 |
 Welcome to MDE |
| Overview |
| Curriculum |
| Facilities |
| Organization |
| Students |
| Applications |
| Fees, Loans, Scholarships |
| Theses |
| Seminars |
| Services |
| International Cooperation |
| MDE News |
| Alumni |
 |
|
| Tiếng Việt | English |
|
Goto: |
|
Chapter 1
|
|
Year |
Exports |
Domestic Revenue |
Total |
|
1993-94 |
330 |
228 |
558 |
|
1994-95 |
485 |
350 |
835 |
|
1995-96 |
734 |
490 |
1224 |
|
1996-97 |
1085 |
670 |
1755 |
|
1997-98 |
1750 |
950 |
2700 |
|
1998-99 |
2650 |
1250 |
3900 |
|
1999-‘00 |
4000 |
1700 |
5700 |
|
2000-01 |
6300 |
1960 |
8260 |
Source: NASSCOM.
3.2.2.1 Exports
The Indian software industry is service rather than product oriented, heavily export oriented (see Table 1).
Indian software exports consist primarily of software services. In other words, software export programs are service characterized rather than product characterized. Indian software exports firms are remarkably similar in terms of their activities and their products.
India exported software and services to nearly 100 countries around the world. The US is the largest market for Indian software exports (58% in 1997 - 1998 and 62% in 1999 - 2000). Other destinations are Europe, South East Asia, Japan…
3.2.2.2 Domestic market
Software revenues in Indian domestic market is smaller in both value and growth rate compared to in exports. But the performance of this market is still very high and impressive. The domestic market has a high proportion of revenues from the sale of software packages and products.
3.3 Some factors behind
India’s success
3.3.1. Factor conditions
3.3.1.1 Human resources
The growth in the Indian software industry can be traced to its educational and
R&D (functioning more as a skills training system than as a source of new
ventures) systems.
The key to the success of the Indian software industry is the supply of trained,
low cost software professionals.
India
has an abundant supply of manpower from a
highly educated, relatively inexpensive and English-speaking. The number of
manpower working in the Indian software industry is illustrated in Figure 3
below.
Figure 3: Manpower in the
Indian software industry.
Source: NASSCOM and CMU
Dataset.
Complement with the abundance, the labor force working in Indian software
industry has the advantage of low cost (cost advantage).
The quality of human resource for software industry in India is a competitive
advantage. A survey taken by Arora and his colleagues in 1999 indicated that 80%
of the software professionals employed has engineering degrees, while 12% has
diplomas from private training institutes.
The large talented pool of software professionals is not only from domestic
institutes, colleges and universities, private training institutes. Another
source of supplying software professionals,
where a large number of students are trained, is private, training firms.
3.3.1.2 Information and Physical Infrastructure
Despite that the general development level of physical communication
infrastructure in India is low; the infrastructure for the software industry is
a noticeable factor to the successfulness of the industry.
Telecommunications links are used in several ways to help Indian firms to
connect to the rest of the world. Telecommunications links also enhance the
ability of foreign clients and Indian developers to interact on a daily basis;
allowing software under development to be sent back and forth and modified
according to client wishes. With greater and
improved interaction, there is reduced risk and greater control for foreign
clients, which encourages greater trust
The rapid growth in the informatics sector over the last decade and the
liberalization of value added services have provided the much-needed impetus for
data and communication networks for the software industry in the country.
Internet access has been available in India for several years through many
providers with high-speed links. The Internet providers also favour to provide
Internet services to Indian software
exporters, educational and research institutions.
Moreover, the Indian government promises uninterrupted power supply to the IT
industries, especially for software sector.
3.3.1.3. Finance for the industry
Equity financing is the primary sources of capital for many Indian software
firms. These firms also diversified their sources of finance by loans or leases.
Loans or leases are easy for software firms in India, especially for firms
developing software services. A large fraction of Indian software firms also
relied upon personal funds for startup finance.
3.3.2 Demand conditions
In India, the software industry seems not tend to be driven by the domestic
market, or domestic demand. Although India is a large market with crowded
population and a large number of firms, India’s software sector displays many
unusual features from an Indian perspective. The India software industry is
export oriented. Software exports have grown
somewhat faster than the domestic market.
3.3.3 Hardware industry
Indian government’s ICT policies emphasized on both software development, which
would comprise a services sector, and a hardware sector, which would focus on
absorbing manufacturing labor.
Despite the fact that the market has grown considerably in recent years, the
number of PCs in country is still low. Hardware industry seems to not developed
in India, and hardware industry (computer) does not contribute much to the
development of software industry.
3.3.4 Rivalry, Firm’s strategy and Structure of the Indian software industry
The Indian software industry consists of a large and growing number of firms. A
fringe of young, small and medium sized companies dominates the industry.
Entry barriers in Indian software industry are relatively low. There are two
types of new entrants in the industry. The first type were existing firms
diversifying into software (computer hardware firms, firms with large in-house
data processing and system integration capabilities). The other type of entrants
was new start-ups. In some cases, there were some managers broke away from some
big firms and founded a new software firm (Arora et al, 1999).
The industry is not geographically concentrated in Bangalore, although Bangalore
is certainly a very prominent location for firms in the industry. Except for
Bangalore, some other regions such as Mumbai (Bombay), Chennai (Madras), New
Delhi, Hyderabad are also important locations of the industry.
Indian software firms largely provide services rather than products. A large
fraction of Indian software firms provide services for a large number of
industries, including manufacturing, banking and insurance, retail and
distribution, transports and communications, and so on.
