Vol. 3 :: No. 2 January, 2001 (Poush-Magh)

Cover Feature

IT Enabled Optimism

Soon after the announcement of the policy the people involved in IT said that they were quite satisfied with the policy. Though it took almost two years for the government to prepare the policy, it had involved the private sector also in its preparation. One example is enough to indicate enthusiasm of the private sector. Computer Association Nepal (CAN) is holding this year’s CAN INFO–TECH, an annual IT exhibition, in the expansive Birendra International Convention Centre as against a limited space of a four-star hotel floor in previous years. But the private sector has now started pointing out that though most of its recommendations are incorporated in the IT policy, a number of critical ones are missing. As the latest newspaper reports show, it has also started raising concerns whether this policy too is going to be like all the other policies of HMG – good if not excellent, but not implemented in the earnest, thus defeating the whole purpose of the policy.

Reasons for the concern are provided by some overambitious targets and provisions of the policy. It aims at placing Nepal on the global IT map within next five years, and targets to provide computer education to every Nepali by the year 2010. That is good 10 years earlier than 2020 by which, according to the other programs of HMG, the country is targeted to achieve 100% adult literacy.

One provision in the policy states that hardware and software for IT can be imported against the payment of a nominal import duty of 1%. But this facility is restricted to the IT education institutes and IT units located inside the IT parks proposed to be set up first in Banepa (some 30 km east of Kathmandu), and later in each of the five development region. The provision is against the interests of the already existing IT companies. Moreover, the existing IT entrepreneurs also point out that, in the present context, such parks are redundant and cannot attract business. All the things can be done by the individuals at home. So there is no compulsion to go to a park.

Even without a policy or law, the IT industry was thriving in the country. Nepal had started IT business in 1984, and at that time no country of South Asia including India was even aware of IT. And the business volume in this industry now in Nepal is estimated to be at least Rs. 600 billion, just considering some services, training and the like (see box). The figure would go well high if all the other businesses related to it are considered. A study of the World Bank in 1998 has concluded that Nepal has a potential to "export US$ 50 billion worth of IT products in the coming 15-20 years."

IT professionals estimate the growth rate to be 20% in the number of PCs in use in Nepal, out of which 60% are estimated to be locally assembled and 40% branded. Number of Internet users is increasing at a rate of about 30-40% per annum. In exports, Bijendra Shrestha, the MD of Digital Meiken and Infonet Nepal, says his companies have achieved a 90% growth in business volume between last year and this year. This is in spite of the fact that in the absence of relevant law, the exporters of IT products have difficulty in bringing in the export proceeds through official channels.

These growth rates look impressive in comparison to other sectors of Nepali economy, but are peanuts when compared to the growth rates neighbouring countries are achieving. At the current growth rate in Nepal, IT policy’s target to hit Rs. 10 billion in software and hardware exports within five years may look highly ambitious.

Causes to say so are several. First, there is no synchronization developed as yet among the IT sub-sectors. Take the example of HRD. As soon as the trainee completes the training, he or she starts looking for an opportunity to go abroad, lamented Yogesh Mishra, CEO of College of Software Engineering, a premier IT education institute which also has a wing engaged in software development. Because of this brain drain, the country always remains short of high level manpower. Second, the IT sector has not yet become much attractive for job seekers. Very seldom do the best students opt for this sector to make a career. This is because of lack of awareness, say the existing IT entrepreneurs, who come with a very good academic background but have failed to attract enough number of equally good deputies for themselves.

Coming at a time when employees agitation hit the hotel industry very hard, and the businessmen involved both in exports and domestic sales are demanding amendments in the labour laws to ban strikes, the IT policy has put IT industry under the essential services category. This means strikes in IT industry are banned. But it seems to be an example of thinking excessively long-term. So far there has not been any instance of labour trouble in this industry in Nepal.

Making policies for a long-term seems to have become a fad among policy-makers in Nepal. After 20-year Agriculture Perspective Plan, the government brought out a 20-year plan for communication sector. Fortunately, IT policy does not talk about 20 years, but the policy makers seem to be confused. Being cautious of the fact that the entire system may get changed in IT where technological changes are coming almost every day, they have put a provision saying that it will be amended after two years. But the IT professionals point out that it would have been better if the provision had allowed for more frequent amendments. Perhaps the policy-makers were also cautious of the complaints that Nepali government has been changing policies very often causing policy instability.

