UEB - Strategies for the Development of Information Technology Outsourcing in Vietnam (1)

7/25/2019 UEB - Strategies for the Development of Information Technology Outsourcing in Vietnam (1)

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS................................................................................iii

LIST OF FIGURES................................................................................................iv

LIST OF TABLES..................................................................................................iv

ACKNOWLEDGEMENT......................................................................................v

ABSTRACT.............................................................................................................1

CHAPTER 1: GENERAL OVERVIEW OF OUTSOURCING AND

INFORMATION TECHNOLOGY OUTSOURCING.........................................2

1.2 Outsourcing.........................................................................................................2

1.2.1 Definition...............................................................................................................21.2.2 Types of outsourcing..............................................................................................3

1.2 Information technology outsourcing....................................................................4

1.2.1 Overview of information technology outsourcing.................................................41.2.2 Model for the evolution of information technology outsourcing providers..........5

CHAPTER 2: THE DEVELOPMENT OF STRATEGIES FOR

INFORMATION TECHNOLOGY OUTSOURCING IN VIETNAM................7

2.1 Overview of Vietnams information technology outsourcing................................7

2.1.1 Development of IT industry...................................................................................72.1.2 IT companies.......................................................................................................10

2.2 SWOT analysis of ietnam!s information technology outsourcing...................13

2.2.1 trengths..............................................................................................................132.2.1.1 !ow production cost.....................................................................................132.2.1.2 trong la"our pool........................................................................................142.2.1.# ta"le political environment.........................................................................142.2.1.$ %overnment support....................................................................................152.2.1.& 'ast growing domestic economy..................................................................1"

2.2.2 (ea)nesses..........................................................................................................1"2.2.2.1 (or)force limitations...................................................................................1"2.2.2.2mall scale industry.....................................................................................172.2.2.3*oor security and intellectual property protection......................................1#

2.2.# Opportunities.......................................................................................................1$2.#.#.1 The trend toward cost+savings of ITO..........................................................1$2.2.#.2 ,ntry of M-s to Vietnams IT mar)et........................................................202.2.#.# *otential of /apanese mar)et.......................................................................21

2.2.$ Threats.................................................................................................................212.2.$.1 trongly competitive environment................................................................212.2.$.2 The downturn of glo"al economy.................................................................22

2.3 SWOT matri%....................................................................................................23

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CHAPTER 3: STRATEGY SELECTION AND SOME IMPLICATIONS FOR

THE DEVELOPMENT OF VIETNAMS INFORMATION TECHNOLOGY

OUTSOURCING...................................................................................................2"

3.1 Selection of a&&ro&riate 'evelo&ment strategies for ietnam!s ITO in'ustry....2"

3.2 Some im&lications for ietnam!s ITO in'ustry.................................................27

3.2.1 (evelo& IT human resources...............................................................................273.2.2 )nhance ietnam!s trust*orthiness on glo+al mar,et........................................2$3.2.3 Im&rove legal system..........................................................................................30

CONCLUSION......................................................................................................31

REFERENCES......................................................................................................33

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LIST OF ABBREVIATIONS

Abbre!"#!$%

--/

O

/-

/

/I

//S/

(

)(S

6/-

6)I

I

I/TI

ISO

IT

IT)S

ITO

O

I/

/

8(

9S

Me"%!%&

-sia acific

usiness rocess Outsourcing

/om&oun' -nnual ro*th ate

/a&a+ility aturity o'el

/a&a+ility aturity o'el Integration

/hinese uan/om&uter Sciences /or&oration

ross (omestic ro'uct

)lectronic (ata System

6o /hi inh /ity /om&uter -ssociation

6igher )'ucation Institution

International usiness achine

Information an' /ommunication Technology

Intellectual ro&erty

International Stan'ar's Organi:ation

Information Technology

Information Technology )na+le' Service

Information Technology Outsourcing

no*le'ge rocess Outsourcing

inistry of Information an' /ommunications

ultinational /or&oration

esearch an' (evelo&ment

9nite' States

iii


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LIST OF FIGURES

;igure 1.2 One mo'el for the evolution of soft*are e%&orting firms in Tier ;our

nations.......................................................................................................................5

;igure 2.1 evenue of ietnam!s soft*are in'ustry ...........................#

;igure 2.2 ro*th of soft*are com&anies in ietnam.............................................11

;igure 2.3 -verage ITO salaries in the --/ in 2005? +y level of e%&erience........13

;igure 2." ro&ortion of soft*are com&anies in ietnam? +y num+er of em&loyees

.................................................................................................................................1#

LIST OF TABLES

Ta+le 2.1 lo+al Services @ocation In'e%.................................................................$

Ta+le 2.2 Information technology in'ustry em&loyment? 200#...............................10

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ACKNOWLEDGEMENT

(uring the time of &re&aring an' com&leting my thesis? I *as very luc,y to receive

numerous su&&ort an' encouragement from many &eo&le. -n' this is here+y to

e%&ress my sincere gratitu'e to them.

;irst an' foremost? I *oul' li,e to give my s&ecial than,s to my su&ervisor? h(.

ham Thuy @inh for &rovi'ing me *ith valua+le recommen'ations an' hel&ful

materials. (es&ite her +usy *or,? she s&ent much time on rea'ing my 'raft an'

hel&ing me correct the mista,es carefully an' ,in'ly. Wor,ing *ith her? I gaine' a

'ee&er ,no*le'ge +ac,groun' a+out ho* to con'uct a scientific research.

Secon'? I *ish to e%&ress my gratefulness to all lecturers of ;aculty of International

usiness an' )conomics an' other lecturers for &rovi'ing me *ith im&ortant

,no*le'ge of economics an' +usiness? *ithout *hich I can never finish this thesis. I

also *ant to sho* my a&&reciation to li+rarian staffs of 9niversity of )conomics

an' usiness an' ietnam ational 9niversity? 6anoi? from *hom I coul' +orro*

many useful materials.

@ast? +ut +y no means least? my sincere than,s are 'evote' to my family? es&ecially

my mother? for their love an' su&&ort through my years of stu'ies. I am greatly

in'e+te' to all of them. I also o*e my gratitu'e to my frien's for their

encouragement through all my 'ifficult times.

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ABSTRACT

Information technology is an in'ustry *ith high intension of intellectual? high

rate of interest an' great &otential of e%&ort. -ccor'ingly? IT outsourcing is a goo'

'irection for 'evelo&ing countries to choose so as to Auic,ly strengthen the

country!s material? intellectual an' s&iritual gro*th? s&ee' u& the mo'erni:ation of

economic sectors? an' em&o*er the com&etitiveness of +usinesses.

;oreseeing the &otential of ietnam in this in'ustry? in Bune 2000? ietnamese

government release' a 'ecision to +uil' an' 'evelo& the country!s soft*are in'ustry?

o&ening the ne* o&&ortunity to attract international IT outsourcers. In recent years?

ietnam has +een emerging as a 'ynamic 'estination for the 'evelo&ment of lo*C

cost ITO in -sia.

The research aims to e%&lore the real situation of ITO in ietnam an'? accor'ingly?

formulate 'evelo&ment strategies an' give some recommen'ation for the country to

enhance this economic sector. -n overvie* of ietnam!s ITO sector is given +efore

SWOT mo'el is a&&lie' to i'entify the sector!s strengths? *ea,nesses? o&&ortunities

an' threats as *ell as formulate 'evelo&ment strategies for the sector. 9tili:ing a

threeC&hase mo'el of evolution for IT com&anies in 'evelo&ing countries? the

research recommen's that? among availa+le strategies? the most a&&ro&riate ones are

focusing on lo*Cen' &ro'ucts? ta,ing a'vantage of lo* costs in short term an'

im&roving service maturity? moving to highCen' &ro'ucts in long term. asing onthe selecte' strategies? some im&lications such as 'evelo&ing human resources?

enlarging scale of IT in'ustry? enhancing ietnam!s trust*orthiness on glo+al

mar,et an' im&roving legal system are &rovi'e' to hel& &romote the 'evelo&ment

of ITO in ietnam.

