Playing the large-stakes Offshore Game

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Published:
21 Nov 2017
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From the Archive (Dec, 2016): Today many IT companies, such as Yomari, Deerwalk and Leapfrog, have found a dedicated client base in the West. These Nepali tech giants are regarded as the trailblazers by up-and-coming companies who aspire to someday do similar offshore work as them

Since around the turn of the century, Nepali software developers and IT professionals have been mostly taking on small-scale offshore coding projects for companies in the US, UK and Australia. In the early days, many of these Nepali IT companies either didn’t have the requisite portfolio or hadn’t garnered the trust of big clients needed to land  their bigger projects. Many Nepali coders also mostly worked as individual contract coders who bid on sites such as eLance, and later, oDesk and Toptal to get low-paying coding work.

But over time, a handful of IT companies based in Nepal (with offices both here and in client countries such as the US) started taking on larger projects from larger companies—on the strength of their prior work experience and strong portfolio. Today many of these companies, such as Yomari, Deerwalk and Leapfrog, have found a dedicated client base in the West. All three companies are led by IT professionals who had already spent many years working in the American tech sector and who knew the intricacies of the software market abroad. Today, these Nepali tech giants are regarded as the trailblazers by up-and-coming companies who aspire to someday do similar offshore work as them. But there are slight differences in the models the big three work with.


The Yomari model  

When Deepesh Pradhan set up Yomari in 1997, he had no idea that the company would evolve to the extent that it has today. Pradhan started the company with himself as its sole employee, but today, Yomari employs more than 150 personnel who develop projects for big international companies like Best Buy, Gap and PetCo. Initially, it was difficult for Pradhan to find work with such organisations, and it was only after his brother—Rupesh Pradhan—joined Yomari full time in 2004 that the company started landing big contracts. Rupesh Pradhan, a graduate of Grinnell College, Iowa, had worked at Retek, a Minneapolis-based software company that was later acquired by Oracle. Rupesh brought a lot of his American-client links to Yomari that the company could make use of. As of today, Yomari has worked with more than 30 international clients.

Yomari started out with projects related to website development, but over the years, the company started working on advanced business intelligence (BI) systems, end-to-end system integration and turnkey project execution—for both Nepali and international clients. Yomari’s BI systems include software for automated product-line management, HR management and inventory management—most of which are used by larger businesses. These systems automate basic management tasks like keeping track of employee attendance, managing store inventory and helping with a store’s accounting and balance sheets.

Yomari, Deerwalk and Leapfrog are regarded as the trailblazers by up-and-coming companies who aspire to someday do offshore work as them

To liaison between the Nepal-based office and their international clients, Yomari used to once have an office in the US as well. The US office housed sales representatives and consulting staff, while the Nepal office housed developers, project managers and communication experts. The US team would look for work in the US market, and once a job was secured, the Nepali team would be handed the project. After the Nepali team developed the software as per the clients’ needs, the project would be sent back to the US team.


But in 2014, Yomari’s US and UK operations were acquired by Logic Information Systems, an IT company based in Minnesota. Logic Information Systems is a company that specialises in retail systems, and since Yomari was already developing exceptional BI systems for clients in the US, their expertise was vital to Logic Information Systems. Today, most of Yomari’s international work comes through Logic Information Systems, while local projects for the Nepali market are handled solely by Yomari’s Nepal team. Yomari’s merger with Logic Information Systems means that Yomari can look forward to working on more, and larger scale, projects because Logic Information Systems are known globally for their retail-based software implementation and integration products. 

The leapfrog model

Leapfrog Technologies Inc started in 2010 with the ambition of making convenient and accessible software for the local masses. Their first mobile banking project, MobileCash—a digital wallet app for the Nepali market—was designed to, through the use of mobile phones, take the banks to the people. Over the years, Leapfrog have grown to take on many projects from many various continents, and their experience ranges from building enterprise-level software for Fortune 500 companies and venture capital-funded startups in Silicon Valley to creating products for US-government-funded institutions like the National Science Foundation and the National Institutes of Health. In a mere five years, Leapfrog have become one of the leading IT companies in Nepal, with a workforce of more than 100 engineers and more than 50 international clients.

The Chief Executive Officer (CEO) of Leapfrog, Himal Karmacharya, is an MIT graduate who worked for big technology companies like Oracle and Motorola before cofounding Leapfrog. Owing to his educational background and the work he was involved in abroad, Karmacharya had already built a strong network of clients in the US. After he cofounded Leapfrog, he was able to make use of his prior connections to offshore work to Leapfrog’s development centre in Nepal. Much like Yomari had, Leapfrog also has offices in the US—in Massachusetts and Seattle—that work in a similar capacity to Yomari’s erstwhile office. Leapfrog’s US office houses their sales executives and company representatives, who, after acquiring clients, offshore work to the company’s developers in Nepal.

