Vietnam in top ten software outsourcing providers

The Vietnamese software industry has been selected as one of the top-ten software outsourcing providers of the Asia Pacific region, announced the 19th Vietnam ICT Outlook (VIO) forum in HCM City on July 25.

Vu Trong Duong, Head of the Information Technology (IT) Department under the Ministry of Information and Communications, said Hanoi capital and Ho Chi Minh City have been ranked 20th and 30th, respectively, as top cities providing software outsourcing in the region.

The forum themed “the third platform-trend and realistic development” focused on new technology trends, such as cloud computing, big data, mobility, social network, the internet and Internet of things.

Duong unveiled the white book on Information and Communications Technology (ICT) 2014 and affirmed that Vietnam’s ranking does not change in the world‘s ICT map in the 2013-2014 period.

According to the White Book, the ICT industry continued to thrive with total revenue of more than US$39 billion in 2013, a year-on-year increase of 55%.

The hardware and electronics industries also continued to grow strongly thanks to a strong export performance. Their gross revenues were US$36.8 billion, up 59.2% over 2013, accounting for 93% of the sector’s total value.

The VIO forum coincides with the second Vietnam E-Business Forum 2014 themed “digital era, opportunity and challenge”.

Vietnam E-Business Forum opened a new view on doing business in the digital era, opportunities and challenges in business management.

It also provided a good chance for ICT businesses, experts and policy-makers to exchange experience and discuss opportunities and challenges arising from the digital era, helping business leaders build proper business strategies and models.

VNA/VNN

Source: VNA

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2014: the year of mobile games

More than 70 percent of games are developed specifically for smartphones, while thousands of new games are downloaded every day. With such growth, the future is bright for the mobile game industry.

The great success of Flappy Bird, a Vietnamese mobile game, in the world market in early 2014 gave Vietnamese game firms a push.

Flappy Bird showed that the mobile game market has high potential, in which programmers have equal opportunities to create games asNguyen Ha Dong did with Flappy Bird.

Le Hong Son, director of a game development studio in Hanoi, said he began focusing on developing apps and games on mobile devices instead of websites in 2013.

However, he could see the great potential of the mobile game market some years before, when smartphones became more popular in the world.

Vietnam is believed to be one of the biggest game markets in South East Asia. With the strong technology development and the popularization of smartphones, mobile games have favorable conditions to develop, according to Son.

Pham Cong Hoang, Deputy CEO of FPT Online, noted that the success of Flappy Bird has “awakened the Vietnamese game development community”. Many programmers, who specialize in developing PC games, encouraged by Flappy Bird, have joined the mobile game market.

Developing mobile game proves to be a great choice for young programmers and start-ups, because it does not require overly high invested capital.

“You need to pay for office expenses and workers’ salaries, but this is not too much. The most difficult thing you need to do is to find a team of qualified game developers,” Son said.

Le Hoang Duong, a 28-year old freelance programmer, who developed a mobile game three months ago with his own money, confirmed that one does not need to spend too much money to develop games.

“The most important thing you need to do is to have good idea,” Duong said, adding that “rescue your pet” was the main idea of his game.

According to Son, one of the reasons which prompt young programmers focus on developing games is that they can make big money quickly.

The major income of game mobile developers is believed to come from ads.

After finishing developing a game, the author can post the game into big app markets such as Google Play or Apple Store.

On average, developers can earn $0.02 from every game download. As such, a game developer can earn $1,000 if his game has 50,000 downloads.

Son said the income can also come from other sources, including download fees and In-app Purchases.

According to Mwork, Vietnam’s mobile game market’s scale in 2014 is expected to be nearly equal to the PC game market with the value of $210 million, or 3.5 times higher than in 2012.

The PC game market has seen growth slowing down with the revenue of $220 million in 2012 to $291 million in 2014.

Meanwhile, a report of Newzoo, a market analysis firm, showed that there are 1.747 billion gamers worldwide, including 1.2 billion people playing games on their mobile devices.

Source: VNA

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Opportunities, challenges for Vietnam's software industry

Vietnam has reaped many successes in developing the software industry, but to expand the market of software products, it must pay more attention to human resources and product development, and appropriate support policies must also be put in place to support software businesses, a local paper said.

Failing to compete with large groups of the US, Japan, the Republic of Korea and Germany such as Fujitsu, Hitachi and Samsung, which are governing the development of the global hardware industry, Vietnamese businesses have chosen to concentrate on software development, the Ministry of Industry and Trade's Vietnam Economic News reported.

The industry is an area where Vietnam has comparative advantages in terms of human resources and labour costs.

The State has promulgated some policies which provide support for software business development. For example, software businesses are offered an exemption from the corporate income tax for four years, personal income tax preferences offered to those who directly participate in software production, and value added tax (VAT) preferences applied to software products.

The number of software businesses has considerably increased. In 2000, Vietnam had a mere 25 software companies but now the number has increased to 3,877 companies with more than 55,000 employees.

Notably, many domestic software businesses have rapidly grown up and become capable to join competition in the home and foreign markets. Examples include the Corporation for Financing and Promoting Technology (FPT), the Tinh Van Technologies Joint Stock Company and TMA Solutions.

In 2013, FPT won bid packages for export of software solutions worth tens of millions US dollars, and now the corporation is pursuing bid packages worth hundreds of millions of US dollars. Its name is present in the list of the top 100 global service providers announced by Global Services (India) and NeoGroup (USA). TMA Solutions, with 1,500 employees and six overseas branches, has attracted customers including hi-tech companies from 25 countries.

Software development has brought in big economic benefits to many countries. In India for example, the software industry has created annual revenue of over 100 billion USD, contributing eight percent to the country’s gross domestic product (GDP).

