Vietnam is embracing technology with open arms, and the Vietnamese government has big plans to make information and communication technology (ICT) a major business sector in the years ahead.
So far, the plans have been working: the Ministry of Information and Communications (MoIC) reports that in 2016 the ICT industry generated a total of VND 1.337 trillion (US$59.9 billion), a 9.36 percent increase from 2015.
Maxfield Brown, Editorial and Research Associate from FDI advisor Dezan Shira & Associates, says, “A lot of factors are coalescing in Vietnam at the moment to create a lot of potential, including Vietnam’s young labour force, increasing education and relatively low [labour] costs compared to other outsourcing destinations, for example China or India.”
However, one little problem is standing in the way of Vietnam becoming a leader in IT development and outsourcing: an ample workforce. As of December 2016, the MoIC calculated that ICT companies in Vietnam employed 600,000, with around 300,000 in the hardware industry and 300,000 in software and digital content. The projected numbers for the future are a bit more grim.
A Struggling Future, A Struggling Past
It’s estimated that companies will seek to employ an additional 400,000 workers between 2016 and 2020. However, the output of of Vietnam’s 290 universities and colleges, along with their 150 IT schools nationwide, are only capable of producing around 250,000 workers at the current rate.
This is bad news for a country on the brink of a strong technological grounding that’s expected to help catapult Vietnam’s GDP to 20th in the world by 2050. Some foreign direct investors from South Korea and elsewhere have been cited as passing on investing in Vietnam’s ICT sector due to the country’s current infrastructure and lack of skilled workers suitable for middle management positions.
Getting recruits for ICT companies in Vietnam has never been easy. Just ask Karl Theisen, Associate Director of the Arizona State University Fulton School of Engineering and one of the original pioneers of ICT work in Vietnam. “Vietnam really took off in ’95 and ’96,” he says. “Back then, it was mainly foreign companies who went to Vietnam to set up a branch. They would have branches all throughout Southeast Asia: Bangkok, Singapore, Hong Kong…”
And even then, the ICT companies would be responsible for providing a rigorous training for new employees – all college graduates – to learn the IT solutions the company provided. While the need to train new hires was undoubtedly an extra expense that companies needed to factor in, this way of doing business wasn’t all bad. Theisen cited one particular HCMC-based company that quickly caught on to the typical Vietnamese worker’s aptitude for learning and strong work ethic.
Photo by ReutersKham
“[One company] would use the Vietnamese worker as an added service value. It would provide technicians the way a Western IT company would, and while the Vietnamese technicians were just as capable as a technician from the US or Germany, they would cost a lot less,” he explains. “So some companies did very well doing that.”
Today, the climate has changed completely, and not just in terms of size. Theisen observes that
“fifteen years ago, your target customer base was foreign companies, ones that have a heavy foreign investment [in Vietnam]. But now you see that domestic companies have grown to the point where they’re real strong target customers to these types of IT solutions.”
Working Through Recruitment
It would make sense that with this expanding market, the number of ICT students and worker recruits would rise with the businesses. However, this just hasn’t been the case. The first problem? For students, the numbers just don’t add up.
In Vietnam, there’s traditionally been a tug of war between business degrees and degrees in the STEM fields, and MBAs usually win. “People want to get a business degree, because then they can go into these different businesses and do different things,” Theisen says. “Whereas the software engineering degree, in terms of a degree, was actually a little bit more expensive as a degree program, and your job prospects were limited.”
Another disadvantage of a career in IT follows graduates into the workplace. Taking a job in an IT company will almost certainly mean a lower salary than workers in other business careers. A 2016 piece by Vietnam.net, for example, listed the monthly wage of the director of a large software park as just VND 24 million (around $1,050).
This was the challenge that faced Karl Theisen when he headed RMIT’s Center of Industry Engagement in 2002: how to make students (and their parents) interested in a field that offered less security than an MBA.
For Theisen, that meant completely changing the way IT was taught in Vietnam. One of the major problems he saw was a disconnect between what companies wanted out of graduates and what universities were producing. Often, although students would have a good grasp of technical skills, they would have trouble finding work because they lacked soft skills like working effectively in teams and speaking up during meetings.
Theisen worked directly with IT companies by setting up internship programmes and informational lectures, encouraging students not only to learn the specifics of the job, but also to practise skills they would be using in their day-to-day work. And this paid off: Theisen immediately saw numbers grow – in student recruitments as well as graduate job placements.
A Brighter Future?
Unfortunately not all tertiary education in Vietnam can provide IT education on the same level as the well-resourced RMIT. However, changes are occurring, and fast. For one thing, VnExpress.net recently found that 81 percent of IT companies will implement company-wide raises of 6 percent to 20 percent in 2017.
As a recent report from Dezan Shira pointed out, the Ministry of Industry and Trade sees a clear connection between education and business – definitely one of the reasons for the recently approved changes to Hanoi’s Hoa Lac High-Tech Park.
In 2016, the park has been approved for an expansion aided by $3 billion in registered capital gathered from 78 domestic and foreign projects. And one of the major additions happens to be the development of Hanoi National University and other training institutions. But will these changes be enough to make up for the 150,000 workers Vietnam needs to match industry demand? Only time will tell.
Staggering Statistics in HCMC
– There are currently around 1,000 ICT companies in Vietnam; 85 percent are located in HCMC.
– 70,000 engineers work in HCMC’s IT sector, an increase of 47 percent since 2015.
– Around 30,000 students graduate every year from around 40 IT programs in HCMC and the Mekong Delta region.
– Vietnam is currently ranked the 10th among countries producing the most engineering graduates.
– In 2016, 100,390 students were enrolled in IT programs in HCMC and the Mekong Delta region.