For the lack of a policy and legal clarity, significant investment in IT sector from the established business houses was not coming in. Though Sharda Group has very recently set up an IT company, Network Technologies, under an Indian joint venture, that can be taken as a very rare example. Similarly, though the other well-known IT companies such as Mercantile, Unlimited, Infonet are owned and managed by persons with family background in business, the owners prefer to identify themselves as technologist-entrepreneurs. The result is an industry dominated by technologists as entrepreneurs who are constrained by lack of finance to expand and lack of managerial capabilities to handle the organisation. So much so that now the established business houses have started believing in such myths as : you need to be an IT expert yourself to do an IT business, and that IT needs a very small investment to begin, so it is not worth paying any attention to by an established business house. Consequently, there are now a number of IT companies with foreign investment, but very few with investment from local business houses.

The reason perhaps is the lack of awareness among the business houses about this sector or they might have noticed that this sector is very risky to go into, as it was not governed by any national policy till recently. The second concern may be now removed by the IT policy, but the awareness problem seems to be still there.

For the lack of awareness, the IT experts themselves may be blamed. Though there have been innumerable write-ups appearing in the newspapers and magazines about IT and umpteen number of seminars and workshops held to woo the business houses, all these efforts seem to have failed. All these write-ups are by IT experts who are the resource persons in the meetings also. And when they speak or write about IT, they sound like talking in Greek. All the technical jargons that they use are quite beyond the comprehension of the ordinary mortals, who have not been trained in IT. "I'm interested to invest in this business, but do not understand what my would-be partner or employee is speaking about", says a noted businessman. This is in spite of the fact that most of the words that sound like Greek are found in a standard dictionary. One IT expert says, "all you need is to be IT savvy", meaning "you should have interest to learn the terminology". Perhaps this indicates to the level of English language knowledge existing in Nepal, where only 2% of the population is estimated to be able to read and write English. India’s achievement in IT so far is attributed to the English language competency.

However, IT is not much different from any other business. While hardware and accessories business is like any other trade, a number of traditional business houses have already been involved in this sector. In case of software and IT enabled services, the differences are more striking such as call centre operation (see box in page 29 for call centre). For example, such business uses different method of delivering the product, there is no finished goods inventory, and this business involves very little paperwork. All these are baffling to existing business houses of Nepal. But as with any other form of the businesses, IT industry also requires personnel, finance, marketing and logistics management. Existing IT entrepreneurs, who are mostly technologists, say they need the participation of established business houses for these aspects of the management. "We hope they will bring corporate management in the industry, and they will bring more business because of their already existing relationship with the big businesses abroad", says Allen Tuladhar, CEO of Unlimited Numedia, an IT company now specialising in Medical Transcription and ISP business.

But looking at the level of corporate culture in the business houses of Nepal, the expectations of the existing technologist-entrepreneurs seems to be difficult to be fulfilled. IT industry needs a corporate house that is comfortable with the latest trends in the corporate management. To avoid the risk that the technical employee would use the organization’s set up for his own personal benefit rather than for the company or to make sure that he does not desert the company in search of greener pastures elsewhere, the IT companies abroad offer the employees various other benefits. For example, stock option for the senior employee is a normal practice abroad. But how many of the business houses here would understand that?

Under such a situation, the hope that the Nepali IT industry can pin is on foreign investments. And the IT policy talks about encouraging foreign investment in this industry. However, whether the foreigners will actually come or not is to be seen only in the future. And foreign investment would be influenced by many other legal, infrastructural, and social factors including the security situation. The optimism may, however, be based on the fact that some joint venture IT companies are already operating in Nepal, even without the IT Policy (Though Pilgrim Asia closed its Nepal office because of the lack of a policy and suitable legal framework). Now that there is a policy on which the business can be based, more of the foreign investment can be expected to flow in looking at the wage differentials between Nepal and abroad.

The more attractive opportunity that Nepal has now is in the form of the Nepali IT professionals working abroad. If they are encouraged to come and invest here, they will bring with them the money and the connections as well as the experience of how to manage an IT company. Such a Non Resident Nepali (NRN) solution, as India has been following with Non Resident Indians (NRI), can be expected to bring tremendous boost for the Nepali IT industry. And the IT Policy also talks in those lines. But the outcome is still in the future. It may also be recalled that Pilgrim Asia's coming to Nepal was largely due to the fact that one of the vice presidents in the company was Nepali. One can only wonder how he may be able to convince the company to come here again after the quite recent experience.

