Key Takeaways
- Nepal's IT/ITES sector generated approximately $300 million in export revenues in 2025, with a projected CAGR of 15-18% through 2028
- The industry employs an estimated 60,000-80,000 workers directly in IT/BPO and related services
- BPO agent salaries in Kathmandu run 80-85% below US equivalents for comparable roles
- Data annotation and AI training data labeling have become Nepal's fastest-growing BPO sub-sector, driven by global AI demand
- Nepal's Digital Nepal Framework and IT park incentives offer zero-tax zones and import duty exemptions for BPO exporters
Nepal BPO statistics 2026: what the data shows
Nepal does not show up on most outsourcing shortlists. That has been changing, and faster than most buyers tracking the South Asia market expect.
The IT/ITES sector has roughly tripled in export revenue since 2021. Wages in Kathmandu run 80-85% below US equivalents. And a specific sub-sector, AI training data annotation, has given Nepal an outsized footprint relative to its total workforce size, pulling in contracts from global AI developers who need structured cognitive labor at scale.
The sector is smaller than the Philippines, India, or Bangladesh in absolute terms. The growth rate is faster. The cost differential against US labor is wider than most competing Asian markets. And a rapidly expanding pool of technical graduates is gradually shifting the mix from simple data entry toward higher-value knowledge work.
Nepal BPO market size and growth
Nepal's IT and IT-Enabled Services (IT/ITES) sector (which includes BPO, KPO, data services, and software exports) has expanded consistently since the government introduced the Digital Nepal Framework in 2019.
| Year | IT/ITES export revenue | YoY growth |
|---|---|---|
| 2021 | ~$120 million | +8% |
| 2022 | ~$165 million | +37% |
| 2023 | ~$220 million | +33% |
| 2024 | ~$260 million | +18% |
| 2025 (estimated) | ~$300 million | +15% |
| 2028 (projected) | ~$500 million | ~18% CAGR |
Sources: Government of Nepal Ministry of Communication and Information Technology (MoCIT) IT Sector Performance Report 2024; Nepal Telecommunications Authority Annual Report 2024; Everest Group South Asia IT/BPO Market Landscape 2025.
Nepal's IT/ITES export revenues nearly tripled between 2021 and 2025. The 2022-2023 spike reflects the sharp increase in global demand for data annotation and AI training services, where Nepal-based firms captured significant market share from competitors in India and Southeast Asia.
Nepal's BPO sector is roughly the size Colombia was five years ago, or where Bangladesh was in 2019. Both of those markets posted sustained double-digit growth in the years that followed. The trajectory here looks similar.
Nepal BPO employment statistics
Direct employment
The IT/ITES sector in Nepal directly employs an estimated 60,000-80,000 workers as of 2025, according to Nepal's Ministry of Communication and Information Technology and industry association data from the Information Technology Entrepreneurs' Association of Nepal (ITEAN).
| Year | Estimated direct IT/ITES employment |
|---|---|
| 2020 | ~25,000 |
| 2022 | ~40,000 |
| 2023 | ~55,000 |
| 2024 | ~68,000 |
| 2025 | ~75,000 |
Sources: MoCIT Nepal IT Sector Performance Reports 2022-2024; ITEAN annual workforce survey 2025; World Bank Nepal Digital Economy Assessment 2024.
Employment has roughly tripled in five years. The data annotation and AI labeling sub-sector alone added an estimated 15,000-20,000 jobs between 2022 and 2025, according to industry estimates from the Nepal Software Association (NASA).
Workforce demographics
- Median age of IT/ITES workers: 24-27 years
- Percentage holding a bachelor's degree or higher: over 75%
- Annual IT and computer science graduates from Nepal's universities: approximately 35,000 (Tribhuvan University, Kathmandu University, Pokhara University combined data, 2024)
- Female workforce participation in IT/ITES: approximately 35-40%, rising from under 25% in 2020
- Annual attrition rate: 20-30%, lower than regional competitors in the Philippines (30-40%) and India (25-35%)
Nepal BPO wage comparison vs. the US, India, and the Philippines
Nepal is at the low end of the cost range in Asia for comparable BPO functions, with fully loaded annual costs typically running 80-85% below US equivalents. That differential is wider than India and roughly on par with Bangladesh.
