VietNamNet Bridge – Small scaled in operation, incapable to undertake big projects, Vietnamese software firms have missed a lot of opportunities to make money.

Though 2014 is believed to be a good year for the Vietnam’s software industry, Vietnamese software firms have been warned that it would be not easy to make money if they cannot upgrade in terms of the operation scale.

Though the world’s software market is considered a big cake, the piece of the cake divided to Vietnam is very modest.

Vietnam is the biggest partner of the Japanese market, but its turnover in the vast market just accounts for a small proportion of the total market value of $30 billion, according to the Japanese agencies.

FPT, the Vietnamese biggest technology group, can earn about tens of millions of dollars from the outsourcing contracts with Japanese firms.

In the past, low labor cost was a great advantage for Vietnam to obtain the contracts. A report by NeoIT, the US based outsourcing survey firm, showed that in 2011, the IT labor cost in Vietnam was 40 percent cheaper than that in China and India.

However, the advantage has become less great due to the high inflation and the wage increases. Meanwhile, some countries have just joined the world’s market, offering lower prices.

Therefore, Vietnamese firms have been warned that if they cannot create new values in technological level, creativeness, IT solutions, the clients Vietnam now has would leave to seek other partners.

Tran Phuc Hong, Deputy General Director of TMA Solutions, believes that the biggest problem for Vietnam now is that Vietnamese software firms are still too small, which makes it impossible to undertake big projects.

The number of big firms with hundreds or thousands of workers, according to Hong, is too modest that it “can be counted with fingers.”

And even if Vietnam has hundreds or thousands of IT firms, the firms, with the small operation scale, would not be capable enough to “swallow the bigger pieces of the market cake.”

Ngo Hung Phuong, CEO of CSC Vietnam, has commented that the Vietnam’s software industry has slowed down in its development because it cannot make the breakthroughs to become a giant, the thing that India has successfully done.

In 2012, with 2.5 million workers, accounting for 0.25 percent of the total population, the software outsourcing and IT services created $100 billion, or 8 percent of India’s GDP.

Having been aware of the existing problems, IT firms have been gearing up with their plans to expand their business scale. TMA, with 1,500 workers, six branches overseas, has set up TMA Japan Center (TJC) which is in charge of developing the Japanese market. TJC plans to employ 500 engineers in the next three years instead of 150 as currently.

A source said that TMA needs hundreds programmers more this year in a plan to develop the US and North American markets.

Nguyen Dinh Quynh, Director of FPT Software HCM City, hopes that the Vietnam’s software industry would develop as a supply chain in the future. Under the supply chain model, FPT Software would get big contracts from foreign partners and allocate to domestic small and medium enterprises.

DNSG