In 2013, when I took my first business trip to Hanoi to meet people from various local IT, telecommunications, and broadcasting companies, most of my friends living there said, "As people here expect software to be free, you should think of it as an investment at first. Let’s patiently wait for the number of users and license sales to grow so we can make it a paid service." What a vague thing to say. The overwhelmingly dominant business model in Vietnam is revenue sharing (RS), which literally means sharing profits.
This is a country where people use software designed by someone else until the free license expires and make a new account to use it again, so the idea of charging software users seems quite distant, which once made me wonder whether Vietnam’s software industry could grow at all.
However, since 2016, the country’s IT industry has seen tremendous changes and development. With Samsung starting full-scale production of its mobile phones in Vietnam, Android developers there now create software for different products and versions at a speed that reminds one of clothes manufactured in sewing factories. Moreover, Vietnam’s fast-growing startups and transition from PCs to mobile phones are further facilitating the growth of its software industry. India used to be considered the best country to outsource software development. However, despite their fluent English and cheap rates, the cultural barriers between us and Indian companies were too high, and it was also difficult to build trust with them. (Based on my experience of working with them, there were a lot of issues related to meeting deadlines and quality.)
 |
| 2020 Vietnam IT Market Report |
Vietnam is now ranked second globally for IT development outsourcing, with its largest partners including Japan, Europe, the U.S., and South Korea. Samsung and LG relocated their global development centers from China to Vietnam, and many other small and big Korean businesses are also constructing development centers in Vietnam or outsourcing software development to it. Most notably, in March 2021, Samsung Electronics built Asia’s largest R&D center (SVMC) in Hanoi, with the goal of outsourcing cutting-edge technology such as AI, IoT, big data, and 5G to 3,000 Vietnamese developers by the end of 2022.
 |
| Samsung's R&D Center in Hanoi, Vietnam |
In addition to building these international R&D centers, Korean, Japanese, and other foreign companies are merging and acquiring Vietnam’s software development companies or establishing joint ventures (JVs) with them, which leads to the expectation that Vietnam’s software development outsourcing will evolve into a national project.
Just like how Vietnamese workers in the past dominated the global sewing market with their enthusiasm for education and diligence, millennial and Gen Z developers of Vietnam, smartphone-savvy and multilingual, have been leading the global IT outsourcing market, the so-called “coding factory,” since around 2020. According to TopDev, a Vietnamese IT employment website, Vietnam needs 400,000 software engineers this year, which is 100,000 more than the actual number of software engineers in the country. Next year, the demand will grow to 500,000, meaning the country requires 190,000 more.
 |
| The Age, Location, and Gender of Developers in Vietnam |
The Vietnamese government is pushing a slogan of “Make in Vietnam,” a slogan that calls for the Fourth Industrial Revolution and refers to the country’s soft power to design something creative and actively produce added value. This presents a contrast to the phrase “Made in Vietnam,” which represents Vietnam’s traditional manufacturing industry. Last year, Vietnam’s ICT industry grew 28 percent compared to the year before, with the foundation of 13,000 new digital companies.
Although the number of people working in the industry in 2019 was 1.03 million, which only accounts for 1.9 percent of Vietnamese workers, the ICT industry takes up 14.3 percent of the entire gross domestic product. (GDP). Its labor productivity is 7.6 times higher than the country’s average and 18.7 times higher than that of agriculture, forestry, and fishing.
While Vietnam’s IT market is still led by foreign, global corporations, Vingroup, the giant Vietnamese conglomerate, started automotive, software, and mobile phone businesses (although the phone business was shut down in May 2021), in addition to construction. This shows how IT and software development presents Vietnamese companies with opportunities to enhance their competitiveness and export their products across the world.
Vietnam has outsourcing companies of various sizes, from its largest software companies, FPT and CMC Global, which currently lead the market, to small and medium-sized ones. Of course, there is also a growing number of outsourcing companies founded by Koreans, too.
 |
| Vietnam’s Leading Software Development Outsourcing Companies |
These companies have developers of all levels, including juniors fresh out of college and seniors in their 30s, as well as leads. The majority of them have less than three years of experience, and one thing you should note is that they are not as prepared as entry-level developers in Korea. Even those who majored in computer engineering are unlikely to have studied up-to-date topics such as AI and big data. Furthermore, unlike in Korea, it’s hard to find private IT training centers in Vietnam, so their competency greatly depends on how much effort they have put into coding at work. It may sound like a stereotype, but it’d be too dangerous to expect these developers to grow on their own.
 |
| Years of Experience of Developers in Vietnam |
In Vietnam, open-source tools and frameworks are preferred over those made by big companies, which require expensive licenses, and I suspect Vietnam has more PHP developers than any other country. In fact, I was quite impressed to see PHP developers, who I thought had vanished from the market, working hard on the front-end and back-end development of e-commerce in Vietnam. This is also why many international projects involving PHP-based legacy systems are outsourced to Vietnamese companies.
 |
| Main Development Platforms, Tools, and Languages in Vietnam |
While the sudden growth of Vietnam’s e-commerce and COVID-19 have made it difficult for me to visit the country as frequently as before, I expect that Vietnamese software outsourcing companies will continue to grow. Even a friend of mine who didn’t believe I could start a corporation in Vietnam to sell software in 2013 now outsources to a Vietnamese company.
The corporation I work in, which is located in Hanoi, also built a development center in Vietnam last year and is working hard on AI, big data, chatbots, and clouds. I plan to introduce them when the timing is right.
Vietnam & IT Blogger
This text was written with the consultation of a legal professional, and it's important to mention that, due to my non-legal background, there may be subjective opinions in the analysis and interpretation of legal documents. If you have any questions, please contact me using the provided information.
VietnamIn Kim Do-yeon ・ Jun. 07,2021 15:39・Translated and Published by Uptempo Global
Comments
Post a Comment