3.3.5 Good timing
Good timing is considered important for the development of the Indian software
industry. This good timing began by the late 1980s, and created a peerless
chance for the Indian software industry. At that time, India was graduating
approximately 150,000 English-speaking engineers and science graduates, with
only a limited demand for their services from the rest of the economy. Around
this time, the information technology revolution in developed countries had
begun to take root and shortages of skilled programmers and ICT professionals
were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world,
especially in the US were very important for the Indian software industry,
because this was the chance for the large pool of talented professionals in
India to join working in very substantial number of foreign firms (mostly US
firms). From “body shopping” to the US, Indian professionals and individual
entrepreneurs could learn skills and experiences from foreign firms and apply
them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
3.3.1. Factor conditions
3.3.1.1 Human resources
The growth in the Indian software industry can be traced to its educational and
R&D (functioning more as a skills training system than as a source of new
ventures) systems.
The key to the success of the Indian software industry is the supply of trained,
low cost software professionals.
India
has an abundant supply of manpower from a
highly educated, relatively inexpensive and English-speaking. The number of
manpower working in the Indian software industry is illustrated in Figure 3
below.
Figure 3: Manpower in the
Indian software industry.
Source: NASSCOM and CMU
Dataset.
Complement with the abundance, the labor force working in Indian software
industry has the advantage of low cost (cost advantage).
The quality of human resource for software industry in India is a competitive
advantage. A survey taken by Arora and his colleagues in 1999 indicated that 80%
of the software professionals employed has engineering degrees, while 12% has
diplomas from private training institutes.
The large talented pool of software professionals is not only from domestic
institutes, colleges and universities, private training institutes. Another
source of supplying software professionals,
where a large number of students are trained, is private, training firms.
3.3.1.2 Information and Physical Infrastructure
Despite that the general development level of physical communication
infrastructure in India is low; the infrastructure for the software industry is
a noticeable factor to the successfulness of the industry.
Telecommunications links are used in several ways to help Indian firms to
connect to the rest of the world. Telecommunications links also enhance the
ability of foreign clients and Indian developers to interact on a daily basis;
allowing software under development to be sent back and forth and modified
according to client wishes. With greater and
improved interaction, there is reduced risk and greater control for foreign
clients, which encourages greater trust
The rapid growth in the informatics sector over the last decade and the
liberalization of value added services have provided the much-needed impetus for
data and communication networks for the software industry in the country.
Internet access has been available in India for several years through many
providers with high-speed links. The Internet providers also favour to provide
Internet services to Indian software
exporters, educational and research institutions.
Moreover, the Indian government promises uninterrupted power supply to the IT
industries, especially for software sector.
3.3.1.3. Finance for the industry
Equity financing is the primary sources of capital for many Indian software
firms. These firms also diversified their sources of finance by loans or leases.
Loans or leases are easy for software firms in India, especially for firms
developing software services. A large fraction of Indian software firms also
relied upon personal funds for startup finance.
3.3.2 Demand conditions
In India, the software industry seems not tend to be driven by the domestic
market, or domestic demand. Although India is a large market with crowded
population and a large number of firms, India’s software sector displays many
unusual features from an Indian perspective. The India software industry is
export oriented. Software exports have grown
somewhat faster than the domestic market.
3.3.3 Hardware industry
Indian government’s ICT policies emphasized on both software development, which
would comprise a services sector, and a hardware sector, which would focus on
absorbing manufacturing labor.
Despite the fact that the market has grown considerably in recent years, the
number of PCs in country is still low. Hardware industry seems to not developed
in India, and hardware industry (computer) does not contribute much to the
development of software industry.
3.3.4 Rivalry, Firm’s strategy and Structure of the Indian software industry
The Indian software industry consists of a large and growing number of firms. A
fringe of young, small and medium sized companies dominates the industry.
Entry barriers in Indian software industry are relatively low. There are two
types of new entrants in the industry. The first type were existing firms
diversifying into software (computer hardware firms, firms with large in-house
data processing and system integration capabilities). The other type of entrants
was new start-ups. In some cases, there were some managers broke away from some
big firms and founded a new software firm (Arora et al, 1999).
The industry is not geographically concentrated in Bangalore, although Bangalore
is certainly a very prominent location for firms in the industry. Except for
Bangalore, some other regions such as Mumbai (Bombay), Chennai (Madras), New
Delhi, Hyderabad are also important locations of the industry.
Indian software firms largely provide services rather than products. A large
fraction of Indian software firms provide services for a large number of
industries, including manufacturing, banking and insurance, retail and
distribution, transports and communications, and so on.
3.3.5 Good timing
Good timing is considered important for the development of the Indian software
industry. This good timing began by the late 1980s, and created a peerless
chance for the Indian software industry. At that time, India was graduating
approximately 150,000 English-speaking engineers and science graduates, with
only a limited demand for their services from the rest of the economy. Around
this time, the information technology revolution in developed countries had
begun to take root and shortages of skilled programmers and ICT professionals
were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world,
especially in the US were very important for the Indian software industry,
because this was the chance for the large pool of talented professionals in
India to join working in very substantial number of foreign firms (mostly US
firms). From “body shopping” to the US, Indian professionals and individual
entrepreneurs could learn skills and experiences from foreign firms and apply
them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
3.3.1.1 Human resources
The growth in the Indian software industry can be traced to its educational and R&D (functioning more as a skills training system than as a source of new ventures) systems.
The key to the success of the Indian software industry is the supply of trained, low cost software professionals. India has an abundant supply of manpower from a highly educated, relatively inexpensive and English-speaking. The number of manpower working in the Indian software industry is illustrated in Figure 3 below.
Figure 3: Manpower in the Indian software industry.
Source: NASSCOM and CMU Dataset.
Complement with the abundance, the labor force working in Indian software industry has the advantage of low cost (cost advantage).
The quality of human resource for software industry in India is a competitive advantage. A survey taken by Arora and his colleagues in 1999 indicated that 80% of the software professionals employed has engineering degrees, while 12% has diplomas from private training institutes.
The large talented pool of software professionals is not only from domestic institutes, colleges and universities, private training institutes. Another source of supplying software professionals, where a large number of students are trained, is private, training firms.
