Source code theft emerges as a growing threat to Nepal’s software industry

Source code theft is emerging as a serious commercial threat to Nepal's burgeoning software industry, jeopardizing companies' competitive edge and financial investments.

The theft involves copying the underlying codebase of software applications, repackaging it, and selling it under a different name. This practice is becoming increasingly common, with the Cyber Bureau of Nepal Police receiving 10 complaints in the last fiscal year alone. The Nepal Copyright Registrar’s Office has also seen similar cases, some of which have progressed to court proceedings.

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The software looked almost identical in both appearance and functionality. When our technical experts examined the fonts and code architecture, they found clear evidence of copying. The logical structure, database design and coding patterns all matched ours. Even spelling mistakes embedded in our source code were reproduced exactly. That prompted us to file a complaint with the Cyber Bureau. Since the identical errors appearing independently would be virtually impossible, the police presented them before the court as strong evidence of source code theft.

A recent case filed at the Kathmandu District Court highlights the problem. Diyalo Technologies Pvt Ltd accused former employees of establishing a new company, Wash Tech Nepal, and launching a competing product, WashBilling, that allegedly replicated Diyalo’s WaterMark ERP platform. PR Khanal, CEO of Diyalo Technologies, stated that technical experts found clear evidence of copying, including identical fonts, code architecture, database design, and even replicated spelling mistakes found in the original source code.

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Over the past few years, several other Nepali software companies have also had their source codes stolen.

Following an investigation by the Cyber Bureau, charges were filed against five individuals accused of copying Diyalo's source code and selling the resulting software. Khanal noted that this incident is not isolated, with several other Nepali software companies experiencing similar source code theft over the past few years. Chandra Bilash Bhurtel, general secretary of the Federation of Computer Association Nepal (CAN Federation), pointed out that accounting software and financial technology products are particularly vulnerable.

Bhurtel added that proving source code theft is technically difficult, requiring investigators to conduct detailed comparisons of database architecture and coding patterns. Employees who are dissatisfied or frequently change jobs are often implicated, replicating products from their previous employers.

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In most cases, employees who are dissatisfied with their organisations or frequently change jobs replicate the products of companies they previously worked for after moving elsewhere. Proving source code theft is technically difficult. Investigators must conduct a detailed comparison of database architecture, in