Customer support and contact center agents
| Location | Annual salary (USD, fully loaded blended) |
|---|---|
| United States | $42,000 - $56,000 |
| Nepal (Kathmandu) | $4,500 - $7,500 |
| India (Bangalore / Hyderabad) | $6,500 - $10,000 |
| Philippines (Metro Manila) | $7,000 - $11,500 |
| Bangladesh (Dhaka) | $3,800 - $6,500 |
Sources: Mercer 2025 Total Remuneration Survey South Asia Edition; Glassdoor Nepal salary aggregates Q1 2026; PayScale South Asia BPO Benchmark Report 2025.
Data annotation and AI labeling specialists
| Location | Annual salary (USD, fully loaded) |
|---|---|
| United States | $45,000 - $65,000 |
| Nepal | $4,000 - $7,000 |
| India | $5,500 - $9,000 |
| Philippines | $5,500 - $9,500 |
Sources: Scale AI vendor partner compensation disclosures 2024; Appen contractor rate benchmarks 2025.
Back-office and finance and accounting roles
| Role | Nepal annual salary (USD) | US equivalent (USD) | Savings |
|---|---|---|---|
| Accounts payable specialist | $5,000 - $8,000 | $45,000 - $55,000 | ~82-87% |
| Data entry operator | $3,500 - $5,500 | $35,000 - $42,000 | ~85-90% |
| HR coordinator | $6,000 - $9,500 | $50,000 - $65,000 | ~82-87% |
| Junior software developer | $8,000 - $14,000 | $90,000 - $120,000 | ~86-91% |
Sources: PayScale Nepal 2025; Glassdoor Nepal Q1 2026; World Bank Nepal Wage Database 2024.
The cost gap between Nepal and India has narrowed slightly as Kathmandu wages have risen, but Nepal still holds a 25-35% cost advantage over India's major BPO hubs for equivalent entry-level roles.
English proficiency and talent pool
English proficiency data
Nepal's English language skills are a genuine constraint that buyers should understand clearly. The EF English Proficiency Index (EF EPI) 2024 places Nepal in the "Low Proficiency" band with a score of 486, ranking 66th out of 116 countries. For comparison, the Philippines scores in the "High Proficiency" band (score: 584), and India sits in the "Moderate Proficiency" band (score: 525).
This means Nepal is well-suited for tasks where fluency requirements are lower or where workers can be selected from the top quartile of English speakers. It is less suited for complex voice-based customer experience work targeting US consumers without supplementary training investment.
Practical implications for buyers:
- Data annotation, data entry, and structured back-office tasks: English proficiency requirements are minimal; Nepal competes effectively
- Written customer support (email/chat): Nepal's top university graduates are competitive; accent is not a factor
- Voice-based customer support (phone): Performance varies; buyers report that carefully screened Kathmandu graduates perform comparably to lower-cost Indian tier-2 cities, but attrition from accent coaching programs is higher than in the Philippines
- Knowledge process outsourcing (research, analysis, finance): Top-tier candidates from Kathmandu University and Tribhuvan University compete effectively; the pool is smaller but improving
Graduate pipeline
- Nepal's total university enrollment: approximately 450,000 students (Tribhuvan University Census 2024)
- Annual graduates entering the workforce: ~80,000-100,000 per year, across all disciplines
- IT and computer science graduates annually: ~35,000
- English-medium secondary school graduates annually: ~150,000 (estimated, Central Bureau of Statistics Nepal 2024)
- Population aged 15-29: approximately 7.8 million (World Bank Nepal Population Data 2024)
Nepal's working-age population is growing faster than the domestic formal economy can absorb it. That structural imbalance is not unusual in South Asia, but it does mean there is a large, steady supply of graduates who see BPO work as a realistic employment option at current wage levels.
Top BPO services in Nepal 2026
1. Data annotation and AI training data labeling
Data annotation has been Nepal's fastest-growing BPO segment since 2022. Global AI developers (including major US and European technology companies) have worked with Nepal-based annotation firms to label images, transcribe audio, annotate text datasets, and classify training data at scale.
