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Home Technology Computer Science

Vietnam Software Market 2005: Many Changes

by Sci
December 4, 2005
in Computer Science
0
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In 2005, the Vietnamese software industry experienced significant movement. Positive signs were first reflected through visits and partnership searches by delegations from South Korean and Japanese companies. Unlike five years ago, confidence in opportunities for Vietnamese businesses is being reinforced.

In addition to FPT Software, TMA, PSV, and Tan The Ky, companies such as CMC, AZ, Vietsoftware, and Tinh Van are becoming more synchronized in their operations despite being relatively new to outsourcing. Many other software companies have also recognized this opportunity. Sharing outsourcing experiences among businesses will surely be essential as opportunities arise.

Mr. Lu Thanh Long, CEO of Misa, believes that software companies are not only focused on survival but are also investing more in quality, diversifying products, and expanding markets. Vietnamese software firms have clearer strategies for outsourcing and developing packaged products for the domestic market. Groups of companies are forming based on specific fields such as outsourcing, ERP, training, and gaming.

There are various opinions, but the Ministry of Information and Communications’ first announcement of a software industry development strategy has heated the atmosphere in the Vietnamese software sector. Simultaneously, VINASA has proposed three development directions: Embedded software, online gaming, and Enterprise Resource Planning (ERP) solutions. Many companies assess these three focal points as very appropriate and well-founded.

However, to promote the development of the software industry, the prominent issue remains copyright. Unlike large foreign companies, Vietnamese software firms are largely standing alone against copyright infringements. Litigation and disputes, if they occur, are often “futile in court“, causing losses for the companies themselves since Vietnam lacks the necessary legal framework to address these violations (not to mention the economic damages caused by software piracy). The draft Intellectual Property Law does not specifically address software copyright as a distinct category, which has raised concerns among many firms. In developed countries, software copyright is usually treated as a separate field with clear definitions and regulations.

Last year also saw significant investments in IT from various Vietnamese ministries and sectors. However, the investment rate in software has not improved significantly. In fact, software costing billions is only utilized at around 10% efficiency due to awareness and skill levels. It is incredibly challenging for Vietnamese software companies to participate in state projects.

For this reason, small and medium enterprises will remain the main market for domestic software in the near future, although this customer segment has the drawback of investing in small amounts of software with low awareness of IT applications.

As a trend, ERP has become the primary concern for medium to large companies over the past year. A wave of Vietnamese ERP software has emerged, as companies are increasingly focused on enhancing their competitive capabilities. According to Mr. Phi Anh Tuan, Deputy Director of AZ: “The potential for ERP applications in Vietnamese enterprises is enormous,” expressing optimism about the growth rate of this market. Experts predict that 2006 will be the “year of ERP” for the domestic market. Alongside this, other management software such as CRM and HRM are also attracting attention for development.

Finally, a positive change worth noting over the past year is the series of collaborations between small software companies and hardware manufacturers with training institutions. This collaboration indicates that software enterprises are increasingly focusing on larger common goals.

NEED STRONGER STEPS
Dr. Nguyen Huu Le, Chairman of the Advisory Council of TMA

The Vietnamese software industry continues to develop at a rapid pace. However, we have yet to create a breakthrough to make software a leading sector. With a low starting point, a growth rate of 30% has not helped us close the gap with the world.

The export software industry in Vietnam has tremendous opportunities to rise to new heights; however, to turn potential into real development momentum, we need to take strong steps:

– Diversifying high-quality human resource training: in addition to strengthening cooperation between universities and businesses, some large companies like TMA and FPT are promoting the establishment of universities to proactively manage human resources. This is a trend that should be encouraged to enhance competitiveness and help share the burden on the education sector.
– Continuing to maintain preferential policies to help Vietnamese companies reduce production costs, such as tax incentives and reduced internet connection fees.
– Strengthening trade promotion activities: North American, European, and Japanese companies face many difficulties in finding information about the Vietnamese software industry.

To date, the Vietnamese outsourcing software sector has not established its own identity, making it challenging to penetrate the international labor division chain. In my opinion, the best way to compete internationally is to maximize the intellectual capabilities of Vietnamese engineers by participating in the most complex high-tech fields. A large number of Vietnamese engineers working in leading IT companies worldwide demonstrate the intellectual potential of Vietnamese people in this area.

Globalization will increasingly exert competitive pressure on Vietnamese software companies. Looking at the world, China has 8,000 software companies, far exceeding India, but still lags in terms of standards and international competitiveness. The reason is that most Chinese software companies are small in scale. In contrast, India has large companies with tens of thousands of employees, such as TCS, Infosys, and Wipro.

Vietnam now resembles China. While there are many software companies, few are large. The recent phenomenon of “a hundred flowers blooming” is very positive, creating momentum for development and IT application in Vietnam. However, in the near future, if Vietnam lacks leading companies, it will be difficult to compete both domestically and internationally. Vietnamese companies should consider alliances and mergers as an inevitable trend in international competition. The strategy of building a strong software enterprise team in Ho Chi Minh City, in my opinion, is a correct direction to make Ho Chi Minh City the software export center of Southeast Asia.

TMA Company
Rising to International Standards

For TMA, 2005 continued to be a successful year with nearly 100% growth (from 375 to 650 engineers). TMA has attracted new customers from the United States and Japan, particularly winning international bids for large software projects. The biggest success for TMA last year was convincing clients to assign large and complex projects requiring hundreds of engineers with the latest technologies. This affirms TMA’s reputation and the intellectual capabilities of Vietnamese engineers.

TMA remains focused on software exports, but plans to expand into the domestic market next year. Two reasons motivate TMA to consider the domestic market:
1. Vietnam has many software companies, but very few can handle large and complex projects. These projects often fall into the hands of foreign companies.
2. Vietnam has not yet built many large-scale IT systems to serve society and economic development. TMA hopes to apply project management experience and the latest technologies to build large IT systems for Vietnam.

However, for now, TMA will only participate in large-scale projects with a professional bidding process.
After rising to a leading position in Southeast Asia, TMA is striving to become the first Vietnamese brand to achieve international recognition in the global telecommunications software industry.

Misa Company
Overcoming Challenges to Grow Stronger

In 2005, Misa’s success has been that each time it faced challenges, the company grew stronger in terms of staff numbers, product quality, and sales revenue. However, the greatest achievement has been forging partnerships with hardware and software counterparts in the country to enhance product development and service value. Misa’s estimated growth by the end of this year is 160%, with projected sales exceeding 1 million USD, surpassing its original plan.

Not stopping at accounting software, Misa is developing a plan to launch a Customer Relationship Management (CRM) software for small and medium enterprises named MISA-CRM.NET 2006, along with several other software solutions aimed at creating a comprehensive ERP solution for SMEs.

AZ-Solution Company
Innovating for IRP

For AZ Solution, 2005 was a year of growth while continuing to build the company. AZ has achieved encouraging initial results in the Japanese market, securing large ERP orders from major Vietnamese companies and some wholly foreign-owned firms. The company’s workforce increased from 110 to 160 people, with promising sales growth.

With its Enterprise Resource Planning (IRP) Solution, AZ has secured 24 large and small clients with 65 usage points. The company is emphasizing further product improvement by researching additional features such as: migrating the entire solution to the internet with compatibility across various technology platforms, allowing clients to choose based on infrastructure conditions and budgets; integrating applications for mobile devices such as mobile sales on PDAs, pocket PCs, and smart alert systems on mobile phones; AZ is also focusing on developing e-commerce applications on the back-end infrastructure of the IRP Solution.

FPT Corporation
Focus on Both “Domestic” and “International”

In 2005, FPT’s growth in the software production sector reached 30-40% compared to 2004, with a remarkable 70% increase in workforce. For domestic software, FPT will continue to focus on government clients and key sectors including banking, finance, taxation, treasury, telecommunications, insurance, and large enterprises. In November, FPT officially launched its branch in Japan, opening up numerous opportunities for collaboration and business. FPT Software Japan is finalizing its procedures in Japan, and contract signing will officially begin in 2006. One of the first potential partners could be Toshiba Corporation. It is expected that by 2006, the workforce of this branch will grow to 30 employees, with an annual growth rate of approximately 18-20%.

BSC Software Joint Stock Company
1,000 Clients in 2006

It has become a cycle; every four years, BSC launches a new software product. Last year was a successful year for BSC as it introduced the purely Vietnamese customer relationship management software, BSC Venus. This software features a Vietnamese interface tailored for small and medium-sized enterprises. Since July 2005, BSC Venus has garnered over 30 clients, and it is expected to reach around 1,000 clients in 2006. Specifically, the education management software, BSC EMIS, achieved an impressive growth rate of approximately 110% in 2005 compared to the previous year, with over 100 universities, colleges, and high schools utilizing it.

Tường Vy

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