The major concern, however, of the IT industry at present is about the seriousness of the government. Two years back, Nepali IT professionals were suggesting for the adoption of cyber law and policy just for the sake of showing them off to the foreigners. But today, show-case policies are not going to be enough. Some activism on the part of the government is required, as was the case in Singapore or Andhra Pradesh (India). When asked, the Nepali IT professionals tell you that the Ministry of Science and Technology and its headman Minister Surendra Prasad Chaudhary were involved with missionary zeal in the formulation of the IT policy. But what about the other ministries and departments of HMG that have to help with equal zeal in the implementation of the policy ? Nobody can say for certain at present, but one need not wait for long to see the answers. If IT stands for something that is fast moving, all the ministries and departments will be "fast moving" in the days to come and there will be tremendous changes in the governance before the Nepali new year is celebrated in mid-April of 2001. As of now, can anyone guess how many government departments or ministries have their web sites or e-mail
addresses ? If one gets them, one may expect that the government is really going to fulfil one of its promises made in IT policy. But it also shows the stage from where Nepal has to start in
IT – right from scratch !

This is the present condition from where HMG has to start in bringing about e-governance. In case of
e-commerce, some companies have their web-sites, but all these sites offer is more promotional stuff. Product also are displayed for which the customer can place the order, but cannot pay online because such transaction is not governed by any law as yet.

IT Sector Business Volume (per annum currently)

 Plus

• Hardware sales20000 pcs
• Networking
• Printers
• Communication
• Data Networking
• Voice
• ISP

• Consultancy
• Sales/distribution of software from foreign co's
• Power system (UPS, solar)
• Support (Repair & maintenance)

 Major IT Training Institutions

Some Major IT Service Exporters of Nepal

 NB : These are some better known exporters. However, there are many others who are not so well known, but are exporting high value IT products and services.

Television:

Radio:

IT Education

Technical education started in early 80's
Technical courses in Electrical Engineering started in mid 60's
Computer Engineering started in mid 90's.

Man Power Scenario

Source : Information Technology 2000, A CAN publication, with updating from various other sources.

  IT Business Myths

That may help, but is not a compulsory requirement. Professionals can be hired. Some old Nepali business houses have already made the start. Technical people may be entrusted the technical side of the business. But what they need is finance, marketing and other management support, which established business houses can provide. However, what is needed in IT is not an ordinary, traditional business management but the most modern way of business management. Still becoming IT savvy will help you a lot.

Volume of investment depends on the scale of operation. You can start modest and grow gradually. If you say that you have 10 or 20 software engineers, the foreigners do not judge you to be worth giving a business. You must be able to say that you have 200 or 400 engineers to attract overseas business.

Yes, but .... You have to be specific in the training content you are going to receive. Just taking any 5 in 1 package available in the market may not be helpful. You should know what you want.

You can go along with a manpower plan and create your own workforce to suit your needs. A company spent about Rs. 800,000 in advertisement to get manpower but found none. Another one says, it spent Rs. 8,000 only and found its requirement.

Very risky. The image of your company gets spoiled, if your target is foreign market. For domestic market, starting small may be OK.

IT, Infrastructure & Education

Two years ago Prabhakar SJB Rana, chairman of Soaltee Group, one of the most professional business conglomerate of Nepal, told this scribe that it was easier to teach the Nepali people grow silk or open a hospitality business than to teach them how to make or operate a computer hardware or software. Agriculture and hospitality both are undoubtedly ingrained in the Nepali tradition. Over the two years, the context however has changed a lot and now Rana also may have changed his opinion. But not much, probably.

In 1997, the literacy level was, according to the same budget speech, 52.6% (39.6% in 1990) and the target set for the end of the 9th plan is 70%. If achieved, the number will be of Nepali literates. What will happen to the number of English literates ?

Perhaps the solution lies in spreading computer education and making the computer able to respond to commands given in Nepali. Though the IT policy recently announced talks about computer education and development of "multilingual computing" and placing "Nepali content" in Internet, it is not so specific about standardisation of Nepali fonts. And an effort was indeed underway in this direction. But it is now stuck, because the basic problem of font standardization is still unresolved. Though there are a number of Nepali fonts being used to type Nepali text, each of the font is different. Indian experience has not been of any help in this regard for two reasons. First, they use English numerals, whereas Nepali numerals are must for Nepal. You cannot write >L 5 sf]
;/sf/. Second, in India, the Hindi alphabet has letters only upto ‘x’, whereas in Nepali we must have If, q and ! also. The problem was further complicated as Royal Nepal Academy’s Nepali language dictionary has no entries for If, q and ! . However, it is learnt that the next edition is going to have entries for these letters also.

In this context what Nepal needs for development of IT is a missionary leader in the bureaucracy to develop the necessary infrastructure – both physical and institutional. Then, the focus has to be in education – both language and technology. The third is for standardisation of the Nepali script for computer use. All these are, necessary for Nepal to experience an explosion in computer users’ number, which will open the opportunity for e-business.

