Why IT in HCMC Continues to Grow

Working - Saigon/HCMC: Feb. 16, 2017

A recent article published during the World Economic Forum’s Annual Meeting 2017 ranked Ho Chi Minh City the second-most dynamic city in the world, among other regular names from India, China and the US. The fact that HCMC has received this honour is no doubt thanks in no small part to the city’s focus on the technology sector and, in particular, on information and communication technology (ICT).

Overall, there are about 1,000 ICT companies in Vietnam, and 85 percent of them are based in Ho Chi Minh City. The city is the centre of Vietnam’s ICT activities thanks to an effective infrastructure, a large workforce in the ICT sector, and the recent growth of ICT companies both locally and from abroad.

There are currently 70,000 engineers working in HCMC’s ICT sector, an increase of 47 percent over last year. However, this number includes a broad range of careers in ICT. If we exclude the communications sectors, especially the burgeoning hardware industries in electronics and smartphone assembly that have become the country’s No.1 export earners in dollar terms, the IT workforce itself increased by a mere 8 percent.

Graduates and Trade Deals

Around 30,000 students graduate every year from some 40 IT programs in HCMC and the Mekong Delta region. In fact, Vietnam is ranked 10th among the countries producing the most engineering graduates, after Russia, the USA, Iran, Japan, South Korea, Indonesia, Ukraine, Mexico and France (China and India were excluded due to lack of data in the Human Capital Report report compiled by the World Economic Forum). Last year alone, there were 100,390 students here! All of these students need jobs, and the tech industry is rapidly meeting this demand.

Over the past 20 years, Vietnam has signed several regional and global trade agreements, such as committing to the ASEAN Free Trade Area, the WTO, the TPP and many others. These treaties have brought, and will continue to bring, more direct trade connections and business deals to HCMC’s information technology sector.

They also help raise the quality of technology in Vietnam. Software development companies have taken advantage of the these opportunities to identify new products to develop and offer to the Vietnamese market. Cloud computing, big data and many internet developments have all been introduced thanks to trade agreements.

 

Credit: themanguide.com

Growing Pains

However, software businesses are also experiencing weaknesses that might affect competitiveness. For example, many companies have trouble with branding and marketing, which ultimately leads to a lack of clear directions in both the city and on a national level. Determining industry-wide goals requires joint efforts from single enterprises and leaders in both the industry and the government. The ICT business in HCMC isn’t there yet, but we’re optimistic for the future.

As for challenges, they are not new but might bring long-term impacts if current market trends continue as they are. These trends flow out of the fact that popular software outsourcing destinations, such as India, China, Thailand and the Philippines, are upgrading and improving their own industries and infrastructures to attract new clients and export their own products. Vietnam should ensure it does not get left behind.

This ties in with the age-old concern about the quality of Vietnamese services and cheap labour. The latter is no longer a main selling point for international IT clients. Nowadays, foreign industries look for reliable partners. When looking for a partner to outsource software manufacturing, they’re more likely to select a company that offers high productivity and a high-quality product rather than just cheap labour. This is, without a doubt, an area that Vietnam’s ICT sector should focus on improving.

 

Credit: tuoitrenews.vn

Foreign multinationals – Samsung, LG, Intel and Microsoft, among others – have invested and opened offices and factories particularly in Ho Chi Minh City, thanks to preferential policies for investment and taxation from the government. They are operating, bringing profits and transferring knowledge to Vietnamese staff.

Now, the next challenge for the software industry is to provide its own products to the world – and to Vietnam itself, where 95 million people, with a low median age of 30.8 years, a high literacy rate and a rapidly growing middle class, present a great potential market to sell software solutions to local corporates, SMEs and individuals.

Orient Software Development Corporation is one of the leading software outsourcing corporates in Vietnam. We focus on Human Resource practices to recruit and support our talents. We understand the simple fact is “happy staff create qualified services and products”. Hence, they are key resources for more than 10 years of our success. 80% our clients is long-term clients from 7 to 10 years, 20% new clients partner with us per year, and we manage to retain 100% of them in last 3 years. The clients are worldwide and from different industries. We grow with clients’ businesses and achievements; we are their reliable software-outsourcing partner.