Vietnam information communication technology industry outsourcing opportunities presented by puk cao danviet consult

About me, Puk Cao• Vietnamese, born in Hanoi • 9 years working experience in sales and marketing in Vietnam • Has been living in Denmark for 5 years • Master of International Business an

Vietnam Information Communication Technology Industry

Outsourcing Opportunities

Presented by Puk CaoDanViet Consult

About me, Puk Cao

• Vietnamese, born in Hanoi

• 9 years working experience in sales and marketing in Vietnam

• Has been living in Denmark for 5 years

• Master of International Business and Economics from Aalborg University

• Speak Vietnamese, English and Danish

• Independent consultant about the Vietnamese market

Country Overview

• Area of land: 331,698 km2

• Population: approx 90,5 million

people 30% live in the cities, 60% are under 30 years old

• GDP per capita in 2010: 1174 USD

• Growth rate of GDP in a decade:

approx 8%

• Rice village culture

Source: CIA Fact Book

Vietnam ICT Overview

Ranking

Reports/Country Vietnam Bangladesh The

Philippines

China

Networked Readiness Index by World

Economic Forum 2011: 138 countries 55 115 86 36

ICT Development Index (IDI) By International

Telecommunication Union (ITU) 2010: 159

ICT Price Basket (IPB) By International

Telecommunication Union (ITU) 2010: 159

Digital Economy Ranking by Economist

Intelligence Unit & IBM 2010: 70 countries

E-Government Development Index (EGDI) by

United Nation 2010: 189 countries

IT Industry Competitiveness Index by

Economics Intelligence Unit (EIU) & Business

Software Alliance 2009: 66 countries

• Top 10 Fastest Broadband Growth by Point Topic 2010: 4th

• Top 10 attractive nations for software outsourcing by AT Kearney 2009

• Top 10 Asia nations in software development by Garner 2010

• Top 10 Emerging Global Outsourcing Cities by Tholons 2010:

– Hochiminh city (6 th – Product Development, Testing, Application Development & Maintenance, Animation/Game Development)

– Hanoi (10 th in 2009)

• Software Piracy Rates by Business Software Alliance- BSA & IDC 2010: 13/111 countries with 83% of piracy

• Top 25 cities with the highest risks in software outsourcing by Brown &

Wilson 2009: Hanoi (22th), Hochiminh city (17th)

ICT Users

• Fixed telephone line: 45,9% (2009)

• Mobile: 113% (2009 – 98,3 million subscribers)

• 3G mobile phone subscribers: 7 million

• Internet users: 27,5% (2009 – 23,6 million)

• Households with internet: 12,22%

• Households with computer: 13,55%

Source: Vietnam ICT White Book 2010

Unit: million USD

in 2009 (%)

Digital content industry

revenue

Source: Vietnam ICT White Book 2010

Employees and Salary

Employees Revenue/ employee

(USD/per/year)

Wage (USD/per/year)

Human resources

• 271 local ICT training institutions with 15.000 university graduates and 10.000 college graduates annually

– Out-of date and poor quality training program in vocational

centers, colleges & universities – Information Technology Professional Graduation rate: below 3%

• Foreign ICT training institutions: Aptech Vietnam (India), NIIT (India), RMIT Vietnam (Australia)

• Language skills, managerial skills, team work,

professional working attitude are big concerns

Source: Vietnam ICT White Book 2010, Danish Embassy

• Unstable telecommunication network without service

guarantees from providers

• Power cut is a big concern

Source: Vietnam ICT White Book 2010, Danish Embassy

Information Technology Parks

• 7 Information Technology Parks:

– HCMC: Quang Trung Software City, Saigon Software Park, E-town, VNU ITP

– Hanoi: HITTC,

– Danang: IDD

– Can Tho: Cantho Software Park

• Hi-tech parks under construction: Lang-Hoa Lac Hi-tech Park

(Hanoi), Saigon Hi-tech Park (Hochiminh city), Binh Duong Hi-tech Park (Binh Duong)

Source: Vietnam ICT White Book 2010

International Presence

• Hardware:

– Hewlett-Packard (HP), Apple, Fujitsu, Intel, Siemens, Acer and many other international and foreign companies

• Software:

– Microsoft, Oracle, IBM, HP, France Telecom, Novell, Cisco System, Bosch and many other international and foreign companies

Software Outsource Cluster

• 1000 small and medium software enterprises (2010) were established in the last ten years

• 50% supply software development outsourcing services

• 20 enterprises with more than 100-500 employees

• 20 enterprises have obtained international quality

management certificate (CMMI-5/4/3)

• 40 enterprises are certified with ISO 9001 and ISO

27001

Source: Danish Embassy, VINASA

Software Outsourcing Cluster

• Revenue: USD 850 million (2009) USD 1 billion (2010)

million

export value)

Pyramid (over 95% of total export value)

• Outsourcing projects: relating to Web Services, Saas, Virtual, Cloud, Mobile phone based (Iphone, Android,…)

Source: Vietnam ICT White Book 2010, HCA, VINASA

Government vision and policy

in English and foreign languages

• 30% IT graduates qualified to work abroad

• Internet user rate: 50%

• Encourage local and international investors to invest in high quality training

• Support Vietnamese IT firms to get CMMI 3 & ISMS process

• Build up database of Vietnamese IT experts

Source: Vietnam ICT White Book 2010

Tax incentives

• Tax incentives in income tax:

– 10% for the first 15 years

– Income tax after that period: 25%

• Tax exemption:

– 50% of income tax for the first 3 years

• VAT exemption for software service export: 0%

Source: LCT Lawyers 2010

Strengths and Weaknesses

– Lowest labor costs in Asia

– Young and quick-learning IT workers with good basic skills

– Good internet connection capacity

– Favorable tax policy

– Dynamic small IT outsource companies

– Potential local market in software product/services, on-line

entertainment and e-commerce

– Unstable communication network

– Unclear and non-strict law system

– Low quality IT graduates, need to retrain

– Lack of high quality human resources having many years of experience

Danish IT Companies in Vietnam

• More than 21 companies, most are

joint ventures formed since 2007

• Get financial support from DANIDA/B2B program

• Danish-Vietnamese ICT club: 26 members

Next steps

• Field trip to Vietnam 12 – 19 November 2011

– B2B Match

– Visit Vietnam Comm 11

in Sep/Oct

• Testing project in Sep/Oct

• Long-term partnership or form joint-venture

Thank you for your attention!