In Vietnam, the software sector has achieved impressive growth. The country has moved ahead of India to become the second largest software exporter to Japan and stand among the top 10 software exporters in the world.

There are opportunities for Vietnam to escape outsourcing and realize the dream of creating made-in-Vietnam software products. Some domestic software businesses are boosting investment in research and development to create new products and technologies which can dominate the market. Creating their own products can bring domestic software businesses much higher revenue compared with doing the outsourcing jobs for foreign companies.

However, manpower shortages have become a challenge for domestic software businesses. They are lacking experienced engineers who are capable to master modern technologies and have good foreign language skills. FPT Management Board Chairman Truong Gia Binh said that the corporation planned to recruit more than 1,000 new employees annually but in fact it usually lacked about 300 workers.

Vietnamese software companies have limited equity capital and their access to capital sources such as the state budget, official development assistance (ODA), investment funds and financial companies remains difficult. The state support for human resources development in the field of information technology has failed to attract highly qualified human resources. Software industrial parks have yet to attract investors.

Many domestic software businesses are yet to have long-term investment strategies for product and market development. Statistics from the Ho Chi Minh City Computer Association show that just about 27 percent of software businesses have spent 10-20 percent of their total expenditure on marketing and market development; and just about 33 percent have invested in human resources development and scientific research.

Although experts predicted that there would be lots of opportunities for the domestic software industry in 2014 as well as ensuing years, it has to cope with increasingly fierce competition and meet growing market demand. To create its own advantages and catch up with developed countries, the Vietnamese software sector must hurry up in surmounting all mentioned above limitations.

Source: VNA

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ICT service market grows by 10 per cent

VietNamNet Bridge – Despite macroeconomic challenges, spending in Viet Nam for IT services increased 9.9 per cent to US$446 million in 2013, according to the International Data Corporation (IDC).

IDC expects IT services spending fore the banking sector to return to a healthy track with demand for new core banking and big data projects.— Photo quantrimang

As an emerging market, Viet Nam's investments in infrastructure have been growing rapidly.

IDC said that hardware support services had continued to dominate IT services spending, with an 18.9 per cent market share, followed by system integration and software deployment services of 14.3 and 11.3 per cent, respectively.

In 2013, the spending for hardware deployment services was low, at an 8.8 per cent growth rate, due to a lack of demand from the banking, insurance, manufacturing and retailing sectors.

Taken together, these sectors constitute 41 per cent of IT services spending in the country.

However, strong investments in e-government, cloud computing, data centres and Geography Information System (GIS) led a healthy demand for system integration services, which increased by 9.7 per cent compared to 2012.

The spending for network consulting & integration services increased 10.1 per cent with strong investments in the IPv6 platform coming from the communication sector.

"The Vietnamese IT services market has been maturing, reflecting the emerging trends of big data, the cloud and mobility," said Ha Ngoc Khuong, market analyst for IDC.

IDC said that spending for outsourcing services increased more than 11 per cent, driven by the lack of end users' advanced technical skills.

Local system integrators have been closing the skill gap by providing better technical support and customer care, enticing end users to opt for outsourcing. More players are jumping into the business, resulting in a wider range of options available for end users.

IDC forecasts that IT services market will grow at 12.7 per cent year-on-year in 2014.

The Financial Sector Modernization and Information project, valued at US$71.8 million by the State Bank of Viet Nam, will be a strong motivation for the IT services market in 2014.

IDC expects IT services spending fore the banking sector to return to a healthy track with demand for new core banking and big data projects.

In addition, increased spending in infrastructure such as a smart grid and smart transport projects will drive demand for related IT services such as consulting and system integration services.

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IT firms to benefit from rule allowing state agencies to use outsourcing

VietNamNet Bridge – With the Prime Minister having allowing state agencies to use outsourced services, information technology (IT) firms hope they will get more jobs in the time to come.

IT firms will provide software products and technology systems under the mode of service packages to customers for use.

The systems will run on the suppliers’ platforms. Customers can order the services they want and pay for service packages, while the service providers will take the responsibilities for all the stages of the service deployment, from operation to maintenance.

According to Do Cao Bao, Chair of FPT Information System Company (FIS), there are four basic benefits institutions and individuals can enjoy when using outsourced services.

They can cut down expenses, save time, improve productivity and reduce labour costs.

Regarding the investment rate, the companies only have to pay small sums of money for what they receive for years, instead of having to spend big money at once to build up information systems of their own.

Customers will also be able to save time because they do not have to follow the complicated administrative procedures. If they use IT firms’ services, they will not have to worry about procedures because this will be undertaken by the IT firms.

Using IT services instead of developing information systems of one’s own is believed to be an economical solution for everyone. They do not need to maintain a large workforce to run IT works.

Nguyen Xuan Hoang, CEO of Misa, said IT services are especially suitable for small and medium enterprises and state agencies, which can easily access high-level management systems, and do not have to spend too much money on servers and systems.

However, analysts commented that it is too early to say the the government decision on allowing state agencies to use outsourced IT services would help develop the market.

In fact, Vietnamese institutions and individuals have been aware of the benefits of IT services. However, they are hesitant to go ahead.

Bao of FIS said that this is understandable. The “hesitancy” is the thing regularly seen in developing countries, where the management level remains lower than in developed economies.

However, Bao said, this does not mean that the opportunity to develop the IT outsourced service market has not come. Vietnam is believed to have all the necessary conditions to do this right now.

IT has been developing more rapidly than the average development of the other sectors of the national economy. Some experts believe that Vietnam’s readiness index is even higher than that of other countries with similar GDP growth rates.

Source: vietnamnet

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