ICT outsourcing in Nepal
Outsourcing is fast moving from just software
codes and call centers to a vast category stretching from copy editing to
financial analysis to tax preparation. Outsourcing is tending towards the fast
changing of office atmosphere and staff chemistry. Jobs such as personal
assistants, secretaries, typists may soon fade into history and people will be
able to move up the value chain to take up more creative and specialized works.
In the recent years, most of the Fortune 500 companies have started the trend of
concentrating more on their core competencies areas, and outsourcing non-related
areas to other specializing organizations. This has been a shot in the arm for
IT-Enabled Services industry.
Estimates suggest that the
for telephone-based industries and peripheral information services
activities was in the region of US$200 billion in 1998. Equally importantly,
the industry is steadily growing at over 23% per annum and is showing no
signs of abetting. However, the outsourcing of IT-Enabled Services is
growing at much faster pace. Nepal could have an important role to play in
this outsourcing and out locating market.
The spectrum of IT-Enabled Services suitable to Nepal include the following
- Call Centers: Call Centers are used by most of the large services and
manufacturing organizations to provide customer information and services.
They are used for responding to customer queries, telemarketing, conducting
customers surveys, etc.
- Medical Transcription: This consists of transcribing medical advice recorded
by doctors into Dictaphones or other such recording equipment, and sending
them back electronically. The recorded advice is sent to offshore medical
transcription centers in remote locations through electronic means or
through physical delivery.
Two Medical Transcription companies have already started in Kathmandu,
employing over 500 people.
- Back Office Operations, Revenue Accounting, and Other ancillary operations:
Paper documents/raw data are sent to remote locations, which are used for
data entry and necessary reconciliation. Using high-speed datacom links for
back office and data processing operation, organizations with extensive data
turnover and customer interface, are able to save costs and improve
productivity. Airlines and banks are the main organizations that require
- Insurance Claims Processing: Insurance, a typical instance of data-intensive
industry, receives a myriad of claims from their customers. The claims
submitted can be processed on the basis of well-defined rules and
parameters. Remote locations like Nepal can save costs.
- Web/Digital Content Development: The services required for developing
digital or web content for intra-organizational dissemination, web site
development and maintenance, CDROMís and other forms of new media channels.
- Mapping and Digitization: As the world maps get digitized, the older maps
need to be corrected with newer construction data and updates. There are
already two Japanese companies in joint venture in Nepal for this kind of
work and there are three more companies in the process of starting. Apart
from above, there are plethora of opportunities in Data Entry, Data
Processing, Payroll, GIS, Data Conversion and many other emerging IT-Enabled
Where does Nepal stand?
For Nepal, the trend of outsourcing can be emerged as an opportunity in the
future if proper planning is started now. Just as production jobs moved from
Japan to South Korea to China due to cost increases created by the demand
for higher wages to support better living, the same will happen with India.
In India, outsourcing centers are already moving from the metropolitan
cities to smaller cities, and Nepal will have comparative advantage in terms
of wages, and our growing numbers of English speaking youth will provide the
pool or resources.
However, Nepal will definitely need to look again at the labor and
employment-related legislation to make this happen. This lesson has already
been learnt from transcription centers that once ran well, and then crumbled
due to problems with legal provisions.
Provided the fact that the countries like Nepal have a young work force well
skilled in information and communication technologies and that many
companies in the United States and Europe farm out software writing payroll
accounting, and customer-service calls to firms in developing nations where
wages are lower and English-speaking skilled workers are plentiful. India
get a huge amount of that work but also has set up so-called centers of
excellence in Mongolia, Mauritius, and Nepal to help those countries develop
software skills, understand international business practices, and enhance
Beside, it is quite impossible to make a check on outsourcing, as it is a
practice followed by almost all the big US companies. In the long term,
Celent Communications, a consulting firm, calculates that 2.3 million
financial jobs are at risk. A research by University of California at
Berkeley shows that as many as 14 million jobs of all types will be
outsourced. Many economists feel that with the increased competition and
with demand not increasing in proportion companies are left with no other
choice but to cut costs drastically. If you put up barriers to save jobs,
the exact opposite will happen. As companies get less profitable, more
Americans will lose jobs, say many economists.
The cost factor alone is not the attraction for the firms to outsource the
works. With competition for experts in every field climbing up most of the
bright workforce are snatched away by the top-end firms paying hefty
salaries. The not-so-rich companies are often found wanting in the service
they provide. Hiring labor from overseas directly means cost escalation
again. So many firms are seeing outsourcing as the best way to stay ahead in
the quality quotient without hurting the balance sheet.
Source: Kathmandu Post - september 2004
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