Vietnam’s software industry targeting at US$1 billion in 2010

After the failure of the goal of US$500 million in the year 2005, the software industry of Vietnam set another aim for itself. That is to reach a revenue of US$1 billion in the year of 2010. Coming together with this target is the program draft for development of Vietnam’s software industry in the phase from 2006 to 2010 compiled by the Ministry of Post and Telecoms. As one more time mentioned in the draft, human resource is seen as the key factor for success of the program.

According to the Ministry of Post and Telecoms, 2005 is the final year for implementation of the general plan for application and development of information technology, as well as the final year for realization of the Government Decree 07 on establishment and development of the software industry. It is time for right assessments of and accurate comments on situation of the industry as well as proposals on solutions and new target for the new phase. As the period from 2001 to 2005 was considered as the initial stage, the next should be the accelerating phase for the young but potential software industry of Vietnam.

Statistics by the Ministry of Post and Telecoms show that 2004 is a successful year for the information technology sector in general and the software industry of Vietnam in particular. The industry earned an amount of US$160 million, an annual growth of 38%. In which, around US$60 million was from software export, and the left was gained in the domestic market. However, that was only insufficient statistics. The Ministry thus set another much higher target at US$250 – 300 million for this year.

Revenues from software export now are centralized in a handful companies with tie business partnership with foreign firms such as FPT with a turnover of US$4.3 million, Paragon Solutions Vietnam and TMA with a receipt of around US$2.7 million. Meanwhile, the number of firms registering for software production and trading has been 2,500 and the number of those with real operation is 600. These enterprises create jobs for as many as 150,000 workers with the average productivity of US$10,000 per capita per year. Software industrial parks and centers are mostly located in Hanoi and Ho Chi Minh City. The two localities also respectively represent 40% and 50% of software workers in Vietnam. To gain prestige in export, software enterprises have invested much in their quality management systems. One of them has met CMMI-5, one has met CMM5, three have met CMM3, and about 30 have meet ISO-9001.

Addressing the conference on development program for software industry organized in the end of April, Director Nguyen Anh Tuan of the Ministry of Post and Telecoms’ Department of Information Technology Industry released the software industry targets an annual growth rate of 35% - 40% and a revenue of US$1 billion by the year 2010. Export turnover will account for 50% of the total revenue. The program aims at 200,000 information technology students, 50% of them will become software experts and the rate of property rights violation in the software domain will be reduced to 60%. The program also sets the goal that the software industry of Vietnam will be acknowledged at the international level.

The program considers human resource the key factor for its success. Outsourcing service, especially for Japan, is emphasized. The Government needs to invest more to develop the software industry as well as the domestic for software. Foreign direct investment also plays an important role. Strong measures should be taken to lower the rate of intellectual property rights protection.

Sharing the same view on the matter of human resource, Chairman Le Truong Tung of the Ho Chi Minh City Information Technology said the biggest problem facing software firms now is of human resource. To meet the demand of the software industry’s growth, the number of skilled workers must be increase by at least 60% annually, he added.

Vietnam Economic Times, May 10, 2005