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CHAPTER 1

LITERATURE REVIEW

1'1 O(#)$(r*!%&

1.1.1 Definition

Outsourcing has a long history. It starte' a fe* hun're' years ago *ith the

&ro'uction an' selling of foo'? tools an' other househol' su&&lies. -t the 'a*n of

man,in'? each &erson or family &rovi'e' everything for themselves. They create'

their o*n tools? gre* their o*n cro&s? hunte' their o*n foo'? an' s,inne' hi'es to

ma,e their o*n clothing. When village s&rung u&? &eo&le +egan to s&eciali:e. They

+artere' *ith one another for goo's an' services? an' soon money *as invente' to

sim&lify the +artering &rocess. ;or e%am&le? a family coul' +uy hi'es from another

family? ma,e clothes an' sell to others. That is the sim&le form of outsourcing from

the early stage of humanity. In s&ite of such a long history? a &recise 'efinition ofoutsourcing has not yet +een agree' u&on.

In the +oo, O&eration anagement +y Bay 6ei:er et al ? the 'efinition is

more s&ecificD EOutsourcing means &rocuring from e%ternal su&&liers services or

&ro'ucts that are normally a &art of an organi:ation. In other *or's? a firm ta,es out

functions it *as &erforming inChouse an' has another com&any 'o the same Fo+.G

-nother 'efinition from the vie*&oint of outsourcing &rovi'ers is offere' in

WhatIs.com = the online technical 'ictionary an' IT encyclo&e'iaD EOutsourcing is

an arrangement in *hich one com&any &rovi'es services for another com&any that

coul' also +e or usually have +een &rovi'e' inChouse.G

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asing on these 'efinitions a+ove? outsourcing in this thesis *ill +e 'efine' as

transferring tas,s that coul' also +e or usually have +een &erforme' inChouse to

e%ternal &rovi'ers. Outsourcing involves t*o or more in'e&en'ent com&anies? the

transfer is not outsourcing if it is from a com&any to a +ranch of its. 9sually?

outsource' tas,s are ta,en for only some of the com&any!s +usiness &rocesses? not

the entire &rocesses.

1.1.2 Types of outsourcing

There are several *ays to 'efine 'ifferent ty&es of outsourcing accor'ing to'ifferent criteria. 6o*ever? the general criterion for outsourcing classification is the

ty&es of *or, outsource'.

One metho' that is no* *i'ely acce&te' 'ivi'es outsourcing into three main

categories H2? 25. The main criterion is the com&le%ity an' s,ill reAuirement of the

*or, outsource'. The three categories inclu'eD

B()!%e)) Pr$*e)) O(#)$(r*!%& +BPO, is outsourcing a s&ecific +usiness tas,.

O *or, coul' +e either +ac, office relate' or front office *or,. y front

office functions *e mean customer relate' *or, such as mar,eting? ans*ering

calls? an' technical su&&ort. On the other han'? +ac, office functions inclu'e

internal *or, li,e +illing an' &urchasing. Other e%am&les of O *or, are

multime'ia? +oo, ,ee&ing? +usiness consultancy? call center? 'ata entry?

ty&esetting? an' han'*riting services. K%$-.e/&e Pr$*e)) O(#)$(r*!%& +KPO, involves &rocess that 'eman'

a'vance' research an' analytical? technical an' 'ecisionCma,ing s,ills.

)%am&les are investment research services ? mar,et research services? legal research services an' &atent research services. O

in'ustry is ne*er an' less mature than the O sector.

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I%0$r"#!$% Te*%$.$& O(#)$(r*!%& +ITO, is another maFor category that

covers the outsourcing of IT functions. ITO is usually overseen +y the /IO

of an organi:ation. 6o*ever? the /IO is often calle'

in to manage O an' O o&erations *here no significant IT s,ills are

involve'. This is 'ue to the e%&ertise the /IO *oul' have 'evelo&e' in

outsourcing negotiations. In some other classifications? ITO is consi'ere' a

su+set of O. 6o*ever? *ith the +ooming of ITO in +oth sco&e an' 'e&th? the

*or, outsource' has reAuire' more com&le% IT s,ills. -s a result? ITO is no*

consi'ere' as one maFor category of outsourcing that must +e &ai' &articular

attention.

1'2 I%0$r"#!$% #e*%$.$& $(#)$(r*!%&

1.2.1 Overview of information technology outsourcing

-s mentione' in the first &art of this cha&ter? outsourcing is an ol' &henomenon

*ith the history of hun're's of years. 6o*ever? ITO is much less mature *ith thehistory of Fust a+out 30 years H15. In the early ages of com&uting? IT tas,s *ere

consi'ere' as internal +usiness +y most com&anies. The 9S *as one of the first

countries to a'o&t ITO. o*a'ays? ITO has +ecome &o&ular all over the *orl' an'

ITO in'ustry has +ecome one of the fastest gro*ing in'ustries. This in'ustry has

+een &laying an im&ortant role in the economy of many countries such as In'ia?

/hina? 9,raine an' Irelan'. - num+er of other countries li,e ietnam? hili&&ines

an' ra:il are trying to &rove their com&etency on the ITO mar,et? *hich &romises

even faster gro*th in near future.

-lthough com&anies outsource IT for many reasons? the gro*th of the ITO mar,et

is often attri+ute' to t*o &rimary &henomena. ;irst? rising interest in ITO is largely

a conseAuence of a shift in +usiness strategy. any com&anies have recently

a+an'one' their 'iversification strategies = once &ursue' to me'iate ris, = to focus

on core com&etencies. -s a result of this focus strategy? IT tas,s? *hich are usually

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vie*e' as nonCcore activities? came un'er consi'eration. )ven in IT com&anies? not

all IT tas,s are core activities? an' those that are nonCcore *ill +e outsource'.

Secon'? the gro*th in IT outsourcing may also +e thought as a result of costCsaving

strategies. In many com&anies? senior e%ecutives vie* IT as an essential cost +ut

one to +e minimi:e' nevertheless. ean*hile? IT ven'ors? &ossessing economies of

scale an' technical e%&ertise? can &rovi'e IT services more efficiently an' less

e%&ensively than internal IT 'e&artments. Thus? ITO is a'o&te' as a metho' of

re'ucing the costs.

1.2.2 Model for the evolution of information technology outsourcing providers

In an article title' ESoft*are Outsourcing in ietnamD - case Stu'y of a @ocally

O&erating ioneerG? Bohn allaugher an' reg Stoller mentione' a mo'el

for the evolution of ETie ;our soft*are firms &ursuing glo+al mar,etG. The mo'el!s

sco&e is *ithin soft*are sector +ut it also can +e a&&lie' for IT sector in general.

