Vietnamese software firms consider Japan as the major market

Software firms

The Japanese software market is really attractive in the eyes of Vietnamese software outsourcing firms, but Vietnamese firms always have to struggle to penetrate the lucrative market. According to Vinasa (Vietnam Software and IT Service Association), up to 80 percent of Vietnamese firms consider Japan as the core market when doing the outsourcing for foreign partners. Of these, only five percent of businesses has been exploiting the Japanese market, 20 percent of businesses consider Japan as the main market, and 55 percent consider Japan as one of their main markets.

The survey conducted by Vinasa shows that though all the businesses consider Japan as a choosy market, 50 percent of them still affirm that they can find the business opportunities on the market, while 25 percent say they can absolutely satisfy the demands of the market.

A representative of the Vietnam Technology Solution Company (Techno) said that the company chooses Japan as the top priority partner. Therefore, besides providing software outsourcing services for Japanese partners in Vietnam, Techno is also striving to export the labor force, i.e sending engineers to Japan.

Meanwhile, the representative of HKDA said that though the company only began approaching the Japanese market in mid 2009, the turnover from the software outsourcing service for the Japanese market now accounts for more than 30 percent of the total turnover of the company.

Nevertheless, Vietnamese software firms have admitted that they still cannot fully exploit the opportunities of the Japanese big market.

According to Tran Tuan Nam, Deputy Director of NCS Joint Stock Company, in the period of 2005-2009, the software outsourcing growth rate for the Japanese market reached 70-80 percent, much higher than the average growth rate of the software industry at 30-40 percent. However, the growth rate has been slowed down significantly in 2010 and 2011, when the Japanese economy borne the big impacts of the global economic crisis.

Though obtaining very high growth rates, the turnover Vietnamese software firms have got from the Japanese market is much lower than that earned by the businesses from China and India – the biggest rivals for Vietnamese firms in the Japanese market.

Sources show that Vietnamese software firms just hold 1-2 percent of the Japanese software outsourcing market, much lower than the market shares held by Chinese or Indian firms.

Nam believes that the main reasons behind the modest achievements of Vietnamese software firms on the Japanese market are the limited Japanese language skills of Vietnamese software engineers and the limited project management capability.

Iku Amino, General Director of the Japan Agency for Promotion of information technology, noted that the biggest problem of Vietnamese software firms is that they lack the engineers who have the qualification meeting the international standards. Especially, the staff has limited Japanese language skills and cannot get adapted well to the arising problems during their works.

Besides, he said that Vietnamese software firms now cannot keep the advantage edge in terms of prices in comparison with the rivals.

Experts have warned about the low quality of IT expert education. By the end of 2010, Vietnam had had 250,000 IT officers, including 128,000 officers in the hardware, 72,000 in the software and 51,000 in the field of digital content. Vietnam has 227 schools that train IT officers and 60,000 students are enrolled every year.

However, a survey conducted by Vinasa has pointed out that the successful recruitment proportion is very low, just 5-10 percent, while most of businesses say they have to spend 1-3 months to retrain newly recruited officers.

Source: Vneconomy

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