VN software firms warned of losing contracts

Though 2014 is believed to be a good year for the Vietnam’s software industry, the country’s software firms have been warned that it would be not easy to make money if they cannot upgrade in terms of the operation scale, said the English language online newspaper VietNamNet Bridge.
Though 2014 is believed to be a good year for the Vietnam’s softwareindustry, the country’s software firms have been warned that it would benot easy to make money if they cannot upgrade in terms of the operationscale, said the English language online newspaper VietNamNet Bridge.

Vietnamese software firms have missed a lot of opportunities to makemoney as they are small scaled businesses and incapable to undertake bigprojects, the online newspaper said

Though the world’s software market is considered as a big cake, and its piece for Vietnam is very modest.

Vietnamis the biggest partner of the Japanese market, but its turnover in thevast market just accounts for a small proportion of the total marketvalue of 30 billion USD, according to the Japanese agencies.

FPT,the Vietnamese biggest technology group, can earn about tens ofmillions of dollars from the outsourcing contracts with Japanese firms.

Inthe past, low labour cost was a great advantage for Vietnam to obtainthe contracts. A report by NeoIT, the US based outsourcing survey firm,showed that in 2011, the IT labour cost in Vietnam was 40 percentcheaper than that in China and India.

However, the advantage hasbecome less great due to the high inflation and the wage increases.Meanwhile, some countries have just joined the world’s market, offeringlower prices.

Therefore, Vietnamese firms have been warned thatif they cannot create new values in technological level, creativeness,IT solutions, the clients Vietnam now has would leave to seek otherpartners.

Tran Phuc Hong, Deputy General Director of TMASolutions, believes that the biggest problem for Vietnam now is thatVietnamese software firms are still too small, which makes it impossibleto undertake big projects.

The number of big firms withhundreds or thousands of workers, according to Hong, is too modest thatit “can be counted with fingers.”

And even if Vietnam hashundreds or thousands of IT firms, the firms, with the small operationscale, would not be capable enough to “swallow the bigger pieces of themarket cake.”

Ngo Hung Phuong, CEO of CSC Vietnam, has commentedthat the Vietnam’s software industry has slowed down in its developmentbecause it cannot make the breakthroughs to become a giant, the thingthat India has successfully done.

In 2012, with 2.5 millionworkers, accounting for 0.25 percent of the total population, thesoftware outsourcing and IT services created 100 billion USD, or 8percent of India’s GDP.

Having been aware of the existingproblems, IT firms have been gearing up with their plans to expand theirbusiness scale. TMA, with 1,500 workers, six branches overseas, has setup TMA Japan Center (TJC) which is in charge of developing the Japanesemarket. TJC plans to employ 500 engineers in the next three yearsinstead of 150 as currently.

A source said that TMA needs hundreds programmers more this year in a plan to develop the US and North American markets.

NguyenDinh Quynh, Director of FPT Software Ho Chi Minh City, hopes that theVietnam’s software industry would develop as a supply chain in thefuture. Under the supply chain model, FPT Software would get bigcontracts from foreign partners and allocate to domestic small andmedium enterprises.-VNA

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