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Vietnam: Rapidly emerging on the outsourcing map

December 2007 by Frédéric Donnette, Global Security Mag

Vietnam is one of the fastest growing economies in the South East Asia and has one of the most liberal foreign investment laws in the region. It represents one of the most stable and secure business environment across the globe.

Vietnam ranks among the new emerging IT-BPO destinations on the global map, a country which is drawing investment within the sector from organizations across the world. Indian companies too are looking at Vietnam as an outsourcing hub to set up their BPO and software development facilities. A larger and larger number of leading IT-BPO organizations are leveraging Vietnam’s low-cost skilled manpower and the country’s state-of-the-art infrastructure to access other markets in the South Eastern region.

Here’s looking at some of the other factors that have enabled Vietnam to position itself strongly within the worldwide IT-BPO market:

· Vietnam is one of the fastest growing economies in South East Asia and has some of the most liberal foreign investment laws in the region.

· Vietnam represents one of the most stable and secure business environments across the globe

· The country’s software industry has expanded rapidly, from just a few firms in 1998 to around 500 active companies in 2003 (this excludes thousands of software firms that are registered but not active).

· Vietnam’s robust infrastructure, which is constantly improving, is catalyzing the growth of its outsourcing industry

Market overview

The IT association of Vietnam attributed the strong development of the ICT industry in 2005-06 to the rapidly improving Internet and telecom infrastructure.
The Internet transmission capacity expanded twice during the period, to reach a total of 4,080 Mbps. The number of Internet subscribers jumped by 86 percent during 2005-06, while Internet users increased by 80 percent, to reach a combined total 12.9 million people.

At the same time, it cautioned that Vietnam had to work harder to improve its position on the global ICT map in the years ahead. It quoted a report by the World Economic Forum released in March,2006, which ranked Vietnam 75th among 115 countries, on the Networked Readiness Index (NRI). The country’s ranking was down by seven grades compared to the previous year. The NRI evaluates the preparedness of a country or a community to take part in and benefit from the development of the ICT industry.

Meanwhile, during 2005-06, software piracy dropped two percentage points, to 90 percent, with a total loss estimated at US$ 38 million, according to the Business Software Alliance (BSA) and IDC. BSA said the value of packaged software released in the local market during 2005-06 totaled US$ 42 million, of which only 10 percent as used with copyright (Source: SGT).

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