Pr$4e*#C$5$%e%#

C$%#r"*#$r

Le"/ $r S$.eDee.$5e%#

P"r#%er

I%/e5e%/e%#S$0#-"re

Dee.$5er

;irms enter the

mar,et for glo+al

soft*are services

via small &roFect

*or,? &erha&s&rovi'ing

com&onents of a

larger effort

;irm moves from

+uil'ing

com&onents of a

&roFect to lea'ing

&roFect'evelo&ment or

han'ling all

'evelo&ment on a

single overseas

client &roFect

;irm has gaine'

significant

e%&ertise?

maturity an'

cre'i+ility tocreate an' launch

its o*n &ro'ucts

for glo+al mar,et

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F!&(re 1'1 O%e $/e. 0$r #e e$.(#!$% $0 )$0#-"re e65$r#!%& 0!r) !% T!er F$(r

%"#!$%)

ource0 %allaugher and toller 2$3

-ccor'ing to the mo'el? a soft*are e%&orting firm in Tier ;our nations *oul' evolve

through three &hases. In the first &hase? 'ue to intellectual &ro&erty concerns an' the

small si:e of the 'omestic mar,et? the firm concentrates on small &roFects *or,

mainly for international clients


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CHAPTER 2

THE DEVELOPMENT OF STRATEGIES INFORMATION TECHNOLOGY

OUTSOURCING IN VIETNAM

2'1 Oer!e- $0 V!e#%") !%0$r"#!$% #e*%$.$& $(#)$(r*!%&

In or'er to &rovi'e a thorough insight into ietnam!s ITO? the 'evelo&ment of this

sector *ill +e consi'ere' from t*o 'ifferent anglesD the *hole IT in'ustry an' IT

com&anies.

2.1.1 Development of IT industry

ietnam!s IT in'ustry has a short history +ut it is one of fastest gro*ing sector of the

country!s economy. In (ecision 012#J2000JK(CTTg 'ate' ovem+er 11? 2000?

issue' +y the rime inister? ietnamese government has 'eclare' its commitment

to +oost the 'evelo&ment of I/T in'ustry? &articularly in soft*are &ro'uction?

internet infrastructure? IT e'ucation an' other forms of human ca&ital 'evelo&ment.

ITO in ietnam mostly falls in the category of soft*are a&&lication.

ietnam!s entry into IT sector as *ell as soft*are sector is rather late in com&arison

*ith some other countries. It *as not until 1$$# that this in'ustry starte' to emerge

in ietnam. 6o*ever? *ithin 10 years from 1$$# to 200#? revenue of ietnam!s

soft*are in'ustry increase' +y 1#.5 times? *ith com&oun' annual gro*th rate

of nearly 35L. )s&ecially 'uring the &erio' of 2005 = 200#? the gro*th

rate *as al*ays aroun' 40C50L . In 200$? 'es&ite of many

'ifficulties 'ue to the glo+al financial crisis? ietnam!s soft*are maintaine' its

gro*th rate of nearly 30L? reaching 9S( ##0 million H2$.

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F!&(re 2'1 Ree%(e $0 V!e#%") )$0#-"re !%/()#r +1778 9 27,

ource0 -guyen Trong Duong 4 M. hung 253

-ccor'ing to ;igure 2.1? the value of soft*are outsource' in ietnam is still

mo'erate as com&are' to the 'omestic soft*are sector. 6o*ever? the gro*th rate of

soft*are outsourcing sho*s a remar,a+le increase *hereas that of 'omestic

soft*are sector ten's to slo* 'o*n over the &erio'. In 2002? value of outsource'

soft*are *as only a+out 9S( 20 million +ut it reache' nearly 9S( 300 million in

200#? e%&eriencing an increase of a&&ro%imately 9S( 2#0 million after " years.

ase' on the 'ifference +et*een the slo&es of e%&ort an' 'omestic lines? it can +e

sai' that the annual gro*th rate of the soft*are outsourcing sector is relatively

higher than that of 'omestic soft*are sector through these years. This in'icates that

the soft*are outsourcing sector in &articular an' ITO in general is more an' more

e%&an'e'. ITO sector of ietnam consists of har'*are? soft*are an' relate' services

in *hich soft*are is the largest an' most im&ortant &art. Therefore? the 'evelo&ment

of ietnam!s soft*are outsourcing is also the 'evelo&ment of its ITO.

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In recent years? ietnam!s role in ITO mar,et has +een significantly gro*ing. In

200$? for the first time? the country *as ran,e' the 10th in -.T. earney lo+al

Services @ocation In'e%. The In'e% analy:e' an' ran,e' the to& 50 countries

*orl'*i'e as the +est 'estinations for &rovi'ing outsourcing activities? inclu'ing IT

services an' su&&ort? contact centers an' +ac,Coffice su&&ort. ietnam has clim+e'

from 1$th &lace in 200# to 10th &lace in 200$. -ccor'ing to -.T. earney? Ethis

change reflects an increasingly +usy offshoring in'ustry? es&ecially focuse' on ITG.

T"b.e 2'1 G.$b".Ser!*e) L$*"#!$% I%/e6

ource0 6.T. 7earney 253

6anoi an' 6o /hi inh /ity also +egan to figure on the ma& of glo+al ITO mar,et.

In 200#? 6o /hi inh /ity *as ran,e' the 4 th&lace an' 6anoi the 10thin the To& IT

cities in 'evelo&ing countries. These t*o large cities have outstan'ing a'vantages ininfrastructure an' human resources? an' have +ecome t*o IT clusters of ietnam?

accounting for a&&ro%imately $0L of ietnam!s IT com&anies.

-lthough IT in'ustry has a remar,a+le gro*th rate? it is still not a maFor sector in

ietnamese economy. Its contri+ution to the country!s ( is small. In 200"? IT

in'ustry!s revenue accounte' for 0.24L of (. T*o years later? the num+er has

'ou+le'? stan'ing at 0.51L H40. 6o*ever? this &ro&ortion is still Auite lo* in

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com&arison *ith In'ia!s IT sector? *hich contri+ute' to "L of the country!s 200#

(. In the same year? ietnam!s total IT em&loyment *as 200?000 &eo&le ? accounting for Fust 0?45L of ietnam!s total la+our force. ;urthermore?

only one si%th of those &eo&le serve in soft*are sector? *hich is the main &art of

ietnam!s ITO.

T"b.e 2'2 I%0$r"#!$% #e*%$.$& !%/()#r e5.$e%#; 28

Se*#$r E5.$e%#

6ar'*are 110?000

Soft*are 57?000(igital content 33?000

Total 200?000

ource0 MI 253

Targete' clients of ietnam!s ITO are foreign com&anies .

@argest mar,et of the sector is Ba&an 'ue to similarities in culture? society an' the

goo' relationshi& +et*een t*o governments. Ba&an!s total value of offshoreoutsource' IT activities in 200# num+ere' 9S( 3.$ +illion? in *hich ietnam

accounte' for the thir' largest share? follo*ing /hina an' In'ia H35.

2.1.2 IT companies

-long *ith the ra&i' gro*th of IT in'ustry? the num+er of IT com&anies? es&ecially

soft*are com&anies in ietnam also increase' su+stantially.

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F!&(re 2'2 Gr$-# $0 )$0#-"re *$5"%!e) !% V!e#%"

ource0 ompiled from 86 and VI-66 2$ 9 253

-ccor'ing to ;igure 2.2? the num+er of soft*are com&anies in ietnam sho*s a

ra&i' clim+ u& over the &erio' of 1$$" = 200#. In 1$$"? ietnam ha' only $5

soft*are com&anies +ut after 12 years? the num+er increase' more than # times?

&ea,ing at 230 com&anies. The &erio' from 2000 to 2004 *itnesses the most

'ramatic gro*th *ith the increase of 370 com&anies. The u&*ar' tren' *as

continue' in 200# *ith 200 more com&anies entering the sector.

In terms of scale? ietnamese IT com&anies have also 'evelo&e' ra&i'ly in recent

years. To& com&anies such as ;T Soft*are an' T- have +een e%&eriencing

human resource gro*th rate of 75 = 100L &er year for several years. -t the en' of

2007? ;T Soft*are ha' 2300 em&loyeesM T- an' ;/ ha' a&&ro%imately 1000

an' #00 engineers res&ectively. In the *hole country? there are currently a+out 150

soft*are com&anies s&eciali:ing in ITO *ith average scale of 100 = 150 em&loyees.

