The Scarcity of IT Workers in Vietnam

Within 3 years, the amount of work in the information technology (IT) sector of Vietnam has increased on average of 47% per year, but the number of worker in this sector rose by only 8% per year.

In recent years, the flows of high quality Vietnamese personnel that go abroad are increasing. In the first 10 months of 2015, total number of Vietnamese personnel that go to work abroad has hit a record of 100,000 people. However, alongside that is the critical shortage of quality human resources of domestic IT sector.

Japan is a large recruiting market for Vietnam IT workers. The declining in the excitement of Japanese young people for natural science professions has appeared for a long time. The technology sector of Japan is lack of about half a million engineers. This is part of the reason for the increasing demand for foreign labor recruitment, including Vietnam engineers.

Within 3 years, the amount of work in the IT sector of Vietnam has increased on average of 47% per year. But the number of workers in this sector increased by only 8% per year. Specifically, till 2020, if the growth rate of IT manpower stayed at 8%, Vietnam will face with a shortage of 78,000 engineers each year.

In the early 2000s, Vietnam has begun upgrading IT labor supply through many technology schools like the University of Science and Technology, University of Science and models of joint ventures with foreign like APTECH (India) or Genetic (Singapore). Just until 2007, the employers and the business sector assessed that the market for IT resources supply has saturated.

Less than a decade later, the shortage is continued to occur. Within the next 4 years, Vietnam would lack more than 500,000 IT engineers, accounting for over 78% of the total workforce that this sector needs.

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Benefits of Setting up Business in Hanoi

Benefits of Setting up Business in Da Nang

Benefits of Setting up Business in Ho Chi Minh City

Assistance in Setting up Business in Vietnam

M&A Services in Vietnam

Recently, the largest information technology event of 2015 titled “Tech Insider Expo” was held in Ho Chi Minh City with the participation of 42 recruiting companies and 12,712 candidates. Worth mentioning, most companies said that the labor supply is never enough.

As many employers sharing at the event, the number of 32,000 IT graduate students each year is still not fully met the needs of businesses. Some large companies like CSC or Lazada said they want to recruit 100 candidates this year, but they can only recruited less than 50% of the target. Furthermore, FPT Software had to come to Philippines, Myanmar… to recruit manpower.

In a recent survey by an online recruitment website specializing in IT, which is www.ITviec.com, in 61 large companies, 90% of foreign companies operating in this field said the shortage of skilled candidates have made their growth rate slow down. In addition, the main weakness of Vietnamese employees working in the IT sector is their English skill is not good. Hence, even among 32,000 IT graduate students each year, not many of them can satisfy the requirements of technology companies, especially foreign companies.

Obviously, there are four important points that Vietnam IT sector must change to develop the labor market. Firstly, the foreign language skills must be improved. Given that most of the IT companies in the fields of outsourcing are usually work for foreign customers, therefore the ability to communicate in English or Japanese is extremely necessary. It is more urgent when Vietnam joins the AEC and TPP in the near future, which is expected to bring bigger markets.

The next reason is the lack of updates about new technology because it has not integrated into IT curriculum. For example, the concepts such as Big Data, Mobile Programming, breakthrough technology in entrepreneurship and Open Source were very popular in the world but have not been popular in Vietnam.Next is the soft skills shortage. This is always the weaknesses of Vietnam manpower in general, but especially it is more important for the IT industry. The high positions in this sector require more than just technical knowledge. For example, the project management position will require skills in communication, presentation, presenting idea, convincing partner, time and schedule management… Not many IT people in Vietnam can satisfy these skills.

Lastly, the training programs for IT staff must be improved. The figures from VietnamWorks – Vietnam’s large recruitment website show that 75% of jobseekers in the IT industry want a job that gives them the opportunity to be trained. But there is only 14% of IT job offers training opportunities. By meeting the training needs of staff, IT companies can create better quality human resources, along with connecting employees, making them more loyal to their company.

The shortage of senior personnel in the IT industry is hotter than ever when recently in Ho Chi Minh City, the multinational corporation with the soft drink brand that has highest revenue in the world, had to recruit again the Chief Technology Officer in charge of system programming, the position that 4 months ago had to resign due to a disagreement with the Executive Director.

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Vietnam Market Research

Market research is an important operation. If the market research is well done, it provides accurate information to help marketers make an appropriate strategy and then, bring high efficiency in business. In other words, if the result of market research is inaccurate information and does not correctly reflect the actual market situation, marketing activities will be inefficient.

Companies would fail if underestimating the importance of market research before entering a new market.

Therefore, market research activity is so important for whomever needing success