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Leading industry experts share their views about Vietnam’s outsourcing market.
What do you think of Vietnam’s market outsourcing potential?
Deputy general director of Global Cyber Soft (GCS) Vietnam Joint Stock Company, Ngo Van Toan
According to reports by some leading experts at the recent 2010 ACOCIO Summit in Vietnam as well as signals from several domestic software companies the world outsourcing market has shown initial signs of recovery after a period of sluggish performance in the aftermath of the 2008-2009 economic downturn.
Reality shows that outsourcing is a general trend that a great number of businesses worldwide have pursued with an aim to saving cost and optimising their business strategies.
The factor represents a golden opportunity for Vietnamese software companies to boost business efficiency. However, the question is whether Vietnamese companies have become ready or grown strong enough to take on the opportunity.
The resources here not only encompass programmer groups, but also expand to other diverse essential aspects of sales, human resource quality, project efficiency, and foreign language competence particularly Japanese communicative skills when working with Japanese partners.
Software outsourcing is fairly demanding in terms of human resource quality and project efficiency. Customers will not come to us even if they have a soaring demand for outsourcing unless Vietnamese companies have proven themselves to be well positioned for the task.
That is why we often talk of the world’s escalating demand for outsourcing while some domestic businesses still find themselves beyond reach to grasp a piece in the world’s vast outsourcing market.
Deputy general director of TMA Solutions, Tran Phuc Hong
In my view, Vietnam has big potential for software production due to a number of factors. The world’s IT market revival leads to soaring market demand, and Vietnam’s still minor stake in the world market promises expansion possibilities, particularly in new markets as Australia and Asia.
With Vietnam’s increasing exposure in software outsourcing to international businesses , more and more foreign companies have come to Vietnam for the deal and ultimately there is a rise in manpower supply as new universities have sprung into life in the past few years.
General director PSD Software Company, Nguyen Ngoc Thinh
The potential for the entire IT industry, not just software outsourcing, is excellent. What investors and customers like most is the human resource here. Vietnam has close ties with leaders in hi-tech industry like Japan, Korea, Taiwan and the US that will help growing the domestic software industry significantly in the near future.
There are over three millions overseas Vietnamese with valuable skills, capital and network who are eager to invest and work in the software industry in Vietnam. With these advantages the software industry in Vietnam will grow very fast with the proper guidance from a very supportive government.
It was said that Vietnamese outsourcing businesses have become mature as many of them have been capable of localising foreign solutions for use at domestic companies. What do you think?
Ngo Van Toan
It is now the case in point that is worth applauding as it helps Vietnamese software businesses raise the added value of IT projects while promoting their capacity and creativity. Businesses capable of handling the work must have in place highly qualified specialist teams with thorough understanding of domestic market demands.
In fact, the trend of localising foreign software is set based on the two following factors. First, it is enterprises’ strenuous efforts to establish mature and capable specialist teams to handle big projects in Vietnam’s context. Second, it stems from the domestic market demand, especially when the Vietnam’s economy is developing robustly and businesses are then obliged to ameliorate their performance as well as management capacity to save cost and enhance competitiveness.
Tran Phuc Hong
After years grappled with tough market challenges it came out that only businesses with real strength and suitable development strategies could survive. In my view, the maturity of software producers is gauged by their service scope and quality, technology level and customer base.
Nguyen Ngoc Thinh
It happened in Silicon Valley, in India and other places. At the beginning there will be a “proliferation” period where you have many small companies but few can grow beyond thousands employees size. The next phase is the “consolidation” period. It look like this phase is starting now as more and more major software companies are moving into Vietnam like HP, CapGemini, Aricent and InfoNam.
Small companies will have to merge together to survive and compete. More investment will be pouring into the software industry in Vietnam which will also bring better executives, skilled managers and proven processes. I know the software industry in Vietnam, especially in Ho Chi Minh City, very well and have watched it closely since 2000.
In Ho Chi Minh City, most of the software outsourcing companies has been able to provide good services for major companies around the globe while competing with companies in places like India, China and Eastern Europe.
Once we have a workforce that can work well with world-class companies, the industry can enjoy steady and significant growth. I predict that the software industry in Vietnam will be the undisputed leader in South East Asia within a few years. That will make selling software services from Vietnam a lot easier.
Human resources is a key factor in any outsourcing contracts. Have your businesses fully prepared for it?
Ngo Van Toan
Addressing the matter requires both time and efforts. It involves the Vietnamese government’s efforts in mapping out human resource development policies and strategies and enterprises’ efforts in devising suitable action plans to make headway.
Tran Phuc Hong
TMA had opened a manpower training center right in 2007 that has helped the company achieve considerably better human resource quality.
Nguyen Ngoc Thinh
It’s correct that human resources is the key for the software outsourcing industry. Every company has its own plan to develop its own workforce. Large companies like Renesas and Intel can afford to pay for long and expensive training programmes but smaller companies may not be able to do that.
It’s a very difficult problem for smaller software companies to solve successfully because there is no way to protect your investment spent on trainings. Even though employees are entitled to better jobs, hiring from each other will create high attrition rate that will impede the growth of the industry in the end.
This is one of the areas where the government can help. Ho Chi Minh City has a large budget for IT training that usually not being used effectively. The central government as well as the Ho Chi Minh City People’s Committee should work directly with the executives in the industry to help build a better workforce to satisfy the enormous demand for good human resources in the next few years.
Too often the supportive Vietnamese government prefers working with their own officials assigned to watch the industry rather than listening to the people who actually invest and manage the software outsourcing companies. That must be changed. The education system also needs to improve quickly as well.