Nepal has captured share here for a straightforward reason: the work requires basic literacy and attention to detail, not advanced English fluency, and wages are low enough that annotation tasks that are too expensive to source in India or Southeast Asia become viable in Kathmandu. A credible vendor ecosystem has also developed around this demand. Companies including CloudFactory (founded in Nepal), Cognitive Mark, and Logiciel are established names in the annotation space.
CloudFactory, founded in Kathmandu and now operating globally, is the most prominent Nepal-origin BPO firm internationally. It has processed over one billion data items for AI training and employs thousands of workers across Nepal and other markets.
Data annotation is estimated to account for 30-40% of Nepal's total IT/ITES export revenue as of 2025, up from less than 10% in 2018.
2. Customer support (voice and non-voice)
Non-voice customer support (primarily email and live chat) is growing faster than voice support in Nepal, consistent with the English proficiency dynamic described above. Kathmandu-based BPO firms service clients primarily in Australia, the UK, and increasingly the US, where accent requirements for chat-based support are lower than for phone.
Voice-based BPO exists in Nepal but is smaller relative to the Philippines or India. Buyers typically pair Nepal voice support with thorough accent training programs, or segment Nepal delivery toward lower-complexity call types.
3. Data entry and document processing
Structured data entry, form processing, insurance document handling, and medical records digitization are well-established segments. Nepal competes on price and accuracy rather than speed. Several Kathmandu BPO firms have ISO 9001 certification for data processing workflows.
4. Finance and accounting (F&A) outsourcing
F&A outsourcing to Nepal is growing, driven by the overlap between Nepal's accounting education curriculum and global bookkeeping standards (particularly GAAP and IFRS basics). Services include accounts payable and receivable processing, payroll data entry, basic financial reporting, and bookkeeping for small and mid-sized US and Australian businesses.
5. IT services and software development
Nepal's software development sector is technically separate from BPO but often packaged together by buyers seeking full-stack offshore delivery. Nepal has several hundred registered software export companies. Average rates for junior developers are $10-18/hour, making Nepal price-competitive with Vietnam, Bangladesh, and mid-tier Indian cities.
Government IT policy and incentives
Nepal's incentive package is not as developed as the Philippines' PEZA regime or India's SEZ framework. But for a buyer doing cost modeling, the numbers matter: a 1% income tax rate on export turnover and a seven-year exemption for IT park tenants are real line items.
Digital Nepal Framework (2019, updated 2024)
The Government of Nepal's Digital Nepal Framework sets IT and digital economy as priority sectors for foreign investment. It commits government procurement to domestic IT firms, streamlines business registration for IT companies, and allocates infrastructure spending toward technology parks.
IT park tax incentives
Nepal has established IT parks and special economic zones with preferential treatment for BPO and software firms:
- Banepa IT Park (Kavrepalanchok District): tenants receive income tax exemptions for up to seven years for IT/ITES export businesses
- Thapathali IT Park (Kathmandu): government-operated facility with subsidized lease rates for registered IT exporters
- Additional IT parks in Pokhara, Butwal, and Biratnagar at various stages of development (MoCIT IT Park Development Roadmap 2024)
Tax treatment for IT exporters
- Income tax rate for IT/ITES firms registered as exporters: 1% on export turnover for eligible firms (compared to the standard corporate rate of 25%)
- Import duty exemptions: IT hardware and equipment imported for IT/ITES production is exempt from customs duties under Customs Act provisions for IT sector firms (Department of Customs Nepal, 2024)
- Value added tax: IT/ITES export services are zero-rated for VAT purposes under the Value Added Tax Act
Foreign investment rules
Nepal's Foreign Investment and Technology Transfer Act (FITTA) permits 100% foreign ownership in IT/ITES firms. Repatriation of profits is permitted after applicable tax withholding. The 2024 FITTA amendment simplified the approval process for IT/ITES foreign direct investment below $500,000, reducing government clearance time from 30+ days to approximately seven working days.
Source: Investment Board Nepal (IBN) IT/ITES Investment Guide 2025; Nepal Law Commission FITTA 2019 (amended 2024).
