Nepal’s IT companies export an estimated Rs 150 billion worth of software and services every year and employ more than 100,000 people. The government’s own budget speeches keep calling IT a strategic sector. So it is a little strange that the same government just approved a plan to build its own in-house software team instead of hiring the companies it keeps praising.
What the Cabinet actually approved
On August 19, 2026, the Cabinet approved the Software Development and Operations Committee Formation Order. That order creates a new government body called the Software Development and Operations Centre, whose job is to build, upgrade, and maintain the software that public agencies use.
The plan starts small on paper: 30 staff positions, mostly software developers, system analysts, and security analysts. According to PMO spokesperson Hemraj Aryal, the centre will also be able to bring in outside specialists on fixed-term contracts when it needs skills its regular civil service posts cannot cover. That detail matters more than it looks. A senior backend developer or security analyst in Kathmandu can earn several times a civil service salary, especially with the number of Nepali engineers billing international clients in dollars. Thirty government posts alone were never going to compete with that market, and the contract clause is basically the government admitting it.
A steering committee sits above the centre, chaired by a Prime Minister’s Office secretary, with seats for the head of the newly formed IT and Electronic Governance Office, a joint secretary from Finance, and a joint secretary from the PMO’s IT division. The centre’s executive director acts as the committee’s member-secretary rather than its chair, which tells you where the actual decision-making sits.
None of this is active yet. The order was still going through legal editing at the Ministry of Law when it was approved, and it only takes effect once published in the Nepal Gazette.
Why the government says it’s doing this
The stated reasons are data security, self-reliance, and cleaner e-governance. None of these came out of nowhere. Nepal has had a rough stretch on the security side: a breach exposed government email accounts, and a separate investigation found thousands of banking login credentials circulating on the dark web, some tied to a state-owned bank running on a .gov.np domain. Officials argue that software built and hosted in-house is at least software the state fully controls.
There is also a coordination argument. Right now, individual ministries commission their own systems from different vendors, which is how a country ends up with a pile of government portals that cannot talk to each other and nobody left who understands the code once the contract ends. A single internal team, in theory, means shared logins, shared payment systems, and one identity layer instead of thirty different ones.
Why the IT industry is annoyed
Gauravraj Pandey, president of the Nepal Association of Software and IT Services, put it bluntly: if the state does not trust its own private sector, it becomes harder to convince foreign clients to trust Nepal either. His argument is that the government’s job should be setting standards and rules, then letting private companies compete to deliver, not building a competing shop inside the Prime Minister’s Office.
Entrepreneur Alok Subedi raised the timing question. Software export work from abroad is already getting harder to win as AI eats into demand for traditional outsourced development, and he thinks this is exactly the wrong moment for the government to be discouraging local firms rather than sending them more work.
IT researcher Amrita Sharma drew a more specific line. A unit that sets software standards and does quality assurance is a reasonable thing for government to run. Hiring engineers to build software and compete directly with startups and established companies is a different decision entirely, and in her view, the wrong one.
There is also a real contradiction with what the budget actually promised. The government’s own budget document talked about making software procurement more systematic through a single purchasing agency, not about building software itself. What got approved goes further than what was announced.
The question nobody has fully answered yet
If a private vendor builds a system and citizen data leaks from it, there are contracts, service agreements, and legal accountability. If a government-run centre builds the system and something leaks, who exactly is responsible? The formation order does not spell this out, and one government official told OnlineKhabar he genuinely doesn’t understand the logic: sensitive work like passport and licence printing already goes to foreign companies, yet homegrown Nepali IT firms are the ones being treated as the risk.
What to actually watch next
Three things will tell you more than any press release. First, whether the order gets published in the Gazette on schedule, since nothing here is legally real until then. Second, who gets named executive director, a career civil administrator versus someone who has actually shipped software will say a lot about what this centre becomes. Third, what its first project is. A centre that starts with something boring and useful, like a shared government login system, is building real capability. A centre that starts with a flagship portal is building a press release.
For students following Nepal’s tech and IT policy space, this is a genuinely useful case study in how government digital projects actually move, slower than the announcement, shaped as much by staffing and budget details as by the stated goals, and rarely as simple as “government versus private sector” once you look at the structure underneath.
