Vietnam - World-leading Software Outsourcing

The software industry in Vietnam has remarkable progresses in recent years. Mr Truong Gia Binh, president of the Vietnam Software Association (VINASA), said the Vietnamese software industry had an annual growth rate of 30 per cent - 45 per cent over the past three years. According to the report released by the Ministry of Information and Communications, the revenue of the IT industry totalled some US$3.75 billion, in which the software industry accounted for US$498 million.

At present, Vietnam has two points magnetising investors: Competitive price and qualified workforce.

 

Vietnam has more than 600 software production companies with some 15,000 technicians and engineers. The number of enterprises holding CMM and ISO international certificates trebled. Especially, FPT and PSV have obtained CMM5 and CMM15 certificates. Mr Hoang Minh Chau, Deputy General Director of FPT Corporation, added: With the support from VINASA, export revenue of FPT rose 690 per cent last year.

 

According to the Vietnamese Digital Content Industry Development Programme, the total revenue of the software industry will exceed US$800 million a year by 2010, in which export will contribute at least 40 per cent,

 

According to the statistics from the Ministry of Information and Communication, at present, some 80 per cent – 90 per cent of software companies are living on exports. With noteworthy efforts, the prestige and reputation of Vietnamese software companies increase robustly in the world markets, especially Japan, the United States, Ireland and Hungary.

 

In addition to business expansion, the quality of human resources in the software industry has increased steadily over the past years. FPT Corporation has nearly software engineers attending high-grade training courses in Japan under the scholarships of the Association for Overseas Technical Scholarship (AOTS) and 30 corporate managers in software companies have been sent to software quality management training programmes, Mr Chau said.

 

From initial six engineers 10 years ago, TMA, a leading software company in Ho Chi Minh City, now has 800 engineers capable of meeting the requirements of most demanding customers. Dr Nguyen Huu Le, chairman of TMA Company, said: “Some 40 per cent of the workforce has overseas training or working experience. Newcomers now need 3-6 months to work in foreign nations.”

 

Made-in-Vietnam software has won the trust of customers. Many foreign software development companies in Vietnam have expanded operations, recruited more employees and signed more contracts.

 

The US-invested Agilis Solutions has very offshore software business in Vietnam. Since its arrival in 2001, Agilis Solutions ordered more than 100 projects at FPT Corporation, with many valued at US$3.5 million each. In 2007, the offshore software business brought in US$1.5 million of revenues to Agilis Solutions. This year, the company expects a double amount.

 

Canon IT Solutions Company also tried to double its revenues in 2008 from US$1 million in 2007. In Vietnam, Canon IT Solutions mainly develops and tests embedded software outsourced at Vietnamese companies. The company plans to expand into financial and banking sector.

 

One of big customers for the Vietnamese software industry is the IBM Global Procurement Centre (GPC). Mr Han Nhan Quang, Director of GPC, said: “Vietnam is a strategic software location of IBM.” He said IBM would recruit an addition of 200 - 300 software developers in Vietnam. In addition to workforce expansion, IBM will also actively seek new Vietnamese partners to take part in IBM’s global software development projects.

 

After six years, the size of workforce and revenues has increased many times. IBM has 250 employees working in Vietnam, with three major partners: FPT Software, Global Cybersoft and Vietsoftware.

 

With three years in Vietnam, Japan’s HitachiSoft Vietnam has contributed up to 23 per cent of total global offshore software output of HitachiSoft. The Japanese company accounted some 10 per cent of FPT Software’s revenue of US$30 million in 2007. When it moved to Vietnam in 2003, India made up some 20 per cent of HitachiSoft’s offshore software output but the current figure is only 1 per cent.

 

Knowing that it is very difficult to compete with giant IT rivals like India, Singapore or China, Vietnam has sought its ways for development: Improving product quality and seeking non-English and non-Chinese contracts to avoid face-to-face competitions with India, Singapore and China. The advantage of Vietnam is to produce software programmes with Japanese, Germany and French languages.

 

Mr Nguyen Ngoc Huy, Managing Director of Digitexx Vietnam located in Quang Trung Software Park, said: “When we produce software using German language, we do not have to compete with India and China. We and Vietnam as a whole have the advantage to penetrate the German market because we had about 15,000 people living and studying in Germany in the past. Therefore, customers in Germany put greater trust on Vietnamese people than service suppliers in China or India because we are supposed to have a better command of German.”

 

GHP and Digitexx are the examples of many prosperous foreign investors in Vietnam. In addition to Germany, Vietnam also eyes other Asian and European major markets. According to VINASA, Japan is the first target of Vietnam. By 2010, the software export revenue to Japan is forecast to reach US$350 million, accounting for some 10 per cent of the offshore software market share in Japan.

 

The Vietnamese IT industry in general and the software development sector in particular are defined the key economic sectors of Vietnam. With the increased concern from investors in Vietnam and the world, the offshore software sector is expected to make a breakthrough profit.