3.3.1.2 Information and Physical Infrastructure
Despite that the general development level of physical communication infrastructure in India is low; the infrastructure for the software industry is a noticeable factor to the successfulness of the industry.
Telecommunications links are used in several ways to help Indian firms to connect to the rest of the world. Telecommunications links also enhance the ability of foreign clients and Indian developers to interact on a daily basis; allowing software under development to be sent back and forth and modified according to client wishes. With greater and improved interaction, there is reduced risk and greater control for foreign clients, which encourages greater trust
The rapid growth in the informatics sector over the last decade and the liberalization of value added services have provided the much-needed impetus for data and communication networks for the software industry in the country.
Internet access has been available in India for several years through many providers with high-speed links. The Internet providers also favour to provide Internet services to Indian software exporters, educational and research institutions.
Moreover, the Indian government promises uninterrupted power supply to the IT industries, especially for software sector.
3.3.1.3. Finance for the industry
Equity financing is the primary sources of capital for many Indian software firms. These firms also diversified their sources of finance by loans or leases. Loans or leases are easy for software firms in India, especially for firms developing software services. A large fraction of Indian software firms also relied upon personal funds for startup finance.
3.3.2 Demand conditions
In India, the software industry seems not tend to be driven by the domestic
market, or domestic demand. Although India is a large market with crowded
population and a large number of firms, India’s software sector displays many
unusual features from an Indian perspective. The India software industry is
export oriented. Software exports have grown
somewhat faster than the domestic market.
3.3.3 Hardware industry
Indian government’s ICT policies emphasized on both software development, which
would comprise a services sector, and a hardware sector, which would focus on
absorbing manufacturing labor.
Despite the fact that the market has grown considerably in recent years, the
number of PCs in country is still low. Hardware industry seems to not developed
in India, and hardware industry (computer) does not contribute much to the
development of software industry.
3.3.4 Rivalry, Firm’s strategy and Structure of the Indian software industry
The Indian software industry consists of a large and growing number of firms. A
fringe of young, small and medium sized companies dominates the industry.
Entry barriers in Indian software industry are relatively low. There are two
types of new entrants in the industry. The first type were existing firms
diversifying into software (computer hardware firms, firms with large in-house
data processing and system integration capabilities). The other type of entrants
was new start-ups. In some cases, there were some managers broke away from some
big firms and founded a new software firm (Arora et al, 1999).
The industry is not geographically concentrated in Bangalore, although Bangalore
is certainly a very prominent location for firms in the industry. Except for
Bangalore, some other regions such as Mumbai (Bombay), Chennai (Madras), New
Delhi, Hyderabad are also important locations of the industry.
Indian software firms largely provide services rather than products. A large
fraction of Indian software firms provide services for a large number of
industries, including manufacturing, banking and insurance, retail and
distribution, transports and communications, and so on.
3.3.5 Good timing
Good timing is considered important for the development of the Indian software
industry. This good timing began by the late 1980s, and created a peerless
chance for the Indian software industry. At that time, India was graduating
approximately 150,000 English-speaking engineers and science graduates, with
only a limited demand for their services from the rest of the economy. Around
this time, the information technology revolution in developed countries had
begun to take root and shortages of skilled programmers and ICT professionals
were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world,
especially in the US were very important for the Indian software industry,
because this was the chance for the large pool of talented professionals in
India to join working in very substantial number of foreign firms (mostly US
firms). From “body shopping” to the US, Indian professionals and individual
entrepreneurs could learn skills and experiences from foreign firms and apply
them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
In India, the software industry seems not tend to be driven by the domestic market, or domestic demand. Although India is a large market with crowded population and a large number of firms, India’s software sector displays many unusual features from an Indian perspective. The India software industry is export oriented. Software exports have grown somewhat faster than the domestic market.
3.3.3 Hardware industry
Indian government’s ICT policies emphasized on both software development, which
would comprise a services sector, and a hardware sector, which would focus on
absorbing manufacturing labor.
Despite the fact that the market has grown considerably in recent years, the
number of PCs in country is still low. Hardware industry seems to not developed
in India, and hardware industry (computer) does not contribute much to the
development of software industry.
3.3.4 Rivalry, Firm’s strategy and Structure of the Indian software industry
The Indian software industry consists of a large and growing number of firms. A
fringe of young, small and medium sized companies dominates the industry.
Entry barriers in Indian software industry are relatively low. There are two
types of new entrants in the industry. The first type were existing firms
diversifying into software (computer hardware firms, firms with large in-house
data processing and system integration capabilities). The other type of entrants
was new start-ups. In some cases, there were some managers broke away from some
big firms and founded a new software firm (Arora et al, 1999).
The industry is not geographically concentrated in Bangalore, although Bangalore
is certainly a very prominent location for firms in the industry. Except for
Bangalore, some other regions such as Mumbai (Bombay), Chennai (Madras), New
Delhi, Hyderabad are also important locations of the industry.
Indian software firms largely provide services rather than products. A large
fraction of Indian software firms provide services for a large number of
industries, including manufacturing, banking and insurance, retail and
distribution, transports and communications, and so on.
3.3.5 Good timing
Good timing is considered important for the development of the Indian software
industry. This good timing began by the late 1980s, and created a peerless
chance for the Indian software industry. At that time, India was graduating
approximately 150,000 English-speaking engineers and science graduates, with
only a limited demand for their services from the rest of the economy. Around
this time, the information technology revolution in developed countries had
begun to take root and shortages of skilled programmers and ICT professionals
were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world,
especially in the US were very important for the Indian software industry,
because this was the chance for the large pool of talented professionals in
India to join working in very substantial number of foreign firms (mostly US
firms). From “body shopping” to the US, Indian professionals and individual
entrepreneurs could learn skills and experiences from foreign firms and apply
them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Indian government’s ICT policies emphasized on both software development, which would comprise a services sector, and a hardware sector, which would focus on absorbing manufacturing labor.