In com&arison *ith Fust a+out 30 com&anies s&eciali:ing in ITO in 2005? this is a

significant 'evelo&ment H31? 33? 42.

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-lthough IT com&anies in ietnam have e%&erience' noticea+le &rogress in terms of

+oth num+er an' scale? in general? most of them are still smallCsi:e'. -ccor'ing to

the inistry of Information an' /ommunications ? in 200#? 3#L of

ietnamese soft*are com&anies have fe*er than 20 em&loyees? 3$L of them have

from 21 to 50 em&loyees an' only 1L of them have more than 500 em&loyees. In

terms of revenue? only 5L of soft*are com&anies have the revenue of more than

9S( 1 million *hereas com&anies *ith revenue lo*er than ( 1 +illion

accounts for $0L of ietnamese soft*are com&anies

H30. These figures reveal the fact that ietnam!s IT in'ustry as *ell as ITO still has

a lot of things to 'o to ,ee& a+reast *ith other countries.

The 'evelo&ment of ietnam!s IT com&anies is not only in Auantity. ecently? many

com&anies have +een trying to im&rove their Auality to gain international certificates

of Auality management such as /? /I an' ISO. -t &resent? there are a+out

20 IT com&anies in ietnam that have receive' /IC5? /IC4 or /IC3 an'

more than 40 com&anies that have receive' ISO $001 an' ISO 27001. 6o*ever? this

is still a small num+er in com&arison *ith the total of #00 soft*are com&anies in

ietnam H43.

To im&rove the com&etitive ca&acity of IT com&anies? investment in such activities

as mar,eting an' &romotion? 8( an' human resource training is im&ortant.

6o*ever? most of ietnam!s IT com&anies are of small an' me'ium si:e an' they

'o not have enough financial resources to invest in those activities. -ccor'ing to the

results of a survey of 6/- in 2005? it can +e sai' that ietnamese IT com&anies 'o

not attach s&ecial im&ortance to investment in mar,eting an' &romotion? 8( an'

human resource training. In &articular? 33L of 74 com&anies

s&en' less than 5L of their total e%&enses on 8( an' human resource training

*hile only 1#L of those com&anies have the rate of

s&en'ing on these activities of more than 20L. The case is even *orse in the fiel' of

12


18/42

mar,eting an' &romotion. The figures are 3#L an' 14L for the s&en'ing rates of

less than 5L an' more than 20L res&ectively.

2'2 SWOT "%".)!) $0 V!e#%") !%0$r"#!$% #e*%$.$& $(#)$(r*!%&

2.2.1 Strengths

2.2.1.1 !ow production cost

The maFor +enefit of outsourcing to ietnam is huge cost savings. These savings

mostly come from *age rate 'ifferential +et*een ietnam an' other countries?es&ecially the *estern ones. ITO salaries in ietnam are consi'ere' the lo*est

among emerging ITO 'estinations of the -sia acific region? the most costC

com&etitive region in the glo+al ITO mar,et. -&&ro%imately? ITO salaries in

ietnam are 40L lo*er than that in /hina or In'ia .

F!&(re 2'3 Aer"&e ITO )"."r!e) !% #e APAC !% 2


19/42

@o* *age is not the only financial +enefit of ietnam!s ITO. In his s&eech

ESoft*are in'ustry 'evelo&ment in ietnamG in 2004? r guyen Trong (uong

? liste' many &olicies of ietnamese government that offere' incentives to IT

sector? most of *hich are a+out ta% e%em&tion an' su+si'i:ing. These

encouragement &olicies? along *ith lo* &rice level in ietnam? ma,e o&eration

e%&en'iture in ietnam much lo*er than that in other ITO 'estinations such as

In'ia? hili&&ines? alaysia? Singa&ore an' some *estern countries.

2.2.1.2 trong la"our pool

ietnam has a large &o&ulation of #5.# million &eo&le? ran,ing the 13 thin the *orl'

&o&ulation. )s&ecially? the 200$ o&ulation an' 6ousing /ensuscon'ucte' +y the

eneral Statistics Office reveale' that iet am is currently entering a &otential

'emogra&hic gol'en &erio' in *hich the num+er of *or,ingCage &eo&le is nearly

'ou+le the num+er of those of 'e&en'ent age. This is a Ngol'en o&&ortunityN for

national economic gro*th. In a''ition? ietnamese &eo&le!s intellectual level is

rather goo' *ith the literacy rate of $7L? among the *orl'!s highest rates? roughlyeAual to that of the 9S? Irelan'? ussia an' *ell ahea' of In'ia.

(ue to the ne* entry of IT fiel' to ietnamese higher e'ucation system an' the

great &otential of this sector? more an' more higher e'ucation institutions

o&en ne* ITCrelate' maFors an' many e%cellent ietnamese stu'ents are attracte' to

these maFors in recent years. Over the 200" = 200# &erio'? the &ro&ortion of 6)Is

*ith ITCrelate' maFors in the total num+er of 6)Is in ietnam is very high?maintaining at "0 = 70L. -t &resent? ietnam!s total IT em&loyment is 200?000

&eo&le. This is not a significant num+er +ut *ith the 'evelo&ment of IT e'ucation? it

is fast gro*ing at annual gro*th rate of aroun' 35L.

2.2.1.# ta"le political environment

14


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-lthough *estern countries are still cautious a+out /ommunist arty of ietnam?

ietnamese government? after 'eca'es of governance? has &rove' to +e +oth sta+le

an' secure. Whereas all In'ia? /hina? hili&&ines? an' In'onesia have &ro+lems *ith

terrorism? frontier conflicts? autonomist an' secessionist? ietnam!s &olitical

environment is al*ays &eaceful. This is note*orthy in such an age of heightene'

security concerns? es&ecially for clients from *estern countries.

-nother as&ect of ietnam!s sta+le &olitical environment is the sta+ility in the

government itself. ietnam!s singleC&arty system &revents the government from

significant changes *hich ha&&en usually in countries *ith multiC&arty system. The

sta+le government allo*s &olicies to have long term effects? unli,e in multiC&arty

system countries *here &olicies frame' +y a &ast government can +e reverse' +y the

successive government. In general? sta+le &olitical environment *ill ma,e goo'

con'ition for sta+le economic environment? *hich is a very im&ortant factor to

attract foreign clients.

2.2.1.$ %overnment support

6aving +een a*are the im&ortant role of IT in the mo'em *orl'? ietnamese

government consi'ers IT as one of the ,ey 'riving forces for economic

'evelo&ment an' social a'vancement. In the last fe* years? the government has

im&lemente' a num+er of measures in or'er to facilitate the IT in'ustry an' attract

the international ITO clients.

To set u& a favora+le investment environment? the government a&&lies the most

&referential levels to IT firms? es&ecially in regar's to ta% . esi'es?

a'ministrative &roce'ures have also +een sim&lifie' to ma,e goo' con'itions for IT

enter&rises to set u& an' o&erate. )s&ecially? the government encourages foreign

investment an' even full foreign o*nershi& of ietnamese firms involve' in the

technology sector.

15


21/42

-nother effective movement of the government is the significant investment in

technology infrastructure? es&ecially the esta+lishment of soft*are &ar,s. So far

there have +een ten soft*are &ar,s an' many ne* &ar,s are sche'ule' or un'er*ay

through 2012. /om&anies in the soft*are &ar,s are offere' relatively goo'

con'itions to o&erate such as +roa'+an' internet access? relatively chea& offices an'

many other necessary services.

The government also &ays great attention to human resource 'evelo&ment.

-ccor'ing to (ecision o"$#JK(CTTg of Bune 1? 200$? in the &erio' of 2010 =

2015? ( $00 +illion is &lanne' to invest in IT human

resource H3".

