Probability and problems of ICT outsourcing from advanced nations to the poorest country: the case of Nepal

Michiko Matsushita


The outsourcing may be the last method of cost cutting for the advanced nations which suffer from depression. In these countries, many big companies in manufacturing industries move their producing bases from their nations to the outside, the foreign counties where the cost of land and labors is quite cheaper. Especially some countries in Southeast Asia play the role of cost center for advanced countries.

Even in the ICT fields, same shift of production occurred in these days. Some US big computer companies started to manufacture PC kits in Taiwan (Chinese Taipei) from 1980’s. Nowadays almost all parts of PC sold in advanced nations are produced in China, Thai, Malaysia, Indonesia, Vietnam etc. Although the outsourcing of ICT hardware field became popular, that of the software fields looks like delay. The outsourcing of the knowledge industries is very difficult, because of scarce supply of the educated high level engineers in computer field. Only China and India are the winners in this area. These two countries have large population and they have great higher educational organizations of the world. The labor cost of these countries was very cheep up to this point. But in these days the capitalistic economy was introduced and permeated, the personal expenses become higher. This situation reduces the merit of outsourcing for the advanced nations.

The advanced nations must search the next countries where the cheaper and more excellent engineers are supplied.

The other hand, the poorest countries of the world need the chance of economic growth. The ordinary developing route where Japan and South Korea walked after World War II is too long to catch up the advanced countries. Because the speed of social change is very fast, the manufacturing technology would be old immediately. In these days, the main cities of however poorest countries, they can use the Internet and mobile phones. We think that these ICT media will be the big opportunity to develop those countries. There are big probability and some problems the business between advanced nations and poorest countries.

We researched the ICT companies in Nepal in 2003 and 2004. Nepal keeps the good relationship with India, the neighbor country. Nepali people can go into the India almost freely. The young Nepali of high society studies in Indian universities using English. In the urban area, there are many Internet cafes, citizens and foreign travelers use the Internet with cheap fee. The mobile phones are very popular for the young people in the city. PCs are available from India or Singapore. Many people buy the PCs assembled in Nepal from the import parts.

In Kathmandu, the capital city of Nepal, there are some big software companies which did business with Japanese and US companies. The characteristic of the Nepali IT companies is the labor intensive work. A company did the digitizing of Japanese road map using old map print and photos from the airplane in order to renew the data for car navigation system. Next company did the digitizing of Japanese water pipe map from old blue copies. The managers of these companies speak Japanese, one company employs a Japanese staff to understand and input the Japanese characters on the maps. There was a company which input the chart from the voice data of the hospital in US. After business hours, the voice data of doctors’ medical examination will be sent by the Internet to the company. During the daytime in Kathmandu, the operators type the voice data and return by the start hour of the hospital next day.

Even though the ICT level becomes higher, some amounts of labors incentive ICT work will remain. The cheap labor force of the poorest countries is very important for the advanced countries. The other hands, the laws of these poorest nations are unripe. There is neither law nor guideline for the personal information protection or data retention in Nepal. If the companies in advanced nations do the outsourcing the ICT works to the poorest countries in order to cut the labor cost, the management cost might be increase.

This risk of ICT work is just same as that of cloud computing. The cloud computing is the next key technology for cost down of management of the biggest computer network. The real processing part of the network is so vague as cloud, then each network user do not have to take care the concrete jobs of the computer systems. Cloud systems help the user companies to cut ICT cost, on the assumption of the responsibility and confidence of the cloud service companies. But how we know what the head of the cloud is? One day the cloud data center may be set in Nepal.

For the poorest countries as Nepal, the complete equipment of laws is very important to get the ICT international outsourcing projects and realize the economic growth. The other hand, for the advanced countries as US, EU, Japan, need the new and safe cost center in ICT field.