Vietnam software industry sees the opportunity to growth overseas

Estimated reading time: 3 minutes

Vietnam saw growth in the domestic software market decelerate in the last five years, but outsourcing for foreign markets was higher. 

According to the report of the Vietnam Software development Association (Vinasa), it showed the big problems of the world’s and domestic economies that led to the decline in the growth of the Vietnamese software industry in 2011-2015. 

However, it still could maintain a 10-15 percent per annum growth rate (the growth rate was 30-40 percent in 2006-2010), 2-3 times higher compared to the GDP growth rate.

The revenue of the application industry increased from $1.06 billion in 2010 to $1.6 billion in 2015, while the revenue from services and digital content in 2015 was also over $1.6 billion. 

Therefore, the full total revenue from software and information technology (IT) services increased from $2 billion in 2010 to $3 billion in 2015. The report remarked that the Vietnamese value content was quite high altogether revenue, about 90-95 percent.

Lately, there is a sharp upsurge in the amount and scale of the firms which do outsourcing for foreign partners.

Vinasa expressed the idea that the domestic market was influenced by the national recession. 

In your home market, IT firms target two major categories of clients – state-owned agencies and businesses. 

Meanwhile, how many clients from both market segments decreased in recent years as the clients cut budgets for IT services.

The problems in policies concerning procurement and Vietnam software outsourcing services also hindered the development of the market.

Meanwhile, Vietnam’s export markets give a positive sign via the annual growth rate of 30-40 percent per annum. Vietnam has become the Number 1 favorite partner of Japan, while the US and European markets have experienced a stable growth rate of 20-30 percent per annum.

A Gartner’s report showed that Vietnam is one of the 10 most attractive countries for software outsourcing services. In 2010-2015, Vietnam’s Hanoi and HCMC were named in the most truly effective 20 of the list of 100 t destinations for software outsourcing, in accordance with Global Services-Tholons.

In 2013, Vietnam became the 2nd largest partner for Japan in software outsourcing, soon after China, in accordance with a Japanese IT promotion agency.

However, analysts have warned that Vietnam’s software industry is facing big challenges for the next development period as a result of insufficient IT engineers. 

Vietnam would need 400,000 IT workers in 2016-2020, while 290 universities and junior colleges in Vietnam and one other 150 training establishments can provide 250,000 only.

From 2011 to 2015, the labor force in the application and digital content industry increased by 10 percent per annum.

Read More:Vietnam plays with the big boys on software outsourcing


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