2.2.1.& 'ast growing domestic economy

ietnam is one of the fastest gro*ing economies in the *orl'. In the last 20 years?

the gro*th rate of ietnam!s ( is al*ays at the level of " = #L. )s&ecially? in

2007? the num+er soars to #.5L? ran,ing secon' &lace in -sia? Fust +ehin' /hina. In200$? 'es&ite the 'o*nturn in glo+al economy? the ( gro*th still stoo' at 5.32L

H34.

The 'evelo&ment of the economy as a *hole results in im&rovement in

infrastructure? e'ucation system an' ca&ital sources? *hich is a favora+le con'ition

for any in'ustry to 'evelo&? inclu'ing IT in'ustry. The government is also a+le to

&rovi'e IT in'ustry *ith more su&&ort. esi'es? the country!s miracle fast gro*th isan a'vantage for ITO in'ustry to attract the attention of foreign clients.

2.2.2 Weanesses

2.2.2.1 (or)force limitations

ietnam!s IT in'ustry has an a'vantage of large an' young la+our &ool +ut the

Auality of the la+our force is a +ig 'isa'vantage. ietnam!s IT com&anies are

1"


22/42

currently in lac, of s,ille' engineers. Whereas thousan's of stu'ents of IT maFors

gra'uate from 6)Is annually +ut they can not fin' a Fo+. This &ara'o% is 'ue to the

fact that many ne* gra'uates 'o not meet the 'eman' of IT com&anies. -ccor'ing

to guyen 6uu @e? /hairman of T- = one of ietnam!s lea'ing soft*are

outsourcing com&anies? only a+out 10L of ietnamese IT gra'uates are Aualifie'

for the outsourcing Fo+s.

)ngineers *or,ing in IT firms are also not fully Aualifie'. ost of them lac, of

*or,ing e%&eriences an' language s,ills. In the 200$ -.T. earny lo+al Services

@ocations In'e%? ietnam!s &eo&le s,ills an' availa+ility are &oorly assesse'. The

country ran,s the 2#th in 50 countries? lo*er than other five -S)- countries

. ietnam!s *ea,est criterion is

relevant e%&erience *ith only 0.4# &oint? roughly one eighth of that of In'ia.

)'ucation is also a &ro+lem *hen it is assesse' at 0.5" &oint *hereas +oth In'ia an'

/hina get 2.00 &oint for the same criterion.

These figures raise a concern a+out the ina'eAuacy of ietnam!s 'evelo&ment

strategy of IT human resource. The gro*th in the num+er of la+or is not

accom&anie' +y the im&rovement in Auality.

2.2.2.2 mall scaled industry

In s&ite of all its fast gro*th an' great &otential? IT in'ustry is still a small sector inietnamese economy. Its contri+ution to the country!s ( is only 0.51L in 200#

H40? far +ehin' In'ia!s IT sector? *hich contri+ute' to "L of the country!s ( in

the same year. Soft*are e%&orts alone in /hina *as 9S( 14.7 +illion in 200#? a

figure that is over three times larger than ietnam!s entire IT mar,et .

17


23/42

ost of ietnam!s soft*are com&anies are smallCsi:e' enter&rises .

The first an' secon' largest &ro&ortions are com&anies *ith fe*er than 20

em&loyees an' com&anies *ith 21 = 50 em&loyees ? res&ectively.

/om&anies *ith more than 500 em&loyees account for only 1L? a small &ro&ortion.

F!&(re 2'= Pr$5$r#!$% $0 )$0#-"re *$5"%!e) !% V!e#%"; b %(ber $0

e5.$ee)

ource0 -guyen Trong Duong; MI 253

To& com&anies such as ;T? T-? //? etc are only of me'ium si:e in

com&arison *ith Tata? Wi&ro? Infosys in In'ia. This situation creates many

'ifficulties for ietnam!s ITO in'ustry to 'evelo& +ecause com&anies 'o not have

enough availa+le resources to ta,e over largeCscale &roFects.

2.2.2.# *oor security and intellectual property protection

et*or,ing security an' 'ata &rotection in ietnam is of &oor stan'ar'. -ccor'ing

to (e&artment of Information Technology? numerous security vulnera+ilities are

e%isting in ietnam. In 200#? there *ere nearly "0 million com&uter infections an'

4"1 *e+site hac,s? inclu'ing 251 inci'ents relate' to international hac,ers. esi'es?

over 40 cases involving hiCtech criminals cause' a loss of ( 30 trillion.

1#


24/42

-ccor'ing to the ach hoa Internet*or, Security /entre ? virus strain

soare' five times higher than in 2007 *hile 'o:ens of *e+sites *ere attac,e' each

month H2".

-lso? ietnam!s rate of / soft*are &iracy is among the highest in the *orl'. In the

re&ort E200# lo+al Soft*are iracy Stu'yG +y S- an' I(/ &u+lishe' in ay?

200$? &iracy rate of ietnam in 200# is #5L? ran,ing 12 thin To& 25 countries *ith

high &iracy rates. -n' this is still an im&rovement. In 2003? the rate is $2L an'

ietnam ran,s the first. This is the first time ietnam esca&es from To& 10 +ut it

still o*ns the highest rate in --/ region H41.

(ue to the nature of IT in'ustry? security an' I &rotection is an im&ortant &art of

+usiness environment for ITO an' a great concern *hen foreign outsourcers

choosing their &artners. Thus? these a+ove issues have ha' negative effects on

ietnam!s image as an ITO 'estination.

2.2.! Opportunities

2.2.#.1 The trend toward cost+savings of ITO

-lthough the 'o*nturn of the *orl' economy has negatively affecte' almost every

economic sector? the case is not the same for ITO. -llie oung? ice resi'ent of

artner sai'D E-lthough things loo, gloomy for the larger glo+al economy?

the outsourcing mar,et re&resents a 'ichotomyD on the 'o*nsi'e? organi:ations!

costCcutting outsourcing strategies may negatively im&act mar,et gro*th? +ut at the

same time? the u&si'e is that outsourcing *ill +e a'o&te' +y more organi:ations to

hel& them *or, through financial an' com&etitive challengesG. -ctually? the current

economic slo*'o*n *ill lea' +uyers of IT services to consi'er an increase in the

&ercentage of their la+our in offshore? lo*erCcost locations.

1$


25/42

artner!s re&ort E)uro&ean Outsourcing an' Services Survey eveals /lient

Organi:ation riorities for 200$G given in (ecem+er? 200# sho*s that 32L of

organi:ations in the survey a&&ear to +e in the initial stage of their ne%t outsourcing

en'eavor? 10L u& from the &revious year. 6o*ever? +u'get for ITO 'oes not ten' to

increase. 75L of these organi:ations ta,e costCsavings as their first concern in

consi'ering ITO 'estinations. -s for ITO &rice? artner forecasts the &rice *ill

'ecrease 5 = 20L in orth -merica an' )uro&ean mar,et. /oncrete figures are

follo*e'.

These a+ove figures in'icate that the tren' to*ar' costCsavings in ITO *ill increase.

This is a great o&&ortunity for lo*Ccost countries li,e ietnam to attract more

clients? *in more contracts? gain more re&utation an' accumulate more e%&erience.

2.2.#.2 ,ntry of M-s to Vietnams IT mar)et

With a gro*ing tren' to*ar's an e%&an'ing mar,et? multinational IT com&anies

*ill see, investing 'estinations that meet their 'eman's an' strategies. -mong-sian countries? /hina an' In'ia have registere' strong IT 'evelo&ment. 6o*ever?

most of /s share the same formula of investment? i.e. /hina an' In'ia &lus one


26/42

2.2.#.# *otential of /apanese mar)et

Ba&an is currently the largest mar,et for ietnam!s ITO in'ustry an' there are stillmuch &otential in this mar,et. In 200#? revenue of Ba&anese soft*are in'ustry hit

9S( 170 +illion. 6aving IT activities outsource' is a great tren' among Ba&anese

com&anies in recent years *ith the annual gro*th rate of 30L. Ba&an!s total value of

offshore outsource' IT activities in 200# num+ere' 9S( 3.$ +illion.