By KG

Ignorance of Dot Com

Technology has made tremendous jumps these past couple of years and yet companies still remain within the cocoon of ignorance feigning Internet expertise. Somehow, companies (small, medium and large) do not seem to accept the fact that the world is turning into a digital economy, where business without well thought Internet presence will find increasingly difficult to operate, and that just putting up a facade of having a web site is not going to suffice. Ironically, every other company wants to be in IT (Information Technology) business because it is doing so good globally. In what form, function and output do these companies define IT will make a very interesting report.

Companies need to be frank enough to admit that they need much more expertise to be able to manage their Internet requirements on their own or possibly identify their requirements initially. They also need to hear the experts for sound advice and suggestions. The key is not to be led into by the cajoling of smooth talking sales people who unbelievably offer cheap options. Like any business undertaking, a serious thought needs to be given, and the long-term implications should be taken into consideration.

Generally, we see companies using e-mail addresses such as name@xyz.com.np or name@company.xyz.com.np that has the name of the service provider attached or (.np) suffixed. Similarly the website addresses reads www.company.com.np or www.xyz.com/company. Very few have TOP Level Domains (TLDs) for their web address that would read like www.company.com and subsequent e-mail address like name@company.com.

Maybe, it is the ignorance of the technology or fear from it. Companies in Nepal have been slow even to register the domain name of their own companies. With over 40,000 domains being registered globally every day, most of the companies find to their chagrin that their domain has already been registered by someone else or is being squatted upon by cyber enthusiasts in order to sell it at a higher price. Internet knows no boundaries or geography. Speed becomes the essence of business survival.

In order for companies to have their very own TOP Level Domain with e-mails configured accordingly (and thus become web enabled) enlisted below are the services that are necessary.

Domain registration

The first step is to register a TOP Level Domain of the company. Should the desired choice be available, the service provider sends request to register or an alternative need to be made if the earlier choice is not available. The most widely used three extensions viz: .com/ .org/ .net refer to commercial, organizational and network companies respectively. It is recommended that all three be registered. Normally, registration authorities confirm the request within 48 hours.

This service is provided at a nominal annual fee. Some even offer it free in a package deal. Once registered, the domain allows configuration of unlimited e-mail addresses directed at the domain. This is one of the many advantages of having one’s own TOP Level Domain. Apart from this, as website and its content is accessed globally, e-mails can be accessed from any part of the world. No longer a hotmail or yahoo address need be used while travelling outside the city of residence.

Any number of e-mails that arrive at the existing functional address can be redirected to the new e-mail address automatically. Similarly, any existing website can be reflected to any other or new domain. People might write in at the old e-mail address or log on to the old website. All this is automatically directed to the new addresses.

DNS maintenance

The service provider who registers the domain name would want to maintain it too. DNS (Domain Name Service) maintenance is usually not a user - end exercise, but of the service provider who hosts the web content and/or run e-mail addresses. Most companies normally charge this on annual basis.

Web hosting

Once the domain name is registered and the DNS is operational the domain or the space taken requires to be parked somewhere. The domain space is usually sold and calculated per MB (mega byte). The service providers normally start with a minimum of 2-5MB space for the domain that needs to be parked or hosted at some server locally or wherever the service provider has bought the space.

The key to choosing the service provider is to understand the kind of server it hosts, how large is the bandwidth and where such server is located. Multiple servers that allow mirroring of the website at different locations worldwide is recommended. This allows surfers visiting the website to extract information from the closest server rather than having to travel across the globe (say, some surfer in Canada reaching out to Kathmandu) to retrieve data. The process thus allows faster access without the load being directed upon a single server.

Web designing

There is so much more to it though. The cost reflects the relativeness of the design and is normally earmarked per MB of space designed.

Website or URL submission

Well, having a great site is fine. But, it is like winking a girl in the dark. Something to sell but nobody knows about it. The website address (also known as Uniform Resource Locator, URL) needs to be recognized by search engines, web crawlers, search directories and the lot when someone wants information of the company.

The service provider would have different packages for the website to be submitted in these search engines complete with key words and phrases. This allows random surfers who would not know of the company website still find the link to the website if the surfer searches with possible closest word(s) describing what is sought.

Hold on. Another critical aspect is to make sure that the Internet presence of the company can retain onto the eyeballs of the potential customer long enough to close the sale. Decisively, the competitor is just a mouse click away.

Shakya is Strategist at Information Technology and Telecom International (ITNTI), pioneer amongst the Application Service Providers in Nepal. He is also CEO of bitarak.com, a marketing company that specializes on door-to-door deliveries. He can be accessed at suman.shakya@itnti.com

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