 Leapfrog’s core technology expertise is in Enterprise Java development, front-end development (working with React, Node, Angular, Ember), mobile app development (for the Android, iOS, React Native), business intelligence and cloud deployment. The company rigorously employs best practices pertaining to coding standards, mandatory code reviews, automated testing and application monitoring, and they have thus been able to win clients through their quality of work.

According to Leapfrog’s Senior VP Richan Shrestha, the company’s vision is to be a world-class technology company and a role model enterprise in Nepal. Despite already snagging quite a few large international clients, Leapfrog view what they have achieved as only a means to something greater: harnessing their experience and talent to create products that have a truly great impact.

The Deerwalk model

Unlike the two companies mentioned above, Deerwalk Services Pvt Ltd are not a service-based company, and they operate mainly as a product-based company. In their initial years, Deerwalk too provided coding services to other companies. But they quickly decided to work on three products focusing on the US healthcare industry: DeerwalkOne Plan Analytics, a population health management application that provides integrated informatics and actionable analytical information; DeerwalkOne Care Manager, a software that helps clinicians and healthcare professionals manage care management workflow; and DeerwalkOne Health Portal, an application that helps members access their digital healthcare records and manage their personal health profile. All three products are updated on a monthly basis with core product features or client-specific custom features.

Deerwalk Services Pvt Ltd, based in Kathmandu, Nepal—a wholly owned subsidiary of Deerwalk Inc, based in Massachusetts, USA—was founded by Rudra Pandey in 2009. The Nepal office takes care of functions like research, development and operations, whereas the US office takes care of functions like sales, marketing and account management.

Deerwalk leverage big data technologies using Amazon Web Services (AWS) to process and host large volumes of healthcare data. Deerwalk have their own standard data processing engine, built solely on open source technologies, that processes large unstructured data into structured formats, which get fed into its production storage—which is the backbone of all of their products. Deerwalk’s technology focus is on reliability, efficiency and scalability. End users, comprising mainly American health plans, brokers, third-party administrators, employers, accountable care organisations and disease/case managers, use the DeerwalkOne suite of products atop the DeerwalkOne Platform, which seamlessly integrates their data. Deerwalk enforce strict security controls in order to ensure their clients’ personal health information is kept private and to ensure compliance with regulations like HIPAA (the Health Insurance Portability and Accountability Act of 1996, which calls for such measures).

Newer models

While these large IT companies have been making use of their tried and tested model to continue to grow their business, there are also today smaller companies in Nepal that have been working on large projects from offshore clients. Blue Muffin Studios, who are primarily focused on the Australian market, are one such example. They have also worked with clients like the UK-based advertising agency Those Computer People, Australia-based engineering consultancy Safai Consulting and the Australian Workforce Training, an organisation that provides compliance courses and licences. Similarly, another Nepali company, Pathway Technologies and Services, have also compiled a gaudy portfolio that includes clients such as Florida-based carpet-cleaning service, Zoomrite, and have worked on mobile apps such as Photo Delete and Truck In, both licenced to international companies. Pathway Technologies have also worked with the Bhutanese government to create and implement an IT platform for their integrated water resource management system. Blue Muffin and Pathway represent two companies who had to come up with rather different methods for snagging contracts than the big three established companies mentioned earlier work with. The founders of these smaller companies had not worked in the West, and they also do not have an office staffed with marketing professionals in their client markets.

Blue Muffin Studios started out by making Skype and IP-based calls to Australian businesses listed on an international business catalogue. When they had exhausted the entire catalogue, they managed to score a handful of work. Pathway Technologies and Services landed international work through word-of-mouth marketing and personal links with clients in the West. They also bid for contracts on online sites like upwork.com and fiverr. com. And while Blue Muffin have been largely focused on getting offshore contracts from the West, Pathway focuses more on the local Nepali market, regarding offshore work as just a part of the overall work they do.

Many of the small IT companies in Nepal who want to land larger offshore projects do not have the resources—like the big three—to establish a company presence in other countries, and they thus have to start out at the bottom and work their way up the ladder to get bigger, better-paying projects.

Abhash Bikram Thapa, creative head and cofounder of Blue Muffin Studios, says that for today’s IT startups to work with a sustainable model, they have to look inward towards the local markets as well. “Offshore work will help you sustain your business,” he says. "But the main revenue for IT companies still lies in the untapped local market. That said, when your company portfolio includes big international clients, securing your company a local job should be easy." He adds, “I think the best way for a startup IT company to function would be to, yes, look outwards, for offshore projects, but to also keep a keen eye on the local market and the projects available here.”