Despite the fact that the market has grown considerably in recent years, the number of PCs in country is still low. Hardware industry seems to not developed in India, and hardware industry (computer) does not contribute much to the development of software industry.
3.3.4 Rivalry, Firm’s strategy and Structure of the Indian software industry
The Indian software industry consists of a large and growing number of firms. A
fringe of young, small and medium sized companies dominates the industry.
Entry barriers in Indian software industry are relatively low. There are two
types of new entrants in the industry. The first type were existing firms
diversifying into software (computer hardware firms, firms with large in-house
data processing and system integration capabilities). The other type of entrants
was new start-ups. In some cases, there were some managers broke away from some
big firms and founded a new software firm (Arora et al, 1999).
The industry is not geographically concentrated in Bangalore, although Bangalore
is certainly a very prominent location for firms in the industry. Except for
Bangalore, some other regions such as Mumbai (Bombay), Chennai (Madras), New
Delhi, Hyderabad are also important locations of the industry.
Indian software firms largely provide services rather than products. A large
fraction of Indian software firms provide services for a large number of
industries, including manufacturing, banking and insurance, retail and
distribution, transports and communications, and so on.
3.3.5 Good timing
Good timing is considered important for the development of the Indian software
industry. This good timing began by the late 1980s, and created a peerless
chance for the Indian software industry. At that time, India was graduating
approximately 150,000 English-speaking engineers and science graduates, with
only a limited demand for their services from the rest of the economy. Around
this time, the information technology revolution in developed countries had
begun to take root and shortages of skilled programmers and ICT professionals
were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world,
especially in the US were very important for the Indian software industry,
because this was the chance for the large pool of talented professionals in
India to join working in very substantial number of foreign firms (mostly US
firms). From “body shopping” to the US, Indian professionals and individual
entrepreneurs could learn skills and experiences from foreign firms and apply
them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
The Indian software industry consists of a large and growing number of firms. A fringe of young, small and medium sized companies dominates the industry.
Entry barriers in Indian software industry are relatively low. There are two types of new entrants in the industry. The first type were existing firms diversifying into software (computer hardware firms, firms with large in-house data processing and system integration capabilities). The other type of entrants was new start-ups. In some cases, there were some managers broke away from some big firms and founded a new software firm (Arora et al, 1999).
The industry is not geographically concentrated in Bangalore, although Bangalore is certainly a very prominent location for firms in the industry. Except for Bangalore, some other regions such as Mumbai (Bombay), Chennai (Madras), New Delhi, Hyderabad are also important locations of the industry.
Indian software firms largely provide services rather than products. A large fraction of Indian software firms provide services for a large number of industries, including manufacturing, banking and insurance, retail and distribution, transports and communications, and so on.
3.3.5 Good timing
Good timing is considered important for the development of the Indian software
industry. This good timing began by the late 1980s, and created a peerless
chance for the Indian software industry. At that time, India was graduating
approximately 150,000 English-speaking engineers and science graduates, with
only a limited demand for their services from the rest of the economy. Around
this time, the information technology revolution in developed countries had
begun to take root and shortages of skilled programmers and ICT professionals
were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world,
especially in the US were very important for the Indian software industry,
because this was the chance for the large pool of talented professionals in
India to join working in very substantial number of foreign firms (mostly US
firms). From “body shopping” to the US, Indian professionals and individual
entrepreneurs could learn skills and experiences from foreign firms and apply
them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Good timing is considered important for the development of the Indian software industry. This good timing began by the late 1980s, and created a peerless chance for the Indian software industry. At that time, India was graduating approximately 150,000 English-speaking engineers and science graduates, with only a limited demand for their services from the rest of the economy. Around this time, the information technology revolution in developed countries had begun to take root and shortages of skilled programmers and ICT professionals were beginning to develop.
The shortages of skilled labor and ICT professionals in developed world, especially in the US were very important for the Indian software industry, because this was the chance for the large pool of talented professionals in India to join working in very substantial number of foreign firms (mostly US firms). From “body shopping” to the US, Indian professionals and individual entrepreneurs could learn skills and experiences from foreign firms and apply them to their later own domestic firms.
3.3.6 Policies of the Indian
government
The Indian government plays a noticeable role in the story of Indian software
industry. Indian government encouraged the growth of the industry by its wisdom
policies (e.g., infrastructure, educational policy, Software Technology Parks,
etc.), as well as by considerably simplifying the process for obtaining the
numerous clearances and permits that any firms in the organized sector in India
typically needs.
3.4 Summary
Chapter 4
Vietnamese software industry:
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
The Indian government plays a noticeable role in the story of Indian software industry. Indian government encouraged the growth of the industry by its wisdom policies (e.g., infrastructure, educational policy, Software Technology Parks, etc.), as well as by considerably simplifying the process for obtaining the numerous clearances and permits that any firms in the organized sector in India typically needs.
3.4 Summary
Chapter 4
Potential and real situation
4.1 Introduction
4.2. Vietnamese software industry: a snapshot
4.2.1 History
The history of Vietnamese fledgling software industry
originated spontaneously from the general trend of modern world in few last
decades- entering the society of knowledge, in which information is a valuable
asset.
