByProxy so long. The three stories together gives a good impression of the possibilities and challenges of an economy in the making.

Connected with India

Kavra IT Park in Nepal [Photo: Frank Moller]

What are the benefits of offshoring to Nepal? To begin the salaries of IT professionals. That is much lower than in the Netherlands and also lower than in India. A novice programmer will be around two hundred euros per month. A programmer with plenty of experience earns about one thousand euros.Another plus, according Verspuij the Internet. Internet connectivity as part of the infrastructure of Nepal has the same speed as that of its big brother India. This is because the backbone of the country is connected with India.

The policy of a few years ago, strongly focused on the foreign offshore market. Möller and Verspuij indicate that the government has done much to Javra Software to the country here. The university took a special internet cable to the building at the IT park Kavre where the Dutch company was caught. Also the price was lower than normal for their office. The contract was signed with the Minister and this event was even on the Nepalese news.

Appeal Status

In addition to these developments is another advantage that many Nepalese ICT knowledge have. According to Möller, there are a number of technicaluniversities of high quality found in Nepal itself. Evers does indicate that the level is very similar to HBO in the Netherlands. Interestingly the first step Javra Software in the Nepalese market. In the first post of Javra on "Job Natonale Nepal" came in a few hours maitjes of eighty students inside. In Nepal it is a fact of professional status.

Per year, there are several hundred IT workers down in Nepal. But there are also many Nepalis their education in abroad. Popular destinations include neighboring India and America. In 2006, some five thousand students enrolled in America, especially in Boston. Besides all the Nepalese students studying abroad bears the diaspora also contributes to the international work environment . By a period in India or America to work, they bring a lot of knowledge with potential.

At least bilingual

One example is that recently a Nepali in the Netherlands ByProxy walking around, ready to work on it next to his master at the University of Amsterdam to start. an international language like English is the international working atmosphere is no problem for IT professionals. So give both Möller and Evers that Nepalese children from an early age to be educated in English. For this reason, controlling five year olds have two languages, an advantage for working in international non-compromise.

Javra Software migrants from such exchanges between the Netherlands and Nepal, as a policy to take into account the cultural differences . And mastering the English language is therefore highly desirable for this purpose. That the Nepalese diligent, shows that they potential niches diving, such as building applications for the iPhone and iPad, so they give in to Javra.

Electricity is best

Despite all the positive developments in Nepal is still only at 116 instead of the 'Doing Business 2011'-list of the World Bank, with a loss of four places compared to last year. According to the study takes a relatively long time to start a business and the costs are higher than in other parts of Asia. Also, the supply of electricity is not very good and seems in that respect the infrastructure in India. This means that the flow at certain times of long lie down, sometimes fourteen hours a day.

Aggregates with UPS systems offer the warranty that all the computers and keep them in Javra hardly anything about the power brands. Internet is available and certainly not slow or unreliable, but the cost for a 2.5-MB line in Schoenmakers rather on the high side. In addition, the state-owned telecommunications and operates so slowly that, according to Evers.

Yes-men

There are also cultural differences to be reckoned with. Evers in Nepal indicates that an appointment is not the same as in the Netherlands. The appointment there at the last moment without batting an eyelid change. Mllers indicating that a Nepali not quick 'no' response will sell. Even though such a deadline is not met, it will be a Nepali often positive responses. Mourad underlines this so-buckling behavior of Nepalese people. He said it was important to give attention, not without a final end to end.

There is also a hierarchy of more layers than in the Netherlands. Evers system tries to tackle them by example the Ethernet cable in the office. Nepali standards for such action is strange for a manager, but if he tries to find a good balance between the two cultures. The urge to acquire knowledge abroad, according to Van Mourik and Schoenmakers very big. This course is pretty big for them. Evers little notice them. For him, the course is low.

Settle abroad

According to Möller's the help from the government to Nepal more interesting for IT offshoring better. The Nepalese government has since the 2006 re-election in a different policy choice, making tourism as the main form of economic growth is seen. It also stimulates the Nepalese government actively to settle abroad. According to Schoenmakers there are now two million Nepalis abroad who keep the economy running at home. However, the question is whether the most important critical success factor is met, the partnership between government, universities and industry .

By working closely, the three actors offshoring on all fronts in terms of tax incentives, and market knowledge. Examples of successful cooperation between the three are the development of the Chinese ICT sector and of course Silicon Valley. In ByProxy they started a program for students to train as. Netters. IBM has in turn has a link with both the Nepalese government and the university. For the Nepalese government, it is important to this partnership with other companies and universities to start.

Dutch SMEs

Although Nepal in the 116th place of the World Bank's "Doing business 2011'-list shines, it is a country with great potential and opportunities. But only for SMEs, so say both gentlemen Javra Software. India is not in their interest to the Dutch SMEs, because the focus is only on the big boys. Nepal is a good alternative for IT companies such as Software Javra, because in many ways like India. The Internet has the same speed for example, there are standard solutions for the flow problem and many Nepalese IT professionals are accustomed to international work culture.

There are also plenty of IT professionals to find the same zone as Nepal and India. In addition, the market is small, so for new foreign investors is possible to get much attention. And if the government makes more effort, will visit Nepal soon get more Dutch IT entrepreneurs.