VietNamNet Bridge – Vietnam has become the priority choice for Japanese partners when they look for the reliable partners to outsource software products. However, they keep worries about the lack of faithfulness of the workers of small software firms.

Vast market opened to Vietnamese

A survey conducted by the Information Technology Promotion Agency Japan on 1,100 Japanese information technology firms showed that 31.5 percent of Japanese firms choose Vietnam for offshore outsourcing orders, a percentage which is much higher than India (20.6 percent), China (16.7 percent), Thailand 9.7 percent and the Philippines 7.4 percent.

Nguyen Doan Hung, Chair of the Vietnam-Japan Club on IT cooperation, said that since the Japan – China relation is getting worse, Japanese firms tend to leave China and look for non-China destinations.

Meanwhile, Vietnam proves to be more competitive than China in terms of service fees (lower by 30 percent), which makes it a good choice to place orders with Vietnamese firms instead of Chinese.

Chu Tien Dung, Deputy Chair of Vinasa, the Vietnamese software and IT service association, also thinks that Vietnam is now the top choice for Japanese firms thanks to the cultural similarities, close geographical positions, political stability, the close relationships between the two governments with many cooperation and support agreements.

Some big Vietnamese software firms have successfully penetrated the Japanese market, namely FPT Software, CMC, Sao Mai and Tan The Ky which have reported the growth rate of 100 percent per annum in software outsourcing for the Japanese partners.

However, Hung has noted that only 23.3 percent of Japanese surveyed firms said they once outsourced to Vietnamese partners. Meanwhile, 75-80 percent of the Japanese total outsourcing contract value has been going to Chinese firms. This means that the total value of the contracts Vietnam has signed with the Japanese partners is just equal to 1/30 of China’s.

There have been no official statistics about the total revenue from the outsourcing contracts with Japan. However, experts have estimated that Vietnam just accounts for 4-5 percent of the Japanese software outsourcing market. Vietnamese firms mostly receive the orders on the products relating to e-commerce, apps on mobile phones and tablets.

When asked if Vietnamese IT firms can design and make valuable software products themselves to export to Japan instead of doing the outsourcing, Hung said it is not a too difficult job, but only a few enterprises can create such products.

Japanese, though having been successful in making machines, cars or cameras, have not always succeeded in making the software products which fit the taste and satisfy all the demands of consumers, according to Hung.

Labor force remains a barrier

More and more opportunities have come from Japan to Japanese IT firms. However, Dung said the lack of the labor force remains the biggest obstacle that prevents Vietnamese firms to grab the opportunities. Vietnamese engineers still lack necessary skills to satisfy the requirements by the Japanese partners.

Sharing the same view, Hung said in general, the Japanese partners only outsource the simple components of projects to Vietnamese firms. For example, Vietnamese firms have been asked to make reports or user interface, while there have been few orders relating to complicated components.

In order to undertake the jobs like Chinese engineers, Vietnamese need to have the Japanese skills and the knowledge fluent enough to work right at the head offices of the Japanese partners, where they have to do the system designing before entering the coding process.

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