Vietnam plays with the big boys on software outsourcing

10:36 | 12/09/2018 Information Technology

(VEN) - The Vietnamese software sector has recorded strong development in terms of the scale and number of companies offering software outsourcing services. This sector has received investment priority given its great potential.

vietnam plays with the big boys on software outsourcing

This growth is particularly impressive given that Vietnam’s software firms are relatively young compared to those in China and India, but they have caught up rapidly and joined the list of leading software exporters.

Information technology (IT) companies are focusing on software development. Some companies have built campus-style workplaces, such as FPT Corporation with three campuses in Hanoi, Da Nang and Ho Chi Minh City.

Vietnam enjoys a comparative advantage in the field of software development in terms of abundant human resources and low labor costs. In addition, the state has promulgated policies to support the development of software companies, such as income tax exemption for four years, incentives in personal income tax for software developers and value added tax (VAT) for software products.

In the last three years, a wave of shifting software outsourcing services from the two big centers of the world, China and India, to ASEAN countries has helped Vietnam’s software export market and IT services reached a growth rate of 15-25 percent per year.

According to the Ministry of Information and Communications, Vietnam’s software exports reached an estimated VND58 trillion in 2017, and VND34.2 trillion in the first half of 2018. FPT’s software exports reached VND3.578 trillion in the first half of the year, an increase of 29 percent compared to a year ago. This figure is expected to reach VND7.5 trillion for the year.

The Vietnamese software outsourcing market has carved out a niche on the world map. Vietnam jumped five places to sixth according to A. T. Kearney’s 2017 Global Services Location Index. In addition, Vietnam has been Japan’s second-largest partner in software and service outsourcing since 2014.

With opportunities from the 4.0 industry revolution, Vietnam will be able to upgrade its position in the global software industry.

However, additional large and professional companies are needed in Vietnam, where there are only about 200 software companies with 150-200 employees and 10 companies with 1,000 employees. This makes it hard for them to meet large orders.

According to the Vietnam Software and IT Services Association, the software and IT services sector has to date

reached revenues of more than US$8.8 billion.

Quynh Nga