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In the next 12-24 months, most tech companies in Nepal will face existential challenges. Exports cease to exist irrevocably. The global war for talent and the culture of celebrity entrepreneurship are the catalysts for further change. If managed properly, this change can steer Nepal’s growth trajectory in a materially favorable direction.
The market for tech talent is borderless – physical or otherwise. At a minimum, the only assets a tech worker should take advantage of are a laptop and access to a broadband connection. Low barriers to entry, combined with many freelancing platforms (e.g., Upwork, Fiverr, Toptal, etc.) have paved the way for a seamless and location-agnostic transition between skilled talent and well-earned opportunities.
Into this equation comes the pay-to-play mentality. Essentially, market forces prevent tech talent from providing services below globally set prices. Based on verified data, these prices are 2-3 times higher than what the local Nepali market can sell. Here’s the rub: Wage rate disparities across physical borders will be normalized in the digital world, creating every incentive for Nepal’s tech talent to serve domestic customers.
A corollary to this fact is the limited talent pool that willingly serves the local market at any given time. Over time, even these resources gain enough experience to grow into Nepal-centric opportunities and graduate into the higher-paying world: working with foreign companies, independently, or for offshore companies in Nepal.
To survive this trend, every Nepalese technical outfit is looking to diversify its balance sheet. With a few exceptions – for example, incumbent category leaders – wage rate pressures ensure that Nepali-only tech start-ups and tech-enabled small and medium enterprises (SMEs) adapt or fail to acquire projects from abroad. Tech brands that rely on the “Made in Nepal” sentiment to sustain their businesses will “die in Nepal,” destroying shareholder value, forcing disinvestment, and driving business capital away from Nepali startups.
Further accelerating the shift to outsourcing is an entrenched and destructive culture of celebrity entrepreneurship. As said, our politics reflects our social and cultural values; By and large, many of our local startups (and their founders) are a reflection of our collective political mindset (and “young politicians”). Our cultural/social bias to mirror cult personalities at the expense of sustainable business models is a recipe for disaster.
The most troubling aspect of celebrity entrepreneurship is the creation of alternate realities that the founders are entitled to. When the fog lifts — and it always does — behind the curtains of self-aggrandizement, there are business models that melt away at the first hint of real competition. Outsourcing companies have become the preferred destination for Nepali tech workers who have survived their zombie startups and famous entrepreneurs.
As tech companies transition to becoming hybrid outsourcers, a once-in-a-generation opportunity arises—namely, the chance to reorient Nepal’s future workforce toward digital skills. The new generation of workforce incomers is already on this path. Yesterday was the time for our policy makers and business owners to catch up.
Rejecting the “Made in Nepal” call of celebrity entrepreneurs is an adaptation to this paradigm shift. Another talent is reconciling with the new and irreversible reality of having the option of moving across borders without physically moving an inch. Enacting policies to promote Nepal as a preferred coastal destination will speed up the narrative of hydropower and tourism that we have been fed for decades to middle-income status.
The ongoing shift is an opportunity for another factor—the clear link between technological prowess and the diversification of Nepal’s exchange base. Reimagining Nepal’s economy to leverage its cultural comparative advantage – namely its workforce – by creating incentives and options for Nepal’s tech SMEs and providing globally competitive services from the comfort of home is a reimagined future. Technology businesses must realign their priorities to embrace this shift, and policymakers must create the regulatory and fiscal space to facilitate this transition.
Now is the future where Nepali tech talent can compete and succeed on a level playing field with talent from around the world. And, in this future, every tech company in Nepal will be an outsourcing company.
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