-lthough ietnam!s share in this mar,et is still mo'erate? +ut it is the thir' largest

share +ehin' /hina an' In'ia. -nnual gro*th rate of ITO activities +et*eenietnam an' Ba&an maintain at more than 100L in recent years. In ITO relation

*ith Ba&an? ietnam has a great &otential of &rocessing em+e''e' soft*are

&ro'ucts? *hich accounts for 5"L value of outsource' IT activities of Ba&an.

Similarities in culture? society an' the goo' relationshi& +et*een t*o governments

are other reason for Ba&anese com&anies to choose ietnam as their ITO 'estination.

In fact? accor'ing to a recent survey of Ba&an Information Technology Service

In'ustry -ssociation ? ietnamese com&anies are favourite ven'ors ofBa&anese com&anies H35.

2.2." Threats

2.2.$.1 trongly competitive environment

The +iggest challenge from outsi'e to ietnam!s ITO in'ustry is the strong

com&etitiveness from other countries? es&ecially those from --/ region. -lthough

in 200$? ietnam entere' To& 10 of lo+al Services @ocation In'e% +y -.T.

earney? the country still lags +ehin' many other -S)- such as alaysia


27/42

/hina has many a'vantages of huge la+our force *ith more s,ills an' e%&eriences

than ietnam? su&erior infrastructure an' +ig com&anies *ith large financial

resources. Their &ro'uction cost is also among the lo*est in the *orl'. -t another

level? In'ia is the lea'er in ITO sector? a com&etitor that ietnam cannot 'irectly

com&ete in near future. They have talente' e%&erience' vast la+our &ool *hich

&rovi'es high Auality services? +ig IT com&anies *ith &restigious +ran' names an'

close colla+oration. They also have a government *ith goo' vision an' strategy to

su&&ort the in'ustry effectively.

Other com&etitors in Southeast -sian region such as hili&&ines an' Singa&ore


28/42

met many 'ifficulties as foreign clients cut their IT +u'gets? cancelle' 'eals?

'elaye' &ayments an' 'eals? *ent +an,ru&t an' renegotiate' &ricing.

The year 2010 has *itnesse' some im&rovement in glo+al economy +ut the

constraints still e%ist. any economists +elieve that at the en' of this year? *hen the

stimulus &ac,ages of the 9S an' other countries in 20 en'? the *orl' economy

*ill fall +ac, to recession. Thus? this is still an o&en threat for glo+al IT in'ustry as

*ell as ietnam!s ITO sector.

2'3 SWOT "#r!6

In the &revious section? SWOT analysis has +een use' to i'entify strengths?

*ea,nesses? o&&ortunities an' threats of ITO in ietnam. 6o*ever? the most

im&ortant meaning of SWOT mo'el is to formulate a&&ro&riate strategies for the

country? +asing on that analysis. In this section? SWOT mo'el *ill +e com&lete'

*ith the +uil'ing of SWOT matri%. In the matri%? internal factors


29/42

T"b.e 2'< SWOT "#r!6 0$r V!e#%") ITO

O55$r#(%!#

C The tren' to costCsavings of ITO

C )ntry of /s to ietnam!s IT mar,et

C otential of Ba&anese mar,et

Tre"#

C Strongly com&etitive environment

C The 'o*nturn of glo+al economy

S#re%

C @o* &ro'uction cost

C Strong la+our &ool

C Sta+le &olitical environment

C overnment su&&ort

C ;ast gro*ing 'omestic economy

SO strategy

C SO1D aintain the lo* costs to attract

more foreign clients

C SO2D /reate goo' con'itions to attract

more IT /s to invest in ietnam

ST strategy

C ST1D ;ocus on lo*Cen' &ro'ucts an'

services? ta,e a'vantage of lo* costs

to com&ete *ith other countries

We">%e))

C Wor,force limitation

+ Ina&&ro&riate ,no*le'ge

+ @ac, of e%&erience+ @ac, of language s,ills? es&ecially Ba&anese

C Small scale' in'ustry

C a' security an' I &rotection

WO strategy

C WO1D Increase the si:e of IT in'ustry

an' IT com&anies to ta,e over largeC

scale &roFectsC WO2D ;ocus on Ba&anese mar,et

WT strategy

C WT1D Im&rove service maturity to

com&ete *ith other countries

C WT2D )nhance trust*orthiness ofietnam!s ITO in'ustry through

international certificates an'

&romotion activities

24


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SWOT mo'el hel&s to formulate strategies *hich ta,e a'vantages of strength an'

o&&ortunity? overcome *ea,ness an' threat. ;ollo*s are some strategies that can +ea&&lie' for ietnam!s ITO sector.

C SO1D aintain the lo* costs +y assuring the sufficient IT la+our force an'

maintain favoura+le &olicies for IT in'ustry.

C SO2D /reate goo' con'itions of +usiness an' legal systems to attract more IT

/s to invest in ietnam.

C ST1D ;ocus on lo*Cen' &ro'ucts an' services? ta,e a'vantage of lo* costs tocom&ete *ith other countries.

C WO1D Increase the si:e of IT in'ustry an' IT com&anies to ta,e over largeCscale

&roFects through 'irect invest of the government an' cluster forming.

C WO2D ;ocus on Ba&anese mar,et? ta,ing a'vantage of goo' relation +et*een to

countries an' *i'ely teaching Ba&anese in 6)Is of IT.

C WT1D Im&rove service maturity to com&ete *ith other countries +y 'evelo&ing

human resources an' a&&lying international stan'ar's in Auality management.C WT2D )nhance trust*orthiness of ietnam!s ITO in'ustry through international

certificates an' &romotion activities.

25


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CHAPTER 3

STRATEGY SELECTION AND SOME IMPLICATIONS FOR THE

DEVELOPMENT OF VIETNAMS INFORMATION TECHNOLOGY

OUTSOURCING

3'1 Se.e*#!$% $0 "55r$5r!"#e /ee.$5e%# )#r"#e&!e) 0$r V!e#%") ITO !%/()#r

In &revious cha&ter? seven strategies for ietnam!s ITO in'ustry have +een

formulate'. 6o*ever? 'ue to limite' resources? ietnam can not a&&ly all thosestrategies at the same time. In or'er to select the most a&&ro&riate strategies from

those seven ones a+ove? *e consulte' t*enty ietnamese e%&erts in IT sector. They

evaluate' seven strategies accor'ing to )-T mo'el? i.e. they mar,e' each

strategy accor'ing to five criteriaD gains? ris,s? e%&enses? attaina+ility an' time.

;ollo*e' is the average result for all strategiesD

S#r"#e& G"!% R!)> E65e%)e A##"!%"b!.!# T!e T$#".SO1 3.5 4.2 4.2 4.5 4.5 20.$SO2 3.2 3.5 4." 4.2 3.0 1$.5ST1 2.0 4.5 4.7 4.# 4.# 20.#WO1 4.0 3.# 3.5 3.# 3.2 1#.3WO2 3.0 4.0 3.5 3.5 4.1 1#.1WT1 4.5 4.2 2.7 3." 3." 1#."WT2 4.5 4.5 3.1 3." 3.7 1$.4

-ccor'ing to the result a+ove? the selecte' strategies are SO1? SO2? ST1? WT1 an'

WT2. T*o strategies WO1 an' WO2 are not selecte' 'ue to the lo* mar,s.

-s mentione' in cha&ter 1? Bohn allaugher an' reg Stoller &rovi'e' a mo'el in

*hich ITO of a Tier ;our country *oul' evolve through three &hases? in *hich ITO

com&anies move from su+contractors &rovi'ing lo*Cen' &ro'ucts an' services to

in'e&en'ent &ro'ucers &rovi'ing highCen' &ro'ucts an' services. -ccor'ing to the

real situation of ietnam!s ITO in'ustry e%&lore' in cha&ter 2? it can +e sai' that

2"


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ietnam is currently in the first &hase of the evolution mo'el of ITO. eing at the

early stage of the evolution? ietnam nee's longCterm vision an' a&&ro&riate

strategies to 'evelo& the in'ustry. In short term? the in'ustry shoul' ta,e a'vantage

of the lo* &ro'uction costs to com&ete *ith other countries? starting *ith lo*Cen'

&ro'ucts an' services to accumulate e%&eriences as *ell as re&utation. This is the

,ey content of the strategies SO1 an' ST1. So? in near future these strategies are

suita+le. esi'es? SO2 can also +e a&&lie'. 6o*ever? in long term? the country has to enhance the

service maturity an' aims at highCen' &ro'ucts an' services to move u& in the value

chain? gaining more value a''e'. That *ill +e a&&ro&riate time for WT1 an' WT2?

strategies that focus im&roving service Auality an' enhancing trust*orthiness.

3'2 S$e !5.!*"#!$%) 0$r V!e#%") ITO !%/()#r

Success in the international soft*are mar,et as a &o*er outsourcing 'estination

reAuires efforts an' colla+orations of the government an' IT com&anies as *ell as

in'ivi'uals. The lesson from In'ia an' /hina sho*s that the vision of governmentta,es a critical role in the 'evelo&ment of soft *are sector. ;or +oosting the soft*are

sector of ietnam to +ecome an outsourcing hu+s? ietnamese government nee's to

ta,e an active role in setting u& a longCterm strategy an' have effective interference

in the sector. ;urthermore? the con'uct of selecte' strategies for the 'evelo&ment of

ITO a+ove also reAuires some relevant solutions offere' +y +oth the government an'

IT com&anies. -ccor'ingly? follo*ing are some im&lication for +oth the government

an' IT com&anies.

!.2.1 Develop IT human resources

The government shoul' have &olicies of 'evelo&ing IT human resources in terms of

+oth Auality an' Auantity. This *ill contri+ute to +oth WT1 an' SO1 +ecause

high Auality of human resource is an im&ortant factor of service maturity an' large

27


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Auantity of la+our force *ill ,ee& the sufficiency of la+our? re'ucing the threat of

*ageCrise an' maintaining the lo* costs.

;irst? the government shoul' e%&an' training scale an' raise enrolment Auotas of IT

maFor for university? colleges? &rofessional secon'ary schools? institutions an'

training centers. oth 'omestic an' foreign organi:ationsJin'ivi'uals are

encourage' to invest in +uil'ing information technology training esta+lishments in

or'er to attract more stu'ents into this sector? assuring sufficient la+our force for the

in'ustry. esi'es? goo' e'ucation &rogram *hich &rovi'es hel&ful ,no*le'ge an'

&ractical s,ills is also an im&ortant factor to encourage stu'ents to choose IT maFor.

Secon'? the su+Fect of techniAues an' com&uter shoul' +e a&&lie' from the &rimary

e'ucation +ecause information technology is the sector *ith highest change an'

u&'ate. In ietnam? IT su+Fect usually starts to +e taught at high schools? therefore it

may +e too late for the stu'ents to +egin learning such an easily changea+le an'

huge source of information technology ,no*le'ge.

Thir'? language s,ills shoul' +e &ai' more attention. The language training

&rograms shoul' +e &arallel *ith the e%&ansion of engineering ,no*le'ge. Some

high stan'ar' technological universities can a&&ly the training mo'el 1 4? in

*hich the first year of the stu'ent *ill focus on language teaching an' the rest of

stu'ying time are centere' on s&eciali:e' ,no*le'ge.

;ourth? the government an' enter&rises &ro+a+ly encourage the association *ithforeign soft*are institutions to esta+lish international high stan'ar' &rogramming

centers. Such associations as -&tech? IIT or IT are 'oing these &atterns very

*ell. uil'ing the lin,ages +et*een soft*are com&anies an' e'ucational institution

is of great im&ortance. The soft*are com&anies shoul' su&&ort technical institutions

*ith some ,in's of e%change &rograms? 'irectly &artici&ating in the training

&roce'ure. y this *ay? the stu'ents *ill have o&&ortunities to a&&roach the

2#


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&ractical ,no*le'ge an' e%&eriences? im&roving their a+ility an' re'ucing the onC

going training time of soft*are +usinesses.

!.2.2 #nhance $ietnam%s trustworthiness on glo&al maret

)nhancing trust*orthiness is very necessary to get closer to ne* outsourcing

clients? es&ecially those *ith high 'eman'. This is the content of the strategy WT2.

esi'es enlarging the in'ustry!s scale as mentione' in &revious section?

trust*orthiness in IT in'ustry can also +e +uilt u& +y getting international stan'ar'

certifications an' &romoting the image of the country. In'ia is very successful in itsstrategy to +uil' u& the trust from international counter&arts. Such lessons are also

recommen'e' to ietnam.

;irst? the overnment shoul' encourage an' su&&ort ietnamese IT com&anies to

a&&ly international Auality stan'ar's such as /? /I an' ISO. These

international certifications are evi'ences sho*ing that the com&anies can meet the

nee's of international clients an' have to follo* these management &roce'ures.;oreign clients? *ith the vie* of re'ucing ris,s an' failures? ten' to outsource their

*or,s for a certificate' soft*are outsourcing ven'ors. /olla+oration *ith

international IT cor&orations to o&en &rofessional

training courses of international Auality management &rocess is also essential.

Secon'? ietnam +ran' nee' to +e &romote' in international soft*are ma&.

/urrently? the image of ietnam ITO sector is very 'im. In future 'evelo&ment?the country nee's to im&rove its +ran' through effective mar,eting strategies.

)sta+lishing a tra'e &romotion organi:ation on IT &ro'ucts to &romote IT

com&anies! image aroun' the *orl' is essential. In a''ition? the government

nee's to encourage an' hel& ietnamese enter&rises to &artici&ate in international

soft*are e%hi+ition an' affair to have chance to intro'uce their a'vantages an'

com&etencies to international counter&arts. The governmental +o'ies locate'

overseas such as ietnamese em+assies an' consulates shoul' ma,e themselves

2$


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the +ri'ge +et*een ietnamese IT com&anies an' outsourcing clients? &romoting

the lin,ages +et*een them.

!.2.! Improve legal system

The government nee's to im&rove the legal system in t*o 'irections? strengthening

measures to &rotect I an' increasing the trans&arency of legal system to attract

more multinational IT cor&orations to invest in ietnam. These 'irections contri+ute

to the strategies WT1

an' SO2 .

;irst? the government shoul' focus on the com&letion of legislative system

regar'ing of intellectual &ro&erty in IT sector? inclu'ing the registration of

intellectual &ro&erty &rotection? the regulation of violation action an' &unishment

sanctions. It is also necessary to raise the a*areness of consumers an' severely

&unish the violating actions.

Secon'? the government nee's to reform the la* system. /urrently? there is a

&lethora of la*s an' regulations from 'ifferent ministries an' government offices

*hich often 'o not fit together. In a''ition? a'ministrative &roce'ures nee' to +e

sim&lifie' in or'er to create favoura+le con'itions for /s to invest an' o&erate

in ietnam. 6igh corru&tion rate is also a &ro+lem that the government nee's to

solve.

30


36/42

CONCLUSION

Outsourcing is an ol' &henomenon an' has +ecome an inevita+le ten'ency in this

era of glo+ali:ation. -ny country *ishing to integrate into the glo+al economy can

not ,ee& itself a*ay from this im&ortant &laygroun'. There are several ty&es of

outsourcing in *hich ITO is the youngest an' most 'ynamic sector. any countries?

es&ecially 'evelo&ing countries? have ta,en the chance of this ne* an' &romising

in'ustry to get into the glo+al value chain an' get e%&ertise for the further gro*th.

-mong those countries? In'ia an' /hina are of the most remar,a+le. They are t*ocountries of 'ifferent levels? at 'ifferent &hases of the evolution of ITO +ut they are

+oth successful ITO 'estinations among +iggest ITO &rovi'ers of the *orl'.

@essons from their success are *orthy references for other countries? es&ecially

'evelo&ing countries in -sia acific region inclu'ing ietnam? to +uil' their o*n

'evelo&ment strategies.

In the *ave of ITO? ietnam has +ecome an emerging 'estination *ith thenoticea+le a'vantage of costCcom&etitiveness. esi'es? the country also has a young

large &o&ulation? fast gro*ing economy an' sta+le &olitical environment *hich are

attracting more an' more investment from /s in IT sector. 6o*ever? there are

some 'ra*+ac,s that 'iscourage the 'evelo&ment of ITJITO in'ustry inclu'ing lac,

of s,ille' an' e%&eriences IT engineers *ith language &roficiency? smallCsi:e'

in'ustry an' +a' security an' I &rotection. Strong com&etitiveness from other

countries such as In'ia? /hina? alaysia? an' hili&&ines an' threat from the glo+aleconomic slo*'o*n are also +ig challenges that the country has to face.

eing at the early stage of the evolution of ITO? ietnam nee's longCterm vision

an' a&&ro&riate strategies to 'evelo& the in'ustry. In short term? ietnam!s ITO

in'ustry shoul' ta,e a'vantage of the lo* &ro'uction costs to com&ete *ith other

countries? starting *ith lo*Cen' &ro'ucts an' services to accumulate e%&eriences as

*ell as re&utation. ut in long term? the country has to im&rove the service Auality?

31


37/42

&ro'ucing highCen' &ro'ucts an' services to move u& in the value chain. With

strategies in that 'irection? ietnam shoul' 'evelo& IT human resource in terms of

+oth Auality an' Auantity? enhance the legal system an' +uil' the re&utation of the

in'ustry through certificates an' &romotion activities.

In conclusion? ITO is a &otential sector for ietnam. With a&&ro&riate strategies an'

action &lans? the country can turn into one of the most attractive ITO hu+s of the

*orl' an' achieve the goal of +ecoming Ethe secon' In'iaG.

32


38/42

REFERENCES

E%&.!) re0ere%*e)

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3. hatnagar S. .

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annual revenues; availa+le atD

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htt&DJJenglish.&eo&le'aily.com.cnJ$0001J$077#J$0#"0J"###0"2.html

2". guyen Thoa ? -etwor) ecurity in Vietnam0 Improper 6ttention;

availa+le atD

htt&DJJvi+forum.vcci.com.vnJne*sP'etail.as&

ne*sPi'1"0"28&arentPi'08catePi'5


41/42

V!e#%"e)e re0ere%*e)

2$.. /hung ? Eng nghiFp phGn mHm Jt doanh thu gGn 5 triFu KD

nLm nay; availa+le atD htt&DJJvneconomy.vnJ200$112$104"01520/1"JcongC

nghie&C&hanCmemC'atC'oanhCthuCganC$00CtrieuCus'.htm .35.T 6ong @an ?8i tho hZp tc phGn mHm 4 -TT ViFt -am 9 -h[t

=n; availa+le atD

htt&DJJ***.vietra'e.gov.vnJin'e%.&h&

o&tioncomPcontent8vie*article8i'7$4DhoiCthaoCho&CtacC&hanCmemCcnttC

vietCnamCnhatC+an8cati'20DsuC,ienC%ucCtienCthuongCmai8Itemi'"4

?*ht triUn cEng nghiFp phGn mHm ViFt -am0 -h`n lc vbn lN

cha )ha; availa+le atD htt&DJJviet+ao.vnJiCtinhCienCthongJhatCtrienCcongC

3"
http://vneconomy.vn/2009112910460152P0C16/cong-nghiep-phan-mem-dat-doanh-thu-gan-900-trieu-usd.htmhttp://vneconomy.vn/2009112910460152P0C16/cong-nghiep-phan-mem-dat-doanh-thu-gan-900-trieu-usd.htmhttp://vnexpress.net/GL/Xa-hoi/2009/10/3BA14BBE/http://www.vietrade.gov.vn/index.php?option=com_content&view=article&id=794:hoi-thao-hop-tac-phan-mem-cntt-viet-nam-nhat-ban&catid=20:su-kien-xuc-tien-thuong-mai&Itemid=64http://www.vietrade.gov.vn/index.php?option=com_content&view=article&id=794:hoi-thao-hop-tac-phan-mem-cntt-viet-nam-nhat-ban&catid=20:su-kien-xuc-tien-thuong-mai&Itemid=64http://www.vietrade.gov.vn/index.php?option=com_content&view=article&id=794:hoi-thao-hop-tac-phan-mem-cntt-viet-nam-nhat-ban&catid=20:su-kien-xuc-tien-thuong-mai&Itemid=64http://www.tin247.com/chinh_phu_vn_dac_biet_coi_trong_phat_trien_nguon_nhan_luc_cntt-4-21230692.htmlhttp://www.tin247.com/chinh_phu_vn_dac_biet_coi_trong_phat_trien_nguon_nhan_luc_cntt-4-21230692.htmlhttp://vietbao.vn/Vi-tinh-Vien-thong/Phat-trien-cong-nghiep-phan-mem-Viet-Nam-Nhan-luc-van-la-chia-khoa/65043478/217/http://vneconomy.vn/2009112910460152P0C16/cong-nghiep-phan-mem-dat-doanh-thu-gan-900-trieu-usd.htmhttp://vneconomy.vn/2009112910460152P0C16/cong-nghiep-phan-mem-dat-doanh-thu-gan-900-trieu-usd.htmhttp://vnexpress.net/GL/Xa-hoi/2009/10/3BA14BBE/http://www.vietrade.gov.vn/index.php?option=com_content&view=article&id=794:hoi-thao-hop-tac-phan-mem-cntt-viet-nam-nhat-ban&catid=20:su-kien-xuc-tien-thuong-mai&Itemid=64http://www.vietrade.gov.vn/index.php?option=com_content&view=article&id=794:hoi-thao-hop-tac-phan-mem-cntt-viet-nam-nhat-ban&catid=20:su-kien-xuc-tien-thuong-mai&Itemid=64http://www.vietrade.gov.vn/index.php?option=com_content&view=article&id=794:hoi-thao-hop-tac-phan-mem-cntt-viet-nam-nhat-ban&catid=20:su-kien-xuc-tien-thuong-mai&Itemid=64http://www.tin247.com/chinh_phu_vn_dac_biet_coi_trong_phat_trien_nguon_nhan_luc_cntt-4-21230692.htmlhttp://www.tin247.com/chinh_phu_vn_dac_biet_coi_trong_phat_trien_nguon_nhan_luc_cntt-4-21230692.htmlhttp://vietbao.vn/Vi-tinh-Vien-thong/Phat-trien-cong-nghiep-phan-mem-Viet-Nam-Nhan-luc-van-la-chia-khoa/65043478/217/


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nghie&C&hanCmemCietCamChanClucCvanClaCchiaC,hoaJ"504347#J217J

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