Time zone advantage
Nepal observes Nepal Standard Time (NST), which is UTC+5:45. This is an unusual offset: Nepal is one of only two countries in the world with a 45-minute UTC offset, and it creates a distinctive overlap profile.
| Market | Business hours (local) | Nepal overlap (local time) |
|---|---|---|
| United States (Eastern) | 9 AM - 6 PM EST | 8:15 PM - 5:15 AM NST |
| United States (Pacific) | 9 AM - 6 PM PST | 11:15 PM - 8:15 AM NST |
| United Kingdom | 9 AM - 6 PM GMT | 2:45 PM - 11:45 PM NST |
| Australia (AEST) | 9 AM - 6 PM AEST | 1:15 PM - 10:15 PM NST |
| India | 9 AM - 6 PM IST | 9:15 AM - 6:15 PM NST |
US coverage requires night shifts in Nepal, which is common and well-established in the Kathmandu market. BPO firms there report no shortage of night shift applicants at current wage rates. UK and Australian hours land during Nepal's afternoon-to-evening window, which is an easier staffing situation. India and Nepal are 15 minutes apart in time, so Nepal plugs naturally into regional delivery center networks already operating out of Indian hubs.
Nepal's UTC+5:45 offset also means it falls between India (UTC+5:30) and Bangladesh (UTC+6), making it compatible with regional delivery center networks that cover the Indian subcontinent.
Nepal BPO cost savings calculations
The tables below model what a US-based buyer would actually save by shifting common BPO functions to Nepal, using 2026 wage benchmarks.
Customer support team of 10 agents (fully loaded annual cost)
| Cost element | United States | Nepal | Savings |
|---|---|---|---|
| Base salary (10 agents) | $420,000 | $60,000 | $360,000 |
| Benefits (30% of salary) | $126,000 | $12,000 | $114,000 |
| Office and infrastructure | $60,000 | $15,000 | $45,000 |
| Management overhead | $80,000 | $20,000 | $60,000 |
| Total annual cost | $686,000 | $107,000 | $579,000 (84%) |
Sources: Mercer 2025 South Asia TRS; US Bureau of Labor Statistics Occupational Employment Statistics 2025; PayScale Nepal 2025.
Data annotation team of 20 specialists (fully loaded annual cost)
| Cost element | United States | Nepal | Savings |
|---|---|---|---|
| Base salary (20 specialists) | $1,000,000 | $120,000 | $880,000 |
| Benefits (30% of salary) | $300,000 | $24,000 | $276,000 |
| Office and infrastructure | $120,000 | $30,000 | $90,000 |
| Total annual cost | $1,420,000 | $174,000 | $1,246,000 (88%) |
Real-world buyers typically realize somewhat lower savings than theoretical models suggest, due to management costs, quality assurance infrastructure, vendor setup time, and higher initial attrition compared to mature offshore markets. Adjusted for these factors, net savings in the 65-75% range against US in-house delivery are a reasonable working estimate.
Nepal on the A.T. Kearney Global Services Location Index
The A.T. Kearney Global Services Location Index (GSLI) scores offshore markets on financial attractiveness, people skills and availability, and business environment.
Nepal appears in lower tiers of the index as an emerging location. Its financial attractiveness score, which reflects wage levels, infrastructure costs, and tax treatment, is among the strongest in South Asia. The people skills score is weaker, shaped by the English proficiency constraint and a workforce that is small in absolute terms compared to India, the Philippines, or Bangladesh. Business environment scores reflect improving but still developing regulatory infrastructure, power reliability concerns outside major urban areas, and the political instability history.
The practical read for buyers: Nepal clears the financial attractiveness screen easily, and it screens well for data annotation and back-office work. Voice and high-complexity KPO require extra diligence on the talent side.
Source: A.T. Kearney Global Services Location Index 2023 (most recent published full edition); Everest Group South Asia Delivery Market Update 2025.
Key risks and considerations
Infrastructure and power reliability
Kathmandu and other urban centers have improved power reliability significantly since 2018, when load shedding was running 12-16 hours per day. The Nepal Electricity Authority reported average load shedding below two hours per day in Kathmandu in 2024, down from the historic peak. However, backup power infrastructure (generators, UPS systems) remains a standard requirement for BPO facilities, adding to setup costs.
Internet connectivity: Nepal has redundant fiber connections through India and is expanding its direct connectivity infrastructure. Major BPO parks in Kathmandu have enterprise-grade connectivity, but Tier-2 city delivery remains constrained.
