Founders comparing offshore software teams now hear a familiar pitch: Nepal is cheaper than India, its engineers stay longer, and their English is better. We are a software company in Kathmandu, and most of that pitch has no public data behind it. Some of it holds up. This is how to tell which parts.
What the pitch claims, and what is behind it
Search for offshore development in Nepal and the same claims appear on page after page: rates far below India's, lower attrition, fluent English, and companies moving work from India to Nepal. Almost all of those pages are written by firms selling Nepal-based teams. Few of them cite a salary survey, an attrition dataset or any other source a buyer could check.
The claim that work is moving from India to Nepal is the weakest of them. We found no government data, industry-body report or major press coverage showing it. The one report we found suggests movement in the other direction, at least as a risk. In February 2026, the vice president of the Federation of Computer Association Nepal (CAN Federation) said "many companies are in the process of shifting out of Nepal", and an accountant in the same report warned that because of India's newly widened safe harbor tax rules for IT exporters, firms "may instead set up in India" (Nepal News, 17 February 2026).
That does not make Nepal a poor choice. It means the case for Nepal has to rest on things you can verify, and on the specific team you are hiring, rather than on a trend. Rate comparisons are a poor starting point for that decision anyway, for reasons we covered in what offshore development actually costs.
Where Nepal holds up: English, with a caveat
The best public measure favors Nepal. In the 2025 EF English Proficiency Index, Nepal ranked 58th with a score of 514, in EF's "moderate" band (EF EPI 2025, Nepal). India ranked 74th with 484, in the "low" band (EF EPI 2025, India).
The caveat matters. EF's index is built from people who chose to take its free online test, and EF itself notes that only those who want to learn English, or are curious about their level, take part (About EF EPI). It describes test-takers, not software engineers, and it says nothing about the person who will join your standup.
So treat the ranking as a reason to shortlist, not a reason to skip the test. Written English and spoken English often differ. Ask a candidate team for a written technical explanation and hold one live call, and judge both.
Where the two are level: time zones
Kathmandu runs on UTC+5:45 all year, with no daylight saving time. India runs on UTC+5:30, also without daylight saving. On this point the two countries are effectively level, and India is 15 minutes closer to the US and the UK.
For US buyers, the arithmetic tells the same story in both places. New York is 9 hours 45 minutes behind Kathmandu from the second Sunday in March to the first Sunday in November, and 10 hours 45 minutes behind for the rest of the year. On a normal working day, a Kathmandu team and a US team do not overlap at all: a 10:00 to 18:00 day in Kathmandu ends at 08:15 in New York at the latest. A shared hour exists only if someone moves. For a Kathmandu team to be online from 09:00 to 12:00 New York time in summer, it has to work until 21:45; in winter, until 22:45.
What a fixed offset does give you, in either country, is predictability. Work handed over at the end of your day can be finished by the start of your next one, and the only schedule change is the one the US makes twice a year. The details are in our guide to working across US and Nepal hours, and in how overlap hours shape an offshore project. Teams in the UK start with a much smaller gap: Kathmandu is 4 hours 45 minutes ahead of London during British Summer Time, and 5 hours 45 minutes ahead in winter.
Where the pitch does not hold up
"Much cheaper than India"
No public salary survey compares software pay in Nepal and India directly, so any market-wide percentage is an estimate by whoever is quoting it. What public sources do show is how fast pay is moving.
In Nepal, the president of the Nepal Association for Software and IT Services (NAS-IT) said in July 2026 that the IT sector "has been growing by 15 to 20 percent annually, and salaries are increasing at roughly the same pace" (Kathmandu Post, 20 July 2026). In India, Aon's salary survey of more than 1,400 organizations projects a 6.6% salary increase in technology consulting and services for 2026 (Aon, 24 February 2026).
The two figures come from different methods, one an industry leader's estimate and the other a survey projection, so they cannot be subtracted to give a number. If both hold, pay in Nepal is rising faster than in India, which would narrow any gap in Nepal's favor. A decision made mainly on price should allow for that.
"Lower attrition"
India's large IT companies publish attrition every quarter. Infosys, for example, reported 13% voluntary attrition in its IT services business over the twelve months to June 2026 (HR Katha, 24 July 2026).
