Pain for IT outsourcing

10:18 | 08/12/2011
Japan is a potential software outsourcing market, but local companies are struggling.

Vietnam Software and IT Services Association (Vinasa) survey figures show that up to 80 per cent of Vietnamese software firms chose Japan as a core market for software outsourcing contracts with foreign partners. But, 5 per cent do business with Japanese firms.

The survey also reflected though most firms considered accessing Japanese market a hard task 50 per cent of firms confirmed they saw vast opportunities for development in the Japanese market and 25 per cent said they were confident their product quality could be on a par with Japanese market’s strict quality requirements.

According to a Techno Vietnam Company Limited representative the company took Japan as its top partner. Hence, parallel to providing software outsourcing services to Vietnam-based Japanese partners, the firm aims to offer manpower leasing services to work in Japan.

A representative from online data HKDA Corporation said one year after breaking into Japanese market, the firm’s software outsourcing revenue accounted for over 30 per cent of its total revenue.

Industry insiders, however, assumed local software outsourcing firms still could not effectively tap potential Japanese market.

According to NCS Joint Stock Company deputy director and member of Vietnam-Japan IT Club (VJC), Tran Tuan Nam Vietnamese firms eyed 70-80 per cent growth in software outsourcing revenue from Japanese market against 30-40 per cent software outsourcing sector’s average growth during 2005-2009.  However, the growth significantly slowed down during 2010-2011 since Japanese economy was hurt by global economic recession in 2010.

Besides, the revenue gained by Vietnamese software firms from Japanese market was tiny compared to that from Chinese and Indian firms, which were local firms’ weighty competitors.

Vietnamese firms just occupied 1-2 per cent outsourcing market share in Japan, far below that owned by Chinese and Indian firms.

Nam said Vietnamese software engineers’ poor Japanese language skills and project management capacity were to blame.

“Vietnamese software firms lack international standard technical workforce and their employees could neither communicate in Japanese nor respond swiftly to arising problems,” said Information Technology Promotion Agency of Japan’s general director Iku Amino.

By Duc Huy

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