Japan, Vietnam’s biggest software partner

Vietnamese enterprises earned big revenue from outsourcing software for Japanese partners

Bounces

According to the Vietnam Software and IT Services Association (VINASA), in 2007, Vietnamese businesses carved a niche of only one percent on Japan’s software outsourcing market, while almost no Vietnamese company opened a campus in Japan. The situation has changed considerably since 2014, as Vietnam has become the second biggest software and IT (information technology) service outsourcing partner of Japan. Vietnamese companies earned US$1.6 billion from outsourcing software for Japanese partners in 2015.

Most of Vietnamese software enterprises have seen their revenue increasing strongly since outsourcing software for Japanese partners. The VBPO Joint Stock Company earned only US$100 from software outsourcing to Japan in 2011. The company’s revenue increased to US$1 million four years after that.

According to the Japan External Trade Organization (JETRO), software ranks first among industries in which Vietnamese businesses invest in Japan. More than 10 Vietnamese software businesses have opened companies and/or branches in Japan. The FPT was the pioneer in this field, launching its FPT Japan in 2005. Over the past 10 years, FPT Japan’s revenue has been growing 32 percent per year. In the first 10 months of 2016, FPT Japan earned revenue of US$100 million, almost becoming a top50 IT service provider in Japan.

Open opportunities

The Japanese Ministry of Economy’s data showed that each year Japan spent an average of about US$30 billion on applied software and the digital content market. Japanese companies have tended to get ASEAN (Association of Southeast Asian Nations) partners to outsource these products instead of China.

Japan Information Technology Service Industry Association (JISA) Chairman Tomokazu Hamaguchi said that the Japanese market is offering so many opportunities for Vietnamese enterprises. Japanese companies are looking to reducing their dependence on the Chinese market, and Vietnam has become the number one candidate in the field of software export.

Leading Japanese companies such as Hitachi, Fujitsu and the NTT Group are leasing Vietnamese enterprises to outsource products. If Vietnamese companies attract qualified and Japanese-speaking engineers, they can find a lot of development opportunities in Japan.

Gartner Japan Vice President Yuko Adachi said that in the coming time, Vietnamese enterprises should rapidly improve human resources qualitatively and quantitatively, and increase operational scale and technological level to take gold opportunities in the highly potential market of Japan.

Vietnamese companies account for only one-fourth of the workload that Japanese software companies hire foreign enterprises to outsource. The reason is that Vietnam hasn’t had large-scale software companies and lack needed human resources. In Vietnam, there are only 200 software companies totaling 150-200 employees each, 10 companies with 1,000 employees, including the FPT Software, the FPT Information Systems, CMC, TMA, CSC, Tinh Van and Microtec, among others.

According Gartner (market research), Vietnam is one of the most competitive choices in the world for software outsourcing because the labor cost in this field in Vietnam is half of that in India, and the human resource stability in Vietnam is higher than in other countries.