Nepal publishes no equivalent. We found no attrition or retention rate for Nepal's IT sector from a government body, industry association or survey. The claim that Nepali engineers stay longer may be true for a given company, but it cannot be checked against the market, and it should not be accepted as a market fact.
The useful question is narrower. Ask the vendor you are considering for its own attrition over the last twelve months, how it counts it, and what happened the last time an engineer left one of your projects midway. We wrote more about that question in how to vet an offshore development partner.
How big each market is
This is where the two countries are least alike.
India
- Technology industry exports estimated at $246 billion in FY2026 (NASSCOM)
- About 5.95 million people directly employed, FY2026 estimate (NASSCOM)
- Large firms publish attrition, headcount and results every quarter
Nepal
- Rs 22.33 billion in telecommunications, computer and information services exports in FY2024/25 (official trade data)
- About $1 billion in IT exports in 2025, by NAS-IT's estimate
- About 100,000 IT workers (NAS-IT estimate)
India's figures come from NASSCOM's February 2026 review (Dataquest, 24 February 2026). Nepal's official figure comes from the government's trade report, and the Kathmandu Post article reporting it notes that many freelancers receive payments outside Nepal's banking system, which that figure would not capture (Kathmandu Post, 20 July 2026).
The two Nepal figures also differ because they measure different things. A 2023 study by the Institute for Integrated Development Studies surveyed companies and freelancers and put Nepal's IT exports at about $515 million for 2022 (OnlineKhabar, 31 July 2023). NAS-IT's roughly $1 billion figure for 2025 applies an assumed growth rate of about 20% a year to that study, and the association's president described it as based on "industry growth patterns and multiple informal assessments" (Kathmandu Post, 25 February 2026). It is an estimate, not a measurement.
About 100,000 IT workers, if the industry estimate is right, is enough to staff a focused product team. Hiring several dozen specialists in a narrow field within a quarter is a problem sized for India's market, not Nepal's.
What actually changes when your team is in Nepal
The week and the calendar
Nepal's government moved its offices and schools to a Saturday and Sunday weekend from 6 April 2026 (The Himalayan Times, 5 April 2026). Nepal Rastra Bank, the central bank, directed banks to close on both days as well (The Himalayan Times, 6 April 2026). The policy drew criticism and calls for reversal (Republica, May 2026), but in August 2026 the law minister told the National Assembly the government had "no decision or preparation" to review it (Nepal News, 13 August 2026).
The decision covers government offices, schools and banks. It does not set the working week for private companies, so ask each vendor which days its team works. We work Monday to Friday.
The bigger calendar question is autumn. Dashain and Tihar are Nepal's longest holiday stretch, usually falling between late September and November, with dates that change each year. Nepal's Ministry of Home Affairs publishes the official list of public holidays for each year. Ask any Nepal-based vendor, before you sign, which days its team will be away and who covers urgent work while they are. During Dashain and Tihar, we keep smaller backup teams available for emergency patches and updates.
Paying a team in Nepal
Paying a registered Nepali software company means sending money to its bank in Nepal. A few details are worth knowing before the first invoice.
- PayPal is not a route for payments into Nepal. A Nepal Rastra Bank official said in September 2026 that those selling goods from Nepal and working as freelancers "cannot bring or send money through PayPal". A bill to let foreign payment companies apply for authorization in Nepal has been registered in parliament, with no set timeline (Fiscal Nepal, 9 September 2026).
- Wise works differently for companies and individuals. Wise cannot send Nepali rupees to businesses in Nepal, only to personal accounts (Wise Help Centre). Nepal can receive US dollars through Wise over Swift, which takes up to six working days and costs more because of intermediary banks (Wise Help Centre).
- Stripe is not available to Nepali businesses. Nepal is not on Stripe's list of supported countries (Stripe). In April 2026, Nepal's Khalti wallet announced a Stripe partnership that lets its users send payment requests to foreign clients who pay by card, aimed at freelancers, developers and entrepreneurs (ICT Frame, 21 April 2026).