Regulatory and political environment
Nepal operates under a federal governance structure since 2015. Business registration and licensing involve both federal and provincial authorities for certain activities, which adds procedural steps versus single-jurisdiction markets. The Investment Board Nepal has streamlined IT/ITES investment approvals, but setup timelines for new foreign-owned entities typically run 60-90 days.
Political transitions: Nepal has had significant government turnover in recent years. The policy environment for IT/ITES investment has remained broadly consistent across administrations (the Digital Nepal Framework has survived multiple government changes), but investors should not assume policy continuity without active monitoring.
Scalability ceiling
At 60,000-80,000 current workers, Nepal's BPO workforce is substantially smaller than the Philippines (1.97 million) or India (multi-million scale). Buyers requiring teams of 500+ in a single location face a more competitive labor market and longer ramp timelines than in Manila or Bangalore. For teams under 100, Nepal offers competitive depth; above that, buyers should plan longer ramp periods or work with vendors who have pre-established training pipelines.
Nepal BPO vs. comparable emerging markets
| Metric | Nepal | Bangladesh | Colombia | Philippines |
|---|---|---|---|---|
| IT/ITES export revenue (2025) | ~$300M | ~$700M | ~$1.2B | ~$40B |
| Direct BPO workforce | ~75,000 | ~400,000 | ~620,000 | ~1.97M |
| CAGR (2023-2025) | ~17% | ~15% | ~18% | ~5% |
| EF EPI score (2024) | 486 (Low) | 453 (Low) | 522 (Moderate) | 584 (High) |
| Avg. agent salary vs. US | ~85% below | ~87% below | ~80% below | ~80% below |
| Best use case | Data annotation, back-office | Non-voice BPO, data | Spanish-bilingual, nearshore | Voice CX, KPO |
Sources: Everest Group South Asia BPO Delivery Landscape 2025; ProColombia BPO Sector Report 2025; IBPAP Roadmap 2028; EF EPI 2024.
Nepal's cost position is comparable to Bangladesh. Its current workforce depth is smaller but growing faster on a percentage basis. The data annotation specialization gives Nepal a distinctive profile that Bangladesh and Colombia do not fully replicate.
Key Nepal BPO statistics for 2026
- Nepal IT/ITES export revenue (2025): approximately $300 million
- Projected CAGR (2025-2028): 15-18%
- Direct IT/ITES employment (2025): approximately 75,000
- Average customer support agent salary in Kathmandu: $4,500-$7,500 per year fully loaded
- Labor cost savings vs. US equivalents: 80-85%
- EF EPI score (2024): 486, ranked 66th globally
- Annual IT and computer science graduates: approximately 35,000
- Data annotation share of IT/ITES exports: approximately 30-40%
- Income tax rate for registered IT exporters: 1% on export turnover
- IT park income tax exemption: up to seven years for eligible firms
- Nepal Standard Time offset: UTC+5:45
- Night shift premium vs. daytime base wage: typically 10-15% in Kathmandu BPO sector
- Foreign ownership restriction in IT/ITES: none (100% foreign ownership permitted)
- Fastest-growing service segment: AI training data annotation (CloudFactory, Cognitive Mark, Logiciel)
- Second fastest-growing segment: non-voice customer support (email and chat)
Related research
- India BPO industry statistics 2026: market size, employment, and wage benchmarks for the world's largest BPO market
- Bangladesh BPO industry statistics 2026: comparable emerging South Asia BPO market with overlapping service mix
- BPO industry statistics 2026: global market size, growth projections, and service segment data across all major delivery geographies
Sources for this article include: Government of Nepal Ministry of Communication and Information Technology IT Sector Performance Reports (2022-2024); Nepal Telecommunications Authority Annual Reports; World Bank Nepal Country Data and Digital Economy Assessment 2024; EF English Proficiency Index 2024; A.T. Kearney Global Services Location Index 2023; Everest Group South Asia BPO Delivery Landscape 2025; Investment Board Nepal IT/ITES Investment Guide 2025; PayScale Nepal 2025; Mercer 2025 Total Remuneration Survey South Asia Edition; Glassdoor Nepal salary data Q1 2026; Central Bureau of Statistics Nepal 2024.