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Outsourcing firms face challenges
Vietnam’s software outsourcing industry has grown exponentially in the last five years, but the world economic downturn and entry of more countries into the market pose great challenges, according to IT experts.
They were speaking at the Outsourcing Vietnam Seminar 2008 organised in the city on October 17 by the Vietnam Software Association (VINASA), and the Vietnam Game and Digital Content Business Club (VGB). The seminar was sponsored by Harvey Nash Vietnam, a London-based software company with 600 employees in its Vietnam branch.
According to the Vietnam National Institute of Software and Digital Content Industry, outsourcing revenues had increased from about US$20 million in 2002 to US$180 million in 2007.
The institute’s report shows that Vietnam has about 150 companies engaged in outsourced software projects, employing an average of 100-150 software programmes.
Some companies have as many as 1,000 software programmes, like FPT software, FPT Information Systems, TMA and CSC.
The software services that could be provided were diversified, like BPO (Business Processing Outsourcing), Data Centre, ERP (Enterprise Resource Planning) Services.
According to the HCM City Computer Association (HCA), the city’s revenue from software outsourcing is VND990 billion, according for one third of national revenue.
The main outsourcing markets currently are Japan, North America and the European Union, according to the report.
Nguyen Duc Quynh, deputy director of FPT Software HCM City said that the US-led economic downturn could limit growth in IT spending.
Besides China and India, other ASEAN, East European and South American countries are also becoming major destinations for outsourced software work because of the low cost resource pool.
These two factors were the most important challenges facing the Vietnamese software outsourcing industry.
Phi Anh Tuan, director of the HCM City Branch of the CMC group, said the high salary paid to programmers was one of the difficulties that companies were facing.
Pham Thien Nghe, general secretary of HCM City Computer Association (HCA), calculated that a software engineer could generate a turnover of about VND20 million a month while the company would pay him VND10 million a month. If taxes and other expenses were included, the company would make no gain.
Tuan noted that most local software outsourcing companies were small, hiring less than 500 employees. This made it difficult to win big contracts from large companies like Boeing or Microsoft.
La Manh Cuong, managing director of Luxsoft Vietnam, a Russian software company, said that procedures for establishing a business in Vietnam were complicated and time-consuming. It took his company forty-five days to start its operations in Vietnam.
A shortage of IT resources required for the fast growing service also affected development of the outsourcing industry, Quynh said.
Earlier in the morning, VINASA and VGB also organized a seminar on the Real Situation and Solutions to Boost the Vietnam Digital Content Industry.
VOV
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