Vietnam eyes a place as IT player on global stage
Sector mushrooming, as communist state eases internet curbs and backs plans
to train more programmers.
QUANTIC Software's MD Bui Quoc Hung and his crew of 60 programmers have
been busy this past year juggling a stream of projects from major overseas firms
such as Nortel Networks, Japan's NTT and Cisco Systems.
"Vietnam is not yet known for its software, but its programmers have good skills.
And we are cheaper than India and China," Hung said.
With cheap, educated and plentiful labour, Vietnam's emerging information
technology (IT) sector has mushroomed from a handful of software firms two years
ago to more than 250 domestic and foreign-owned companies, said Truong Gia
Binh, CE of FPT, Vietnam's top internet firm.
The country's communist leadership only allowed the internet into Vietnam in 1997
and restricts access through filtering software.
But that hasn't stopped IT from blossoming into a $290m market that could more
than double by next year, says research firm IDG Vietnam.
The country is starting to carve a niche for itself as a software development base
for clients from North America, Europe and Japan, a new study suggests.
The report, released by Andersen Vietnam, finds some of the industry's leading
names IBM, Cisco, Nortel, Hewlett-Packard, Sony and Fuji already outsourcing
work to Vietnam.
The number of US companies seeking to outsource the labour- intensive writing of
code to cheaper locales will grow by 50% in the next two years, Forrester
Research predicts.
But Vietnam's IT ambitions face some serious obstacles.
Telecommunications charges are among the most costly in Asia and there are the
restrictions on internet access. There are five licensed internet service providers,
but the state monopoly, Vietnam Posts & Telecommunications, controls the
nation's one international gateway.
That allows the government to create filters to block politically or culturally
sensitive information, which end up slowing data transmission.
The country also faces a shortage of programming talent.
It produces about 2500 university graduates a year, about 10% short of the
country's needs, according to the education and training ministry.
But Vietnam's leaders keen for an industry needing fairly little capital but yielding
huge revenue seem to be taking some of the right steps.
They have enacted a slew of favourable policies since 2000, and plan to grant
domestic competitors additional licenses to access the internet gateway.
Telecoms charges are set to be seriously trimmed this year, to fall in line with
regional rates, while software firms are being offered incentives like tax breaks and
fast-track licensing.
Vietnam is also scrambling to build up its technical labour pool. Vocational centres
set up by Oracle, Microsoft, Cisco, and India's Aptech are supplementing
university computer science programs.
On the outskirts of Ho Chi Minh City, the 40ha campus of Quang Trung Software
City fosters the politburo's dream of incubating dot com entrepreneurs. Named
after an 18th century king who encouraged an "opendoor" policy of trade and
cultural exchange, the year-old software park is still a work in progress.
"Things pick up slowly here. But the priorities are still basic and sound," said Jean
Paul Tschumi, chief representative for Swiss-based IT firm Elca. "Nothing will
change overnight but we are here for the long term," Tschumi said.
SAPA (South Africa) - May 15, 2002.
Vietnam's emerging IT industry eyes huge foreign contracts
HANOI - Quantic Software's managing director Bui
Quoc Hung and his crew of 60 programmers have been busy this past
year juggling a stream of projects from overseas giants such as Nortel
Networks, Japan's NTT and Cisco Systems.
"Vietnam is not yet known for its software, but Vietnamese
programmers have good skills. And we are cheaper than India and
China," Hung said.
Based in Ho Chi Minh City, the software company had little money to
promote itself abroad. But, like many other tech companies in Vietnam,
Hung used another means to get the inside track on some of his
high-powered deals -- contacts with fellow Vietnamese overseas
already working in the industry.
With cheap, educated and plentiful labor, Vietnam's emerging
information technology sector has mushroomed from a handful of
software companies two years ago to more than 250 domestic and
foreign-owned companies, said Truong Gia Binh, chief executive of
Vietnam's largest Internet company, FPT.
It's only a matter of time before the Communist country becomes a
full-fledged regional IT player, he said.
"IBM, HP, NTT -- they already accept the quality of Vietnamese
programmers. Young Vietnamese IT people are very eager to take on
the challenge of showing they can do more," he said.
The country's Communist leadership only allowed the Internet into
Vietnam in 1997 and restricts access through filtering software.
But that hasn't stopped information technology from blossoming into a
$290 million market that could more than double by next year,
according to the research firm IDG Vietnam. The country is starting to
carve a niche for itself as a software development base for clients from
North America, Europe and Japan, a new study suggests.
The report, released by Andersen Vietnam Ltd., finds some of the
industry's leading names -- IBM, Cisco, Nortel, Hewlett-Packard, Sony
and Fuji -- already outsourcing work to Vietnam -- although the overall
value of contracts remains well below $10 million annually.
"If you want fast turnaround, go somewhere established like India. But
if you're looking for a long-term, cost-effective partner, Vietnam has
the potential to be that," said Marc Lopatin, director of Research
Vietnam, the independent analyst who conducted the study.
The number of U.S. companies seeking to outsource the
labor-intensive writing of code to cheaper locales will grow by 50
percent in the next two years, Forrester Research predicts.
Vietnamese programmers charge less than half what their
counterparts in India make. Including overhead charges, corporate
customers pay about $20,000 per person per year in Vietnam,
compared to $30,000 in Russia or Romania and $40,000 in India,
Research Vietnam says.
"With Vietnam, you do get quality. Its education system, which
emphasizes rote learning, mathematics and logic, creates good
programmers. But the bottom line is cost," Lopatin said.
But Vietnam's IT ambitions face some serious obstacles.
Telecommunications charges are among the most expensive in Asia
and then there are the restrictions on Internet access.
Though there are five licensed Internet service providers, the state
monopoly, Vietnam Posts and Telecommunications, controls the
country's one international gateway.
That allows the government to create filters to block politically or
culturally sensitive information, which end up slowing data
transmission.
"Infrastructure remains Vietnam's single biggest problem," said Don
Lam, a deputy director for PriceWaterhouseCoopers. "Communication
costs are starting to drop but the fundamental issue has not been
fixed."
The country also faces a shortage of programming talent.
It produces about 2,500 university graduates a year, about 10 percent
short of the country's demand, according to the Ministry of Education
and Training. That gap is expected to widen to 15 percent over the
next three years.
But Vietnam's leaders -- keen for an industry that requires relatively
little capital but yields huge revenues-- appear to be taking some of
the right steps.
They have enacted a slew of favorable policies since 2000, and plan
to grant domestic competitors additional licenses to access the Internet
gateway. Foreign Internet service providers will be allowed to compete
by the end of 2003.
Telecom charges are set to be seriously trimmed this year, to fall in
line with regional rates, while software companies are being offered
incentives like tax breaks and fast-track licensing.
Vietnam is also scrambling to build up its tech labor pool. Vocational
centers set up by Oracle, Microsoft, Cisco, and India's Aptech are
supplementing university computer science programs.
On the outskirts of Ho Chi Minh City, the 100-acre campus of Quang
Trung Software City fosters the Politburo's dream of incubating
dot-com entrepreneurs.
Named after an 18th century king who encouraged an "open door"
policy of trade and cultural exchange, the year-old software park
features manicured flower beds and a gurgling fountain, but remains a
work in progress.
Its biggest incentive -- a separate, filter-free connection to the internet
-- has yet to come on line.
"Things pick up slowly here. But the priorities are still basic and
sound," said Jean Paul Tschumi, chief representative for the
Swiss-based IT company ELCA, which has a staff of 30 in its Quang
Trung office. "Nothing will change overnight but we are here for the
long term."
By Tini Tran - Associated Press - May 13, 2002.
|