The economic reform in 1987 had resulted in a relatively large demand for
information technologies in general and software products and services in
particular. The Vietnamese government, although has attempted to carry out
industrialization and modernization process in the nation, as well as to
understand the role of ICT in the process, seemed to be passive before the wave
of ICT development, especially before the development of software industry in
Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software
companies) are companies who started producing software in Vietnam. These
companies started their software development by designing some solutions for
domestic companies, such as solutions for banking, accounting, selling,
documental managing… The initial success of these companies attracted many other
informatics or electronics companies turn to, or diversify by, producing
software. A number of new companies are formed, and this followed by the
increase in demand for labor force working in this area. The government woke up
to the reality of the role of ICTs in the industrialization and modernization
process of the nation, started to promulgate and enforce many legal documents in
which ICTs in general and software industry in particular are put in central
position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
The economic reform in 1987 had resulted in a relatively large demand for information technologies in general and software products and services in particular. The Vietnamese government, although has attempted to carry out industrialization and modernization process in the nation, as well as to understand the role of ICT in the process, seemed to be passive before the wave of ICT development, especially before the development of software industry in Vietnam. Some Vietnamese companies such as FPT, VDC… (not primarily software companies) are companies who started producing software in Vietnam. These companies started their software development by designing some solutions for domestic companies, such as solutions for banking, accounting, selling, documental managing… The initial success of these companies attracted many other informatics or electronics companies turn to, or diversify by, producing software. A number of new companies are formed, and this followed by the increase in demand for labor force working in this area. The government woke up to the reality of the role of ICTs in the industrialization and modernization process of the nation, started to promulgate and enforce many legal documents in which ICTs in general and software industry in particular are put in central position.
4.2.2 The ambitious object of Vietnamese government for the software industry -
Why?
The Vietnamese government considers ICT industry in general and software
industry in particular is the best way that can help Vietnam takes a short cut
to succeed in the nation’s industrialization and modernization process, as well
as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative
requirements to develop software industry in Vietnam. The first argument touched
the development of ICT all over the world. The second argument based on the need
of information security for the nation. The third argument mentioned the problem
that proposed for every country in the world - sustainable development. The
fourth argument showed that the development of software industry in Vietnam will
develop and promote the intelligence potentials of Vietnamese people, firstly
the abundant pool of young, trained and hard-working labor force. The fifth
concerned the position of software sector as an important component in ICT
infrastructure, creating the basis for building a knowledge-based economy and an
information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
The Vietnamese government considers ICT industry in general and software industry in particular is the best way that can help Vietnam takes a short cut to succeed in the nation’s industrialization and modernization process, as well as to transform from a poor nation to an economic power in the near future.
The object of the Vietnamese government based on arguments of imperative requirements to develop software industry in Vietnam. The first argument touched the development of ICT all over the world. The second argument based on the need of information security for the nation. The third argument mentioned the problem that proposed for every country in the world - sustainable development. The fourth argument showed that the development of software industry in Vietnam will develop and promote the intelligence potentials of Vietnamese people, firstly the abundant pool of young, trained and hard-working labor force. The fifth concerned the position of software sector as an important component in ICT infrastructure, creating the basis for building a knowledge-based economy and an information society.
4.2.3 The Vietnamese software industry’s performance
The contribution of the software sector in ICT market in Vietnam is very small
(about 5% - see Figure 4). The low proportion of software in total ICT
expenditure due to many causes, of which there are two highlighted ones are: (i)
The serious unbalance between investment on IT and investment on software,
consequently the investment efficiency is low and (ii) The rampant of copyright
violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million,
1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest
rates in the nation. Contrast to India, software revenue skewed to domestic
market (about 70%). Vietnamese companies have occupied only about 35% of the
domestic market; the remainder belongs to imported software or foreign software
companies. Moreover, almost all Vietnamese companies have focused on programming
skill of producing software; other skills such as system analysis and marketing
are forgotten.
Most of Vietnamese software companies are small scale, with the total employees
of only 10-50 people (about 80%). Software activities in Vietnam are mostly
carried out in small groups, because most of Vietnamese companies are lack of
capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up
in simple managerial solutions for industries; development of small specific
applications for existing system; formulating Vietnamese alphabet in documental
compiling; network designing (LAN, WAN) for enterprises, universities, civil
service offices, governmental offices and so on; web page
design and other services related to small
networks and PC using (setup, installing, usage guide…). There is only a few
companies that carry out more complex projects such as conversing foreign
software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
The contribution of the software sector in ICT market in Vietnam is very small (about 5% - see Figure 4). The low proportion of software in total ICT expenditure due to many causes, of which there are two highlighted ones are: (i) The serious unbalance between investment on IT and investment on software, consequently the investment efficiency is low and (ii) The rampant of copyright violation.
Figure 4: ICT and software revenues and growth rates in Vietnam, US$ million, 1996-2001
Source: PC World Vietnam, 2002 and calculation of the author.
The Vietnamese software industry is one of the industries that growth at highest rates in the nation. Contrast to India, software revenue skewed to domestic market (about 70%). Vietnamese companies have occupied only about 35% of the domestic market; the remainder belongs to imported software or foreign software companies. Moreover, almost all Vietnamese companies have focused on programming skill of producing software; other skills such as system analysis and marketing are forgotten.
Most of Vietnamese software companies are small scale, with the total employees of only 10-50 people (about 80%). Software activities in Vietnam are mostly carried out in small groups, because most of Vietnamese companies are lack of capability, fund and experience to deploy large and complicated projects.
The software activities carried out by most companies in Vietnam are gathered up in simple managerial solutions for industries; development of small specific applications for existing system; formulating Vietnamese alphabet in documental compiling; network designing (LAN, WAN) for enterprises, universities, civil service offices, governmental offices and so on; web page design and other services related to small networks and PC using (setup, installing, usage guide…). There is only a few companies that carry out more complex projects such as conversing foreign software programs or producing software packages.
4.3. Vietnamese software industry: is it promising?
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
4.3.1 Factor conditions
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese
software industry has been increasing steadily every year.
Table 3: Number of software enterprises
and manpower in Vietnam, 1996-2001
1996
1997
1998
1999
2000
2001
Number of companies
95
115
140
170
229
304
Increased by %
17
18
17
26
25
Number of manpower
1900
2300
2800
3400
4580
6080
Increased by %
21
22
21
35
33
Source: PC World Vietnam, 8 -
2002.
