IT outsourcing sought in Japan

With outsourcing work to low-wage countries on the rise globally, Vietnamese software companies are eager to get a bigger share of the pie.

Local IT experts say Japan, which outsources about US$100bil in software work to countries like Vietnam, China and lndia, is seen as the market to tap.

Winning more outsourcing contracts is increasingly viewed as a top priority by most domestic IT companies, whose sales at home are hurt by rampant copyright violations and limited use of software in Government offices.

To win more contracts, companies are refining their marketing strategies and specialising in products catering to markets like Japan, the US and the EU.

"It's time for us to change direction. Local companies should specialise instead of making all kinds of software," said, Chu Tien Dung, director of Quang Trung Software Park in HCM City. "If they become excellent in one area, then they can grow more easily."

TMA Solutions, for example, which is the largest software company in Vietnam with more than 650 staff, makes software exclusively for the telecommunications industry in Japan.

FPT, another large domestic IT company, also does outsourcing work for Japanese companies.

Although Vietnam's software industry has grown 25-30% annually since 2000, it is far from reaching its ambitious goal set five years ago of an annual $500mil in both export and domestic sales.

Last year, domestic software sales amounted to US$125mil with exports at $45mil. The latter is expected to double this year, with domestic sales rising only $150mil or 20% from last year.

Industry experts say annual domestic software sales could easily reach $200mil if more Government offices used IT and the country had a more effective law on intellectual property rights.

"The domestic market is small because of the low use of information technology in offices, the high level of copyright violations and the slow implementation of State-owned IT projects," Nguyen Trong, chief of the secretariat of the National Steering Committee for IT, said.

The National Assembly is slated to pass a new law on intellectual property rights by the end of November.

Working in Japan

With their eye on the huge Japan market, domestic IT companies are searching for innovative ways to improve their software engineers' skills.

One such strategy involves sending Vietnamese engineers to work in Japanes software companies at low pay. Under this exchange, Vietnamese employees can upgrade their skills and learn more about the needs of the Japanese consumer.

Phi Anh Tuan, vice-director of AZ software company, said work abroad gives most IT employees, who have weak English and Japanese skills, an opportunity to learn the language.

Dung said the newly formed UK Brain company, a joint venture between Japan and Vietnam, will train IT staff for work in Japan.

Students, who are IT staff, study Japanese for six months and IT skills for another six months, and are then sent to Japan for one to three years.

The company, with a US$1.2mil investment, has already trained 120 IT staff and another 180 will study in 2006.

"After they return, the employees will more clearly understand what the Japanese market needs. They will then be able to adjust their work and be more productive," Nguyen Bach Khoa, director of the UK Brain said.

UK Brain will also help domestic software companies better meet the need of Japanese customers.

Private company training like that offered by UK Brain is becoming more popular, as the industry continues to lack well-trained IT graduates.

About 63% of domestic software companies are in need of highly qualified employees, according to IT experts. With that in mind, more graduates are being trained in-house.

To solve the training gap, the industry is also stepping up co-operation between companies and universities. "Universities, more and more, are training for what businesses needs," said Tuan.

In the last five years, the software industry recruited 15,000 employees who work in 600 companies.

(Source: Viet Nam News)