- Allow for extra paperwork. Nepal was placed on the Financial Action Task Force's "grey list" of jurisdictions under increased monitoring in February 2025 (Kathmandu Post, 22 February 2025) and remained on it in June 2026. Nepali bankers say international transactions have become "slower and more expensive due to additional documentation and compliance procedures" (Kathmandu Post, 20 June 2026). Keep the contract and invoice to hand for the first transfer.
Two things are the vendor's concern rather than yours, but they tell you something about the market. Nepal gives IT export income concessional tax treatment, and the policy moves: the FY2025/26 budget gave a 75% income tax exemption on IT export income (Kathmandu Post, 30 May 2025), and the FY2026/27 budget set it at 50% (Nepal News, 29 May 2026; The Rising Nepal, 1 June 2026). And as noted above, many freelancers are paid outside Nepal's banking system. Paying a registered company through a bank keeps both of you on the formal side of that line.
Continuity
A candid comparison has to include the disruptions of the last two years, because a vendor's account of them tells you more than any promise about the future.
- Power. In December 2024, the Nepal Electricity Authority reintroduced evening power cuts for industrial areas, six and a half years after declaring load-shedding over, while other consumers were unaffected (New Business Age, 16 December 2024). After the August 2026 Bhotekoshi flood, the authority said 431.1 MW of generation was disrupted and that 654 MW of imports from India had been approved for winter (Ratopati, 15 September 2026).
- Connectivity. On 2 February 2025, a nationwide internet outage through Airtel, an Indian upstream provider that carries much of Nepal's international bandwidth, raised concerns over dues that Nepali providers owe their upstream providers (Kathmandu Post, 4 February 2025).
- Political unrest. In September 2025, the government banned 26 social media platforms. The ban was lifted after five days, and the Internet Society described the disruption as "slight to moderate" rather than a full shutdown (Internet Society Pulse, September 2025). The protests of that month left at least 77 people dead, and a snap election followed in March 2026 (Al Jazeera, 12 March 2026).
These events differ in kind and in human cost. For a buyer, the practical question is whether the team you hire can show how work continued. Ask what happened to client delivery in September 2025 and after the August 2026 flood, and what backup power and connectivity its engineers rely on.
When India is the better choice
India is the stronger option when scale is the requirement. If you need to hire a large team quickly, fill several specialist roles at once, or choose among many established vendors with public track records, India's market is far deeper. Its largest companies also publish results, headcount and attrition every quarter, which makes some due diligence easier.
Nepal can make sense for a focused team, where a stronger English-proficiency baseline (tested, not assumed) and working closely with a vendor matter more than market depth. Neither country is the right answer in general. The right answer depends on what you are building and how fast you need to grow.
How to decide
Decide what you are optimizing for
Write down whether you need scale, a specific specialism, the lowest rate, or a small team you can work closely with. Each points to a different market.
Test English in writing and live
Ask for a written explanation of a technical decision, then hold one call. Judge the engineers who will do the work, not the sales lead.
Ask for attrition, with the method
Ask how many engineers left in the last twelve months, out of how many, and how the vendor counts it. A vendor that cannot answer probably has not measured it.
Ask how work continued through recent disruptions
Ask what happened to delivery in September 2025 and after the August 2026 flood, and what backup power and connectivity the team uses.
Check the payment route and holiday calendar before signing
Confirm how you will pay, in which currency, and which days the team will be away during Dashain and Tihar.
Questions founders ask about Nepal and India
Is Nepal cheaper than India for software development?
No public salary survey compares the two directly, so market-wide percentages are estimates. NAS-IT's president says Nepal's IT salaries are rising at roughly the sector's 15 to 20% annual growth, while Aon projects 6.6% for India's technology consulting and services sector in 2026. Compare specific quotes for the same scope instead.
Do Nepali developers speak English well?
Nepal ranked 58th and India 74th in the 2025 EF English Proficiency Index. The index is based on self-selected online test-takers, so test the specific engineers in writing and on a call.
Does Nepal's new Saturday and Sunday weekend apply to software companies?
The April 2026 decision covers government offices, schools and banks. It does not set the working week for private companies, so ask each vendor directly.