Of human resource working in the software industry, the domination belongs to
graduations (bachelor/engineer degree) (more than 80%); post-graduates take
about 10% and the remainder of the workforce is technicians and other lower
levels (VCCI, 2001). But, of the total workforce, there is about 35%
responsible for software development in their companies. This is a very low
figure compared to the average level in the world (75%). The number of those who
do technical works is lower (34%). Managerial works are taken over by 13% of the
total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking
in experience, software knowledge, project management skills, system analysis,
business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational
and training system. Six large universities are invested in and supported for
IT departments. Moreover, there are more than 20 universities and colleges in
the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software
particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate
(PhD, MSc); Graduate (BSc including regular, second degree and in-service
training); College degree; Senior high school technician (vocational training
regularly and irregularly); and others (including software training centers,
intensive professional training at software companies). In terms of state
management, the system is divided into some categories: Official/regular
training (degrees are stipulated by government – from level A, B certificate to
PhD) and Unofficial/irregular training, in which the training centers will
offers certificates of international computer companies like Microsoft, Cisco,
Sun, Aptech, etc. But except for training centers held by foreign organizations
and companies, almost all domestic universities, institutions and centers are
backward in educational and training facilities and programs, and that’s one of
reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in
fact hindered greatly the software market development, the capacity to attract
various sources of investment as well as the domestic enterprises’
competitiveness.
The Internet infrastructure for IT in
general and for software industry in particular is not only poor but also
expensive compared to that in the region. Moreover, the price of Internet usage
in Vietnam is by far on of the highest in the region. The capacity of the
international gateway is low. This makes the Internet connection extremely slow,
unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
4.3.1.1. Human resources
The number of software companies and the manpower working in the Vietnamese software industry has been increasing steadily every year.
Table 3: Number of software enterprises and manpower in Vietnam, 1996-2001
|
|
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
|
Number of companies |
95 |
115 |
140 |
170 |
229 |
304 |
|
Increased by % |
|
17 |
18 |
17 |
26 |
25 |
|
Number of manpower |
1900 |
2300 |
2800 |
3400 |
4580 |
6080 |
|
Increased by % |
|
21 |
22 |
21 |
35 |
33 |
Source: PC World Vietnam, 8 - 2002.
Of human resource working in the software industry, the domination belongs to graduations (bachelor/engineer degree) (more than 80%); post-graduates take about 10% and the remainder of the workforce is technicians and other lower levels (VCCI, 2001). But, of the total workforce, there is about 35% responsible for software development in their companies. This is a very low figure compared to the average level in the world (75%). The number of those who do technical works is lower (34%). Managerial works are taken over by 13% of the total, while other works are done by the remainder labor force (VCCI, 2001).
Human resource in the industry is not only in serious shortage, but also lacking in experience, software knowledge, project management skills, system analysis, business management and English proficiency.
Almost of the software workforce in Vietnam is sourced from domestic educational and training system. Six large universities are invested in and supported for IT departments. Moreover, there are more than 20 universities and colleges in the country training IT engineers and bachelors.
At present, the training system of professional IT generally and software particularly in Vietnam is divided into 5 hierarchical levels: Post-graduate (PhD, MSc); Graduate (BSc including regular, second degree and in-service training); College degree; Senior high school technician (vocational training regularly and irregularly); and others (including software training centers, intensive professional training at software companies). In terms of state management, the system is divided into some categories: Official/regular training (degrees are stipulated by government – from level A, B certificate to PhD) and Unofficial/irregular training, in which the training centers will offers certificates of international computer companies like Microsoft, Cisco, Sun, Aptech, etc. But except for training centers held by foreign organizations and companies, almost all domestic universities, institutions and centers are backward in educational and training facilities and programs, and that’s one of reasons of low educated and trained quality.
4.3.1.2 Communication infrastructure
The late jointing time and the slow development of Internet infrastructñe in fact hindered greatly the software market development, the capacity to attract various sources of investment as well as the domestic enterprises’ competitiveness.
The Internet infrastructure for IT in general and for software industry in particular is not only poor but also expensive compared to that in the region. Moreover, the price of Internet usage in Vietnam is by far on of the highest in the region. The capacity of the international gateway is low. This makes the Internet connection extremely slow, unsecured and unstable, that unfavorable for software companies.
4.3.2 Demand conditions
Basing on the type of end-user of software, the Vietnamese software market’s
customer can be divided into four segments: government offices, state-owned
enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the
total software market (OIT, 2000). Most of the demands from government offices
are computerizing working offices and software for managerial process.
State-owned enterprises are also big customers of Vietnamese software companies
as they have high demand on new IT equipment installation, expansion and upgrade
of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of
Enterprise Law in 2000. However, even though private companies are well aware of
the need of IT and software, a large fraction of them in fact cannot afford it,
since majority of private companies are small and medium-sized with limited
investment capital. In addition, in the Vietnamese software market, there is the
fact that many private companies use pirated software, because pirated software
is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software
market. But in fact, software used in foreign owned companies is usually bought
by their international head offices as a standard package for the whole global
corporate network. It is then transferred to their joint ventures with domestic
partners as contributing assets. In this
case, software products are often bought from a certain supplier stipulated by
internal contracts. As a result, the buying demand of foreign companies on
software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Basing on the type of end-user of software, the Vietnamese software market’s customer can be divided into four segments: government offices, state-owned enterprises, private companies and foreign joint venture enterprises.
The largest segment belongs to government sector, which accounts for 70% of the total software market (OIT, 2000). Most of the demands from government offices are computerizing working offices and software for managerial process. State-owned enterprises are also big customers of Vietnamese software companies as they have high demand on new IT equipment installation, expansion and upgrade of existing IT system, especially in large corporations.
Private companies are mushroomed in Vietnam, especially after the launch of Enterprise Law in 2000. However, even though private companies are well aware of the need of IT and software, a large fraction of them in fact cannot afford it, since majority of private companies are small and medium-sized with limited investment capital. In addition, in the Vietnamese software market, there is the fact that many private companies use pirated software, because pirated software is cheap and easy to get.
