Vietnam software segment lags in innovation, creativity

VietNamNet Bridge – Although several large multinational corporations have selected Vietnam as a location for offshore software development, the industry segment still lags in home-grown products and technological innovation, says the Vietnam Software Association (VINASA).

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“Vietnam is still primarily an offshore engineering site, a software factory where work can be done efficiently and cost effectively,” said Truong Gia Binh, chairman of VINASA, at a software industry conference last May in Hanoi.

"It is not that we are just running short of ideas, but our people are risk averse," said Mr Binh, and they don’t have access to the needed financial capital or the entrepreneurial talent to develop new products and bring them to market.

Mr Binh said the education system in Vietnam also does not encourage engineers to be innovative and think creatively outside of the box, but instead focuses on preparing students to work for software services companies where work is divvied out to them by clients.

Additionally, the focus of most software companies in Vietnam has been on lucrative, but yet low-risk, opportunities such as software development and business process outsourcing services, said Mr Binh.

"In technology, Vietnam is still playing catch-up with the rest of the globe, and innovation will take a lot longer to take root and flourish," said Mr Binh.

The software industry nationwide generated total revenue of US$4.6 billion in 2015, Mr Binh said, further broken down into software development of US$1.6 billion and business process outsourcing services of US$3.0 billion.

“Overall industry revenue jumped by roughly one-third from US$3.06 billion in 2010 to US$4.6 billion in 2015,” said Mr Binh.

Nguyen Tuan Anh from TTSOFT, a company specializing in business administration and accounting software, in turn pointed out that while Vietnam companies have done a good job in the software services market, innovation has to grow if they are to thrive in the competitive market.

The trends in the marketplace show that the large multinational corporations are choosing Asia as a prime location for their outsourcing and Vietnam faces stiff competition from Indonesia, the Philippines and Thailand.

The biggest deficit Vietnamese workers have competing with the aforementioned countries is the poor foreign language skills in both English and Japanese, make them less attractive outsourcing options.

"There is no doubt that some of the work currently being done by local companies at some of the Vietnam subsidiaries of multinational technology corporations involves innovation," said Mr Anh.

Down the line, some of these corporations may start getting their product ideas from their staff in Vietnam, but we’re not at that juncture yet and more needs to be done in the education system to fix the problem, he underlined.

Vietnam subsidiaries of some multinational technology corporations and local companies alike must start taking greater responsibility for product development and engineering in order for the industry to take root and thrive.

"It will likely take several years or longer for that to happen,” he said.

Another shortcoming for the Vietnam software development segment is that the Vietnam government does not have adequate programs to support home-spun innovation, said Mr Anh.

Technology industries such as those in the US were spawned by government-sponsored projects, he said, and similar programs could be highly beneficial to help local start-ups get off the ground.

Lastly, Nguyen Manh Tuong, business director of GetFly, specializing in business administration solutions, reminded everyone of the old adage, "It's not what you know. It's who you know."

In order to succeed in the industry, said Mr Tuong, local companies need to master the art of salesmanship and develop good relations with a wide network of business and social contacts.  

    
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