Nepal’s information and communicationstechnology (ICT) services are nascent, informal and centeredin Kathmandu. The supply of skilled manpower is notwell-oriented to the needs of ICT firms. Similar to othersectors, Nepal’s ICT sector also faces severe cross-cuttingbusiness climate challenges, the most critical relating toinstitutions and infrastructure. Limited access to financeand excessive barriers to foreign investment andforeign-exchange transactions also hamper the ICT sector.Reform efforts should focus on improving access to skills,infrastructure and finance, together with regulatorysimplification. The education sector reforms are required toincrease the pool of skilled manpower for the ICT sector.This report provides recommendations on key horizontal andcross-cutting challenges that are essential to develop theICT sector in Nepal. Furthermore, it provides a strategicsegment analysis applicable to a small number of niche ICTfirms that can develop specialized software and services infocused sectors such as tourism and mountaineering.