Foreign enterprises belong to the fourth segment of the Vietnamese software market. But in fact, software used in foreign owned companies is usually bought by their international head offices as a standard package for the whole global corporate network. It is then transferred to their joint ventures with domestic partners as contributing assets. In this case, software products are often bought from a certain supplier stipulated by internal contracts. As a result, the buying demand of foreign companies on software produced by domestic companies seems small.
4.3.3 Hardware industry: still embryonic
Till the end of 2000, there are about 160 computer-supplying companies. Of
which, there are only four assembling companies, while the remainder selling
imported products. The amount of imported PCs has increased with a rapid speed
of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them
assembles about two or three thousand of PCs each year. Most of components are
imported. Despite the fact of low competition in the industry, these four
companies have been striving to do their businesses. Some leaders from these
companies admitted that they have been facing many difficulties, of which, the
two salient problems are their limited financial abilities and the lack of
supporting policies from the government. Most of these domestic assembled PCs
are bought by individuals, households and small private companies, while almost
large SOEs and government offices believed in such famous imported labels as
IBM, Compaq and Acer. Thus, the domestic computer market is dominated by
companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the
development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Till the end of 2000, there are about 160 computer-supplying companies. Of which, there are only four assembling companies, while the remainder selling imported products. The amount of imported PCs has increased with a rapid speed of 50% yearly.
The four Vietnamese assemblers are negligible in output capacity. Each of them assembles about two or three thousand of PCs each year. Most of components are imported. Despite the fact of low competition in the industry, these four companies have been striving to do their businesses. Some leaders from these companies admitted that they have been facing many difficulties, of which, the two salient problems are their limited financial abilities and the lack of supporting policies from the government. Most of these domestic assembled PCs are bought by individuals, households and small private companies, while almost large SOEs and government offices believed in such famous imported labels as IBM, Compaq and Acer. Thus, the domestic computer market is dominated by companies that are foreign firms’ sale representatives.
The embryonic computer hardware industry does not contribute muchto the development of software industry in Vietnam.
4.3.4 Rivalry, Firm’s strategy and Structure of the Vietnamese software industry
Software activities in Vietnam are concentrated mainly in major cities like
Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are
young (established 1995 and afterwards). Moreover, most of Vietnamese software
companies are private companies with small sized, limited capital and limited
software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on
industries and fields that software products serve, the software market is
divided into several segments. In some areas, the competition is high
(accounting, financing, banking, government administration,…). This rivalry
situation resulted from many reasons, on of which is the low demand conditions
for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most
of the companies joining the software market are informatics companies, whose
main activities are PCs and services supplying. Nevertheless, due to current
unfavorable conditions it is rather difficult for newcomers to join the fray.
Newcomers have to face with: building relationships with customers, recruiting
and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not
built strategies for their software development. Many of so-called software
companies actually survived and thrived by other businesses but not software
development. This fact leads to the situation that these software companies have
not paid much attention to, and thus invested a remarkable sum in their funds in
the software business. They often snatch offers from customers and develop
software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Software activities in Vietnam are concentrated mainly in major cities like Hanoi, Ho Chi Minh City and Danang. Most of Vietnamese software companies are young (established 1995 and afterwards). Moreover, most of Vietnamese software companies are private companies with small sized, limited capital and limited software development competencies and credibility.
The rivalry situation in the software market is considerable. Based on industries and fields that software products serve, the software market is divided into several segments. In some areas, the competition is high (accounting, financing, banking, government administration,…). This rivalry situation resulted from many reasons, on of which is the low demand conditions for the industry.
The entry barrier for software industry in Vietnam is generally not high. Most of the companies joining the software market are informatics companies, whose main activities are PCs and services supplying. Nevertheless, due to current unfavorable conditions it is rather difficult for newcomers to join the fray. Newcomers have to face with: building relationships with customers, recruiting and training employees, and so on.
Most of software companies involved in VCCI’s survey confessed to having not built strategies for their software development. Many of so-called software companies actually survived and thrived by other businesses but not software development. This fact leads to the situation that these software companies have not paid much attention to, and thus invested a remarkable sum in their funds in the software business. They often snatch offers from customers and develop software products as required.
4.3.5 Chance for the follower
Although the Vietnamese software industry is still fledgling, it is facing with
a good chance of development. This chance comes from the widespread of ICT
development, especially software industry in the world. Moreover, with the
industrialization and modernization process in Vietnam, the domestic demand for
software will increase dramatically. In this case, a key issue in Vietnam is to
accelerate development by effectively exploiting the opportunities offered by
the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Although the Vietnamese software industry is still fledgling, it is facing with a good chance of development. This chance comes from the widespread of ICT development, especially software industry in the world. Moreover, with the industrialization and modernization process in Vietnam, the domestic demand for software will increase dramatically. In this case, a key issue in Vietnam is to accelerate development by effectively exploiting the opportunities offered by the knowledge and information revolution.
4.3.6 Policies of Vietnamese government
The Vietnamese government has promulgated many documents in which IT industries
generally and software industry particularly has received preferential
treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector
means that it will support investments aimed at technical training and export
promotion strategies for the industry. The government proposed several measures:
Creating favourable conditions for education and training human workforce for
ICT and software industry, Providing software manufacturers with tax incentives,
Establishing venture capital funds, Setting up direct Internet
gateways at Hoa Lac Hi-Tech Park (Hanoi) and
Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and
ODA funds to support software development projects, Creating favorable
conditions for all entities and individuals, including foreign ones wishing to
engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its
commitment to developing and promoting growth in the IT industry, especially
software which it has already been
supporting. But, the government still has other issues that it needs to
overcome. These issues include (i) lack of cooperation among governmental
agencies in guiding and implementing the government's policies, and (ii) weak
enforcement of legal regulations (exemplified by the popularity of pirated
software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT
revolution in the world. Two industries are started and developed in developing
countries with low economic and infrastructure conditions. The two governments
have strong willingness to develop the industry.
- Factors of Diamond Model:
·
Most of firms in the two industries are small and medium, with the
domination of private companies.
·
The development of hardware industry (computer) does not
contribute much to the development of the software industry.
·
Finance for software companies is mainly from private sources.
·
Domestic demand is small sized…
4.4.2 Some differences
The success of
India
connotes many factors that not or not yet belongs to
Vietnam:
- The hoard of a large pool of talented workforce for software industry with
skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions
for the development of the industry: in education and training human resource,
in establishing software technology zones, in creating favorable conditions of
infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a
unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are
in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software
industries, which creates opportunities for Indian firms in human training,
firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
Policy implications and conclusions
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
The Vietnamese government has promulgated many documents in which IT industries generally and software industry particularly has received preferential treatments and favorable conditions to develop (Appendix 1).
The Vietnamese government's strong commitment to develop the software sector means that it will support investments aimed at technical training and export promotion strategies for the industry. The government proposed several measures: Creating favourable conditions for education and training human workforce for ICT and software industry, Providing software manufacturers with tax incentives, Establishing venture capital funds, Setting up direct Internet gateways at Hoa Lac Hi-Tech Park (Hanoi) and Quang Trung Software Park (Ho Chi Minh City), Mobilizing foreign investments and ODA funds to support software development projects, Creating favorable conditions for all entities and individuals, including foreign ones wishing to engage in the country's software development…
By issuing the above resolutions, the government has re-accompanied its commitment to developing and promoting growth in the IT industry, especially software which it has already been supporting. But, the government still has other issues that it needs to overcome. These issues include (i) lack of cooperation among governmental agencies in guiding and implementing the government's policies, and (ii) weak enforcement of legal regulations (exemplified by the popularity of pirated software in Vietnam - 97% in 2000 and 94% in 2001, BSA, 2001).
4.4 Vietnamese and Indian software industries - a comparison
4.4.1 Some similarities
- Generally: The development of the two industries is in the trend of ICT revolution in the world. Two industries are started and developed in developing countries with low economic and infrastructure conditions. The two governments have strong willingness to develop the industry.
- Factors of Diamond Model:
· Most of firms in the two industries are small and medium, with the domination of private companies.
· The development of hardware industry (computer) does not contribute much to the development of the software industry.
· Finance for software companies is mainly from private sources.
· Domestic demand is small sized…
4.4.2 Some differences
The success of India connotes many factors that not or not yet belongs to Vietnam:
- The hoard of a large pool of talented workforce for software industry with skills, qualifications and fluency of English.
- The active and wise role of the government in creating favourable conditions for the development of the industry: in education and training human resource, in establishing software technology zones, in creating favorable conditions of infrastructure, especially communication and Internet.
- The timing of the development of India software industry, which created a unique chance for Indian software, but cannot be seen in case of Vietnam.
- Despite the low infrastructure conditions, those for the software industry are in favoured to supply to firms.
- The close connection (link) between the Indian and the US’s software industries, which creates opportunities for Indian firms in human training, firms’ alliance, export opportunities and markets…
4.5 Summary
Chapter 5
5.1
Lessons from India and policy implications for Vietnamese software industry
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry.
Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication
and Internet. Communication facilities, Internet services and other related
equipments for the software industry should be in the best condition and with
favourable charges. These conditions can be
supplied in software parks, which should be soon established in big cities such
as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance
is developing human resources.
- Building a favorable legal environment for
developing software industry, especially creating favorable legal climate and
protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds,
risk venture funds, working places with attractive conditions, incentive taxes,
electric power…
- Developing software market by encouraging computerization and use of
Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
5.1.1 Government should step up its supports for the
software industry
The government should have active policies to support the software industry. Supports from the government should be aimed at following issues:
- Creating better and favorable infrastructure for the industry on communication and Internet. Communication facilities, Internet services and other related equipments for the software industry should be in the best condition and with favourable charges. These conditions can be supplied in software parks, which should be soon established in big cities such as Hanoi, Ho Chi Minh City, Danang.
- Developing resources for the software industry, in which, the most importance is developing human resources.
- Building a favorable legal environment for developing software industry, especially creating favorable legal climate and protecting intellectual property of software.
- Creating favorable conditions for software companies such as supporting funds, risk venture funds, working places with attractive conditions, incentive taxes, electric power…
- Developing software market by encouraging computerization and use of Vietnamese software in all socio-economic activities.
5.1.2 Companies should do business in professional and strategic way
Vietnamese software companies should take
full advantage of the domestic market (by supplying domestic software services)
and Export strategy could be done through outsourcing then later on start
exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to
customers’ demand, increasing firms’ reputation, promoting credibility and
technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Vietnamese software companies should take full advantage of the domestic market (by supplying domestic software services) and Export strategy could be done through outsourcing then later on start exporting completed software in sequence.
Vietnamese software firms should focus on concerning how to gain access to customers’ demand, increasing firms’ reputation, promoting credibility and technical competency.
5.2 Conclusions
Software industry plays very importance role in the industrialization and
modernization process of Vietnam. Over the last few year, the development of the
Vietnamese software industry has attained achievements and contributed to the
development of the economy. But, the industry in Vietnam is just born and still
fledgling, and there are many difficulties and chalenges that Vietnam have to
face with in the maturation of the industry. However, at the same time, there
are many opprtunities and advantages for dev
Software industry plays very importance role in the industrialization and modernization process of Vietnam. Over the last few year, the development of the Vietnamese software industry has attained achievements and contributed to the development of the economy. But, the industry in Vietnam is just born and still fledgling, and there are many difficulties and chalenges that Vietnam have to face with in the maturation of the industry. However, at the same time, there are many opprtunities and advantages for dev