Vietnam’s software firms shift from outsourcing to R&D

June 3, 2019 | 02:38 pm GMT+7

Vietnam’s software firms are no longer satisfied with outsourcing for foreign partners. They have shifted to conduct research and develop products of their own.


In its Vietnam IT Landscape 2019 report released in April 2019, TopDev mentioned the growing trend of Vietnam’s technology firms shifting to develop products of their own, or becoming more involved in partners’ product development process.

Vietnamese experts also noted basic changes in the operation of software firms over the last three years. Instead of ‘coding and testing’ and implementing the work as set by foreign partners, Vietnamese companies now are joining forces with partners at the beginning of the R&D process. Foreign partners raise the problems, while Vietnam’s companies find the answers and solve questions.
According to VINASA, an organization of software firms and IT service providers, the number of projects that are only doing outsourcing has decreased considerably in recent years. Most software firms now both do outsourcing and join R&D with partners.

“The new approach has shown good results and it has been applied by many firms,” Giang said.Young dynamic software firms which were outsourcing partners for Japanese partners now have a new approach to clients. They take the initiative in learning about clients’ demands, and introduce clients to PoC-form apps which can solve clients’ problems. The clients then invest in the programs.
FPT Software, the leading Vietnamese outsourcing firm, has begun providing digital transformation solutions and consultancy services.
FPT Software CEO Pham Minh Tuan said it began discussing the ‘moving up the value chain’ strategy 10 years ago, under which FPT will take higher-level stages in the software value chain, such as consultancy, designing and solution analysis instead of only simple work such as coding, testing and maintenance.
Also according to Tuan, there are many different stages in the software value chain. If Vietnam’s companies focus on low-level stages, which can be done by many companies, or can be undertaken by robots in the future, the companies will not survive.
FPT Software has found that if 80 percent of its projects remain small projects, or projects with simple jobs, the company will encounter difficulties after three years.
TopDev has named seven pioneering companies which have made heavy investments to develop products rather than focus on outsourcing. They are TPS, Evolable Asia, FPT Software, Persol Vietnam, Sun, KMS Technology and Tinh Van.
Tinh Van Outsourcing CEO Nguyen Ich Vinh said the company is moving forward because the expected profit is higher, while Vietnamese engineers are quite capable of doing the work.