Up to now, there is no adequate and systematic study on the current situation of

the Vietnam software industry because of its newness and spontaneous

development and the poor management of the government. Therefore, it should

be necessary to investigate and consider the recent situation of the Vietnam

software industry. 

1. The situation of the Vietnam software industry in recent years:

It is unavailable to get the accurate figures about the number of the informatic

companies and production capacity of the software industry in Vietnam recently.

However, it could be seen that the number of the informatic companies in

Vietnam has increased quickly in recent years which are placed mainly in two big

cities: Hanoi and Ho Chi Minh city. Based on the Vietnam Information

Technology directory 2000, there are about 200 informatic companies running

hardware, software, network, services consulting... in such there are about 40

companies that specialize in software. In addition, there are about 80 other

organizations providing software programs. The following will give more detail

analyses about the location, the length of forming, the number of employees and

the capacity of the informatic companies in Vietnam.

1.1.  Background and experience

First of all, it could be affirmed that almost informatic companies have been

established newly which are limited in abilities of organizing and managing.

There are only 7 of 168 listed companies have been established before 1990

appropriated 4.18%. 68 companies have been formed in the period between 1991

and 1995. The remains accounted 93 companies that make up to 55.35% have

been established in latest 5 years. It could be said that all of the Vietnamese

informatic companies are newcomers so it is difficult to find out several famous

names from them that are strong enough to compete and to get a recognized

prestige in the software market.

However, the late foundation should not be the reason for the weakness of the

companies in business management. The evidences from many companies in

developed nations have shown that a company could become famous after only 3

to 5 years since establishment. Especially, one company could be posited its

name by the quality of provided services and it’s ability in satisfying the variable

demands of the customers. Being the late comer in the information technology,

the Vietnamese informatic companies could get some advantages by catching up

the level of latest technology.

In addition, the variability of the number of the informatic companies is main

characteristics of the development of the Vietnam software industry also.

1.2.  The size of the business in software companies

It could be considered that almost Vietnam informatic companies are small-sized

enterprises recently. There are only several medium-sized enterprises in the

software industry. The number of employees has proved that, especially the

number of the programmers in each company and the revenue that the company

has reached. The figures in the below table will demonstrate.

The numbers of companies having below 50 employees are majority account for

76.8% in total listed informatic companies. Meanwhile, the number of

companies that has above 100 employees makes up 10.6% only. Particularly,

there are only two companies that have a big number of employees for each. The

first company is the Corporation for Financing and Promoting Technology (FPT)

which has 700 employees totally. And second one is Vietnam Data

Communication Company (VDC) which has 400 employees. It must be said that

the share of the programmers and project managers in total employees is too low.

This rate is about 5 – 10% in many informatic companies. In general, there are

about 1200 programmers in whole country.

The quality of the programmers in the informatic companies could be considered

from another side of the viewpoint that are professional level and foreign

languages using of the programmers. The gathered figures from 18 software

companies in Vietnam have shown that almost programmers have graduated and

post-graduated degree in information technology. In 15 surveyed companies, the

proportion of the programmers having graduated degree and above is higher than

80%. In addition, about half of the investigated companies have post-graduated

employees such as Master of Science, Ph.D. The majority of the programmers

are trained in the domestic universities. Some of them have been practiced in the

developed countries.

Together with the restriction of the number of employees, informatic companies

also have been limited about investment capitals. The surveyed data have pointed

that average investment capital for each company equal to 3.533 bill VND

recently. Furthermore, it is the beginning of the investment so that the revenue

from software selling is limited. Some of software companies have not had

revenue yet. According to the statistical figures, whole informatic companies’

revenue is 3360.47 bill VND in 1999 and estimated revenue in 2000 has reached

about 4185.51 bill VND (the revenue was estimated basing on the figures in

Vietnam Information Technology directory 2000). If separating the revenue from

software selling, whole informatic companies’ estimated revenue is 21 millions

US $ in 1999 and 50 million in 2000. (1 US$ = 14,5000 VND recently).

The average revenue for each informatic company is about 25.65 bill VND and

31.95 bill VND in 2000 correspondingly. However, based on the gathered data,

it could be said that average revenue of Software Company is very low that is

about 5.19 bill in 1999 and 5.36 bill VND in 2000. In general, revenue of

software selling is too low and the main of revenue is from selling hardware,

providing services...

1.3.  Human resource training

As presenting above, there are about 1200 programmers working in software

industry. This figure is too little related to the demands for human resources to

develop the software in the future. In past years, the universities in Vietnam have

centered on training software specialists for the information technology. The

Vietnamese government has also invested to train human for software in 7

faculties of different universities. In 4 latest past years, these faculties have

trained about 700 programmers and informatic engineers. In addition, many other

universities and institutes has also participated in training informatic students.

Recently, there are about 100 organizations including universities, institutes,

informatic centers, have trained informatic students. Based on the statistical

figures, it has been estimated that there are about 3500 students every year

educated from universities, institutes and others including the numbers of

students that informatic companies trained themselves. By this way, there could

be about 38000 persons who get bachelor degree up to year 2005.

In recent years, Vietnamese Government has also allowed organizations and

individuals forming training center for informatic as a measure to reduce the

short of human resource in Vietnam. However, these centers must be controlled

tightly about the quality of the educated students from them.

According to the surveyed data, it could be said that HCMC has played an

important role in training and providing well- trained programmers to others.

Ho Chi Minh City is a big informatic center of the country. In this time, there are

10 faculties specified in information technology in universities where 9980

students have trained and about 160 lecturers teaching here. According to the

Department of Science, Technology and Environment HCM City, approximately

5000 to 7000 persons who get bachelor degree in information technology have

worked in the software sector.

Nevertheless, one question emerging is that how to balance between increasing

quantity and quality of the trained persons. Many experts in information

technology have believed that universities and training centers could satisfy the

demands for quantity of the informatic engineers and bachelors. But it is difficult

to guarantee on the quality of these engineers and bachelor. The quality of the

training informatic engineers and bachelors is not good enough. In the viewpoint

of many foreign businessmen in the Vietnam market, Vietnam students are

intelligent, diligent and able to make software like Indian students but they are

lacked of experience and are timid in working. Their English is also a big

problem. In other side, the lecturers are lacked of real experience in producing

software.

Because of this, the students have been well trained basically but they have not

necessary skills and have not satisfied the requirements of the software

companies in using. There is also an opinion that universities and centers in

Vietnam just only trained  “the lecturer” not “the worker” in the producing

software. In order getting contracts on software processing, producing high

competitive software, it is necessary to software companies in having good

programmers and project managers. Unfortunately, it is not easy to find out these

persons in fact. The practical situation of the software industry has shown hat

software companies have not enough high level educated programmers. For

example, Paragon Solutions Vietnam – one of the foreign software company

operating in Vietnam since 1995- has been “hungered” for software human

resources.

1.4. The location of the informatic companies

Most informatic companies are located in Hanoi and Ho Chi Minh City.

According to the statistical figures, there are 71 companies in Hanoi and 75

companies in Ho Chi Minh City. The remains are located in Danang, Haiphong,

Dongnai and some other provinces. In Ho Chi Minh City, the Saigon Software

Park has been established and operated from April 2000. This center includes 25

member software companies with 585 employees in such the number of

employees who have graduated degree in informatic makes up to 93%. The

remains of them include post-graduated employees. The majority of employees

working in center have above 2 years experience in software sector with the rate

of the above 5 years equals to 36 %. The center provides a number of software

products such as technical, constructing, architecture, financial analysis,

banking... In addition, this center has also supplied special software on education

and management.

Simultaneously, the People’s committee of Ho Chi Minh City has also been

conducting the project named Quang Trung Software Park. Recently, many

software companies including foreign and domestic companies have been

interested in investing to software sector. At least 25 companies have penetrated

in the Park with an area of 15000 meters square. In those companies, it must be

named some important such as Paragon Solutions Vietnam with 120

programmers, the FPT with 100 programmers and Tuongminh Company with 80

programmers.

In the North, the Government but also has invested to construct the software

technology park in High Technology Park Hoalac likes “Silicon Valley” model to

aim establishing high competitive software centers that those centers play core

units of software industry development. Further, there are some smaller software

technology-parks in other provinces such as Danang, Hue. So in the light of

forming software industry in Vietnam, Hanoi and Ho Chi Minh City will play a

crucial role.

2.  Software production in Vietnam:

In the condition of the size and capability of production as presented above, the

sort of software is limited. Software companies have focused only to provide

software products to important customers in post – communication, banking,

financing, constructing sectors and some others. In general, there is a few in

number of kind of software, mostly producing to the order from customers.

Because of limitation on the resources and experience in operating, software

companies just only have specialized in specified sectors like accounting,

management, and educational software... In other hand, some companies are

interested in processing software and package software for foreign software

producers. For example, the FPT and Haihoa Company have strongly increased

revenue from processing software for foreigners. This measure has been looked

like a way to entry the foreign software markets and to increase turnovers from

exporting software. However, there are some problems for this topic, so that it

will be discussed more detail.

Two software parks, which located in the Ho Chi Minh City, have already been

operated in Vietnam. Approximately ten companies, including foreign ones, are

already working there. A high-volume Internet network links both parks but the

relatively high connection cost is a problem. Connections in Vietnam have to go

through the state operator, and there is therefore an urgent need for additional

infrastructure investment.

The shortage of software developers is another problem, and training qualified

professionals is another urgent issue. According to the Ministry for Science,

technology and environment, the expansion of the software industry will require

25,000 IT engineers to reach the target of 500 million dollars, and this in turn

will demand the investment of 68 million dollars. There are today in Vietnam

17,000 to 20,000 IT engineers, but only 20% of them are experienced. Every

year approximately 3,500 students graduate with IT qualifications. By 2005, the

total number of IT engineers is expected to reach 38,000, and there is a clear

need to train more specialists.
 

The Ministry for Education and Professional Training is currently developing a

program under which the seven universities offering an IT diploma are to

accommodate more IT students and other universities are to offer such diplomas.

In fact, software specialized companies have been providing about 60 kinds of

basic and applied software for domestic and foreign users. It is a trend of

concentration in producing some kind of software such as accounting, data base

management, financing, educational software.

In conclusion, it could be made some main points following:

Firstly, the contribution of the software industry in the GDP is so low. The

quantity and quality of the software is restricted because of the lack of human

resources, capitals and managerial skills.  The production capability of the

software industry is too weak and there are so much of problems of

developments.

Secondly, Vietnam software industry is located mainly in two big economic

centers of this country that are Hanoi and Ho Chi Minh City. It could be an

advantage condition to form important software parks in the near future.

Thirdly, the economic efficiency in operating of each company as well as whole

software industry is very low. So it should make negative effect to the economy.

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