Understanding Software Outsourcing Industry in Vietnam - Insights from Saigon Technology

Vietnam Software Outsourcing Industry

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Vietnam - a country that has experienced many fierce wars, now confidently walks on the path of comprehensive development in terms of society, economy and education ... referring to the outstanding development of the "information technology" industry, especially "software development" in the direction of providing software outsourcing services to growing startups and enterprises in oversea.

After more than 20 years of doing the software development outsourcing for Europe and North America markets, from 2010, Vietnamese software development firms believe they have accumulated enough experiences to handle more complicated and higher value contracts.

The Chaotic World in 2020 and The Battle Against Coronavirus

2020 is an unforgettable year with many changes from the Coronavirus pandemic. Recently, Coronavirus has spread fear to citizens around the world, with nearly 22.000.000 infections and nearly 1.000.000 deaths. Vietnam particularly, there have been over 20 deaths recorded because of Coronavirus - proving that Vietnam has been doing well in their best effort in epidemic prevention and control, initially marking the glorious feat after the direction of the strict social isolation policy - compared to other nations from all over the world. Economically, in this sensitive time, many restaurants, hotels, and entertainment enterprises have to suspend or give up their businesses.

These are the numbers of public health and safety, from the perspective of economic growth, according to Wikipedia, The announcement of the General Statistics Office in the afternoon of March 27, 2020, showed that GDP in the first quarter of 2020 increased by 3.82% compared to the same period of 2019. This is the lowest increase of the first quarter in the period of 2011-2020, even worse than the worst scenario that the Ministry of Planning and Investment has set out in the Government's regular meeting of January 2020.

Overview of Software Outsourcing Industry in Vietnam

While Vietnam suffered from a number of market conditions limiting technological expansion, the market lacked technology, and that demand was far exceeding many challenges in the country. A significant part of Vietnam's growing technology industry was driven by the development of an indigenous outsourcing industry for overseas contract work. By 2001, about 100 software development companies were operating in Vietnam. Anheuser Busch, Bayer, BMG, BP, Cisco, IBM, Merrill Lynch, Nortel Networks, NTT, Oklahoma, and Sony have outsourced development to Vietnam, directly or through third-party apparel.

Analysts noted that English-speaking markets tend to outsource software development to Vietnamese companies instead of Chinese, Indian because the Chinese, the Indian labor force has been on the rise. Especially the regular changes in the labor force of Chinese, Indian software firms have badly affected the implementation of the projects ordered by the Japanese. The escalating political tense has also prompted English-speaking firms to work with the Vietnamese.

However, Thanh (Bruce) Pham, CEO of Saigon Technology - a leading software outsourcing firm in Vietnam, shared that in order to gain an increasingly higher position or be able to rise to the height of holding a world-leading position in software outsourcing, Vietnamese companies need to make more efforts to demonstrate their true capabilities to the world. What Vietnam has done to the technology - software industry, international businesses have recognized, however, the spirit of relentless learning and outstanding responsibility will be seen as the key to opening a bigger door for Vietnam - proving to friends from five continents that Vietnam is also capable of usurping India, China undertakes technology projects from other powers.

New Playground - Yet Challenging

The CEO of Saigon Technology also said on Vinasa that in the past, Vietnamese software outsourcing firms could do simple works, such as low-value coding or testing projects. Meanwhile, they now can make the product designing and researching, which can bring higher value.

Also according to Thanh, Vietnam gets ¼ of the total workload outsourced abroad by Japanese firms, the rest to English-speaking firms. Most of the contracts Vietnam gets nowadays have values higher than in the past since Vietnamese firms now can undertake more complicated works.

According to the event stream discussing practical capabilities of Vietnamese software engineers, Mr. Chu Tien Dung, Chair of the HCM City Information Technology Association, who is also President of the Quang Trung Software Park, affirmed that more orders have come from Japan. This not only proves the reliability that Vietnam has in the world but also shows that becoming a technology partner of a famous and rigorous country like Japan is indeed not easy. that any country can do. Dung has noted that Vietnam is now completely capable of undertaking the jobs which require high techniques, which helps improve its competitiveness in comparison with the rivals – China, India, the Philippines, and Malaysia. Some Japanese companies are considering setting up some research and development (R&D), IT services, and software outsourcing centers in Vietnam.

The report of A.T. Kearney in 2005 showed that Vietnam ranked “average” at 26/50 among the attractive software outsourcing countries. Meanwhile, it jumped to the fifth out of the 50 most attractive software outsourcing countries in 2011. The IT development index in 2012 increased by five grades to 81/16. Vietnam now ranks fourth in South East Asia and 12/27 in the Asia Pacific.

The report of Gartner has pointed out that over the last five years, Vietnam has been continuously listing itself among the world’s top 30 countries and among Asia Pacific’s top 10 countries, while it has been leading in software outsourcing at low costs.

In the domestic market, the Vietnamese software industry has been facing big challenges due to the economic recession. Therefore, its turnover growth in 2012 was lower than the year before, at 3.1 percent, with a turnover of over $1.2 billion. Vietnam’s total turnover from the IT industry in 2012 was $25.5 billion, an increase of 86 percent over 2011.

Though being optimistic about the Japanese market, analysts still have warned that Vietnam needs to beware of Myanmar and Malaysia, at least for some more years. This is a newly emerging market which may grab one piece of the cake from Japan. 

Saigon Technology - We Don’t Bring Service, We Are Your Assistants!

Developed with the motto "Your success is our mission", Saigon Technology soon achieved many successes after its establishment in 2012. Through many ups and downs on the path of change and rise, Saigon Technology has won 2 Sao Khue awards consecutively in 2019 and 2020 - demonstrating competence and affirming the steadfast position of Saigon Technology in the international market.

For the success to date, Saigon Technology team has continuously worked hard to consider and implement ways to best support businesses. Foreign businesses that have been cooperating with Saigon Technology include famous brand names all over the world, from many different industries such as Abbott, Topicus, Panasonic, Standard Chartered ... this not only proves that Saigon Technology's service capability stretches from many fields such as banking, e-commerce, home appliances, healthcare ... but also shows off an important role in contributing to Vietnam's brand name - a perfect destination for software outsourcing - to the world. With the strength of talented human resources, energy, and regular working spirit, Saigon Technology has gradually occupied a foothold in the software engineering industry in Vietnam during the past decade.

As the leading Agile offshore software development company in Vietnam, Saigon Technology Solutions has teams of world-class experts in software engineering. With a mature process and consistent core values, Saigon Technology is confident of being the "right hand" of customers.
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