Vietnam Software Outsourcing History

The software outsourcing industry in Vietnam is extremely potential as some corporations such as Boe

The software outsourcing industry in Vietnam is extremely potential as some corporations such as Boeing, Toshiba are investing a lot of technology and the scientific application of IT in working and management, which is become popular in Vietnam.

At present time, the application of IT in all aspects of life from services and production all over the world has made the software outsourcing industry in Vietnam become one of the sectors with the highest export value country.

In the context of a flat economy that is flooding the Vietnamese market and the IT sector represented by software outsourcing, it will be a tool to promote Vietnam in the formation of the knowledge economy.

In the period of about 10 years ago when we started to create a voice in software outsourcing world, Japanese corporations such as Hitachi, NEC invested heavily in software manufacturing and Japan  always considered Vietnam as a strategic partner in the software industry.

The outsourcing industry will be the springboard for us to move closer to the world. That’s reason why the software outsourcing companies in Vietnam sprouted so much in 2004, and the consulting group International prestige in the world Kearney has ranked Vietnam as 20 out of 25 countries capable of attracting the best outsourcing.

During this time, numbers of software outsourcing companies in Vietnam have established because Vietnam has created a prestigious brand in the international market with quality and cheap labor.

According to statistics of the General Statistics Office in 2005, Vietnam has 650 companies specializing in outsourcing services with about 30,000 employees with an average of each programmer made $10,000 per year.

In 2006, it was said that the peak of the software outsourcing industry in Vietnam when the net profit was estimated at 400 million USD. The software export growth rate was over 60% and the domestic market was about 30%.

By 2007, according to VNINASA's report, software outsourcing industry in Vietnam continued to have strong development steps as revenue of nearly USD 1 billion, that was a proud figure.

The software outsourcing industry in Vietnam from 2007 to 2012 has been in a period of stable revenue reached $1.5 billion. A large number of companies such as FPT and TMA have expanded their market share worldwide with the number of employees up to thousands people.

At the next phase of the fierce competition, the software is more specialized, the database is very long and our workforce is not adaptable enough to improve its quality.

At this stage there are numbers of software outsourcing companies in Vietnam must be dissolved and that is the signal of the market that only real strong people can survive. Vietnam cannot rely on the cheap labor force. To develop, it is necessary to increase labor productivity and quality so that Vietnam can compete and gain market share in the world.

In 2015, IT industry revenue in Vietnam reached $58 billion, hardware and electronics industry is still the largest contributor to revenue, over $53 billion, estimated more than 91% of total IT industry revenue. Besides to the hardware and electronics, software industry and digital content industries is continued growth in revenue.

With the results achieved in 2016, IT statistics also shows that in the past seven years, from 2010 to the end of last year, Vietnam's IT industry has grown rapidly, continuously increasing revenue leader. Specifically, from revenue of $ 7.62 billion in 2010 to over $ 25.45 billion in 2012 and continue to increase total industry revenue to $58 billion in 2016, growth of more than 14% Compared to 2015 and more than 7.6 times the industry's revenue in 2010.

About the main partner of software outsourcing, Vietnam is mainly North America, Japan and Western Europe. However, Japan remains the largest source of revenue in software outsourcing in Vietnam. South, India and China are the three main partners of Japan, but we still have a higher priority in terms of cultural, geographical and political intimacy and the solidarity between the two countries.

We have about 50 companies cooperate with Japanese companies among which there are many companies whose revenue mainly export software to Japan with the growth rate up to 200%, such as FPT, TMA, CMC, etc.

In Japan there are nearly 500,000 labors in the industry but there are signs of going down and in Vietnam trend up. Japan is still the main Vietnamese partner but if Vietnam wants to raise the labor cost, Vietnamese people need to know more about Japanese culture and how to behave in the best way

The United States is also a potential market for software outsourcing in Vietnam but the United States always selects India as its top partner because of its abundant labor force and able to communicate English fluently.

Besides the advantages for Vietnam development is still difficult. Although Vietnam's labor costs are lower than China, India is about 40% of those countries, but our competitiveness is still low.

It is derived from the scale of software outsourcing enterprises in Vietnam, except for some big corporations such as FPT, Viettel, TMA, etc. Compared to India, China is a country of superior English ability compared to Vietnam. India was formerly a British Colony, most Indian people were able to communicate in English. Foreign language is a small obstacle for Vietnamese IT engineers to work with customers around the world.

What do you look forwards to seeing Vietnam Software Outsourcing in forthcoming years? Let’s see!

Thanks for your reading!

By Thuy Le

Comments (1) -

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