After doubling their efforts to build trademarks and seek new markets, Vietnamese software offshore companies have made important progress powered by growing export revenues. Vietnam is among 20 countries with a high capacity of developing software outsourcing and related services.
However, the global economic crisis has sent many to numerous difficulties, even to the verge of bankruptcy due to falling business orders. It remains a hard task for Vietnamese software companies in particular and the IT industry in general to ride out difficulties and boost competitiveness.
Difficulty
Mr Nguyen Trong Duong, Deputy Director of Information Technology Department under the Ministry of Information and Communications, said: “Vietnam now has more than 1,000 software developers which employ 48,000 people. Some 200 companies outsource software and related services for foreign contractors, mainly from Japan, North America and Western Europe.”
In 2008, the software outsourcing sector made over US$ 680 million in revenues, a rise of 87 % from 2007, including US$120 million from exports, up 47 %. However, the software outsourcing revenue slumped in the first half of 2009. Many reported negative growths. According to specialists, software outsourcing revenues will revive in 2010-2011.
Mr Truong Gia Binh, Chairman of Vietnam Software Association and President of FPT Corporation, the largest software developer in Vietnam, admitted existing difficulties would trim this year’s growth to some 10 %, compared with 20 % in 2008. The main reasons are attributed to economic recession.
Even biggies like FPT Software (Fsoft) only saw a growth of 12.5 % this year and will hardly complete the full-year target. NEC Solutions Vietnam, an affiliate of Japan’s NEC Soft, made revenue of US$3 million in 2008 but reported a decline of 30 % in the first half of 2009.
At present, according to software developers, all traditional markets have shrunk especially the United States and Japan.
Opportunity
The resilience of Vietnamese software producers remains weak, said Dr. Mai Anh, Chairman of Hanoi Telecom Association. “Internal force of Vietnamese software companies is weak and their programmers usually lack experience. Many companies do not have programmers with more than 10 years experience, and they lack abilities to write feasibility projects and persuade customers when they attend bids,” Mr Mai Anh analysed.
Nguyen Tu Quang, Director of BKIS, a network security centre, said: “The quality of Vietnamese software is not high. Vietnamese-made software lacks utility and adaptability to practical uses. For the time being, Vietnam is ranked 12th in the world in software piracy. This negatively impacts the development of the Vietnamese software history. Moreover, Vietnamese companies are suffering heavy pressure from fierce competitions from rivals in India, South Korea and China.
However, the Vietnamese software outsourcing sector also has many opportunities. Deputy Prime Minister Nguyen Thien Nhan affirmed that software and IT industry is considered a key industry for the next 10 year development by the Government.
In the Technology Business Research Insight released by Gartner, in 2009, Vietnam’s ICT ranking climbed up 15 positions to 92 out of 154 countries. In 2009, Vietnam is, for the first time, added to the list of 30 Leading Locations for Offshore Services by Gartner.
Dr. Le Truong Tung, Vice President of the Vietnam Association of Information Processing (VAIP), said: “To develop the software industry, the Ministry of Information and Communications has proposed several solutions to develop human resources and expand foreign and domestic markets. Software outsourcing for foreign companies will remain the main source of export incomes for Vietnam in the coming time.
Mr Truong Gia Binh said Vinasa is stepping up cooperation with Japanese and US partners this year to boost software export to these markets. The association spent VND1 billion assisting software companies to attend major IT events like CeBIT in March 2009 in Germany and Sodec in May 2009 in Japan. Vinasa estimated that the Vietnamese software industry will earn export revenue of US$800 million in 2010.
Tuan Duong
Vietnamese
