Nepal Government Wants To Build Its Own Software, But What Happens To Private IT Companies?

KATHMANDU, August 20, 2026

The Government of Nepal has taken a major step toward developing and managing more of its own digital systems after the Cabinet approved the Software Development and Operation Committee Formation Order, 2083 during its Wednesday meeting. The planned mechanism is intended to support the development, operation and maintenance of software required by government bodies, with the broader goal of improving security, strengthening government ownership and control of digital systems, reducing dependence on outside vendors and advancing Nepal’s digital-governance agenda.

Cabinet Gives The Plan A Green Light

The latest development is the Cabinet's approval of the Software Development and Operation Committee Formation Order, 2083.

Government spokesperson Sasmit Pokharel announced the decision while briefing the public on the Cabinet meeting. The software order was among several decisions approved by the Cabinet.

The approval is significant because the government's plan has moved beyond earlier discussions and preparations toward establishing a formal mechanism for software development and operation.

A Dedicated Government Software Centre

The broader plan involves a Software Development and Operation Center responsible for government software systems.

Earlier reports on preparations for the centre said it would operate under the E-Governance Board, which falls under the Office of the Prime Minister and Council of Ministers.

The centre is expected to work on software required by different government agencies, including its development, operation, maintenance and upgrading.

Why Does Government Want Its Own Software?

A central argument behind the initiative is control.

Government offices currently rely heavily on software developed or supplied by outside companies. That can create long-term dependence on vendors for maintenance, upgrades and technical knowledge.

By developing greater internal capacity, the government wants to retain stronger control over critical systems and reduce situations where a public institution depends heavily on an outside company to keep an essential digital service functioning.

Source Code And Ownership Are Major Issues

Software ownership is not simply about who uses a system.

The source code determines how software works and is essential when a system needs to be fixed, modified, secured or upgraded. If a government institution lacks sufficient control or access, changing vendors or maintaining a system independently can become difficult.

The government's approach is therefore aimed at keeping greater ownership and control of government software, its source code and its long-term operation within the state.

Cybersecurity Is Another Major Reason

Security is also central to the government's argument.

Government systems can contain sensitive citizen information, administrative records and other important data. Greater institutional control could allow the government to establish common standards for how systems are developed, tested, maintained and secured.

But simply developing software inside government does not automatically make it secure. The success of the model will still depend on skilled engineers, security testing, infrastructure, audits and continuous maintenance.

Government Previously Estimated Huge Software Spending

The plan had been under preparation before the Cabinet's latest approval.

Earlier reports citing Prime Minister's Office officials said government agencies collectively spend more than Rs 20 Arba annually purchasing software from private companies.

Officials involved in the proposal had estimated that significantly more government-led development could reduce that expenditure to around Rs 2 Arba.

However, these figures are government estimates reported during the planning stage, rather than independently audited savings that have already been achieved. Whether the new model actually produces savings of that scale will depend on implementation.

Part Of A Bigger Digital Government Plan

The software centre is not an isolated project.

It fits within the government's wider governance-reform agenda, which seeks to make public services more digital, interconnected and accessible through integrated systems.

One element of the reform agenda is a proposed National Integrated Digital Governance Platform, intended to connect government services, data and systems.

The plan also promotes a “once-only” principle, under which citizens would ideally not have to repeatedly provide the same information to multiple government offices.

Government Has Wanted This For Years

The idea of government-developed software did not begin with this week's Cabinet decision.

Nepal's 2081/82 Policies and Programmes had already stated that systems and software used by public bodies would be developed through the government sector while domestically developed software would receive priority.

The latest Formation Order therefore represents a further institutional step toward a policy direction that has been discussed for several years.

Private IT Sector Raises Concerns

Not everyone sees the government's approach the same way.

Some technology-sector voices have argued that Nepal already has capable domestic software companies and skilled developers, and that government should use them as partners instead of potentially competing against them.

Critics fear that if government institutions begin developing a large share of software internally, domestic companies could lose public-sector projects that have traditionally provided business and experience to Nepal's technology industry.

Government Platform Or Government IT Company?

This has created a larger policy debate: Should government build software itself, or should it create standards and platforms that private Nepali companies build upon?

Critics of a fully government-led development model argue that the state should concentrate on digital infrastructure, interoperability, cybersecurity standards, procurement and regulation while allowing competitive companies to develop solutions.

Supporters of stronger in-house capacity, meanwhile, can point to vendor dependence, fragmented government systems and the need for the state to maintain control over critical digital infrastructure.

The eventual impact will depend heavily on how the new centre divides work between its own developers and private technology companies.

Nepal's Existing Digital Systems Face Challenges

The initiative also comes against the backdrop of continuing problems with government technology.

Recent reporting has highlighted old infrastructure, outdated systems, limited technical manpower, weak long-term planning and dependence on vendors as factors behind disruptions to government digital services.

Creating a dedicated software centre could address some of those weaknesses, but only if it develops enough technical capacity to maintain systems over the long term rather than simply creating new applications.

What Happens Next?

The Cabinet's approval establishes an important foundation, but the real test comes with implementation.

Questions remain over staffing, budgets, procurement, cybersecurity standards, which systems will be developed internally, how existing software will be handled and what role private Nepali IT companies will continue to play.

The initiative could give Nepal greater control over critical government technology if implemented effectively. But its success should ultimately be measured not by how much software the government builds itself, but by whether citizens receive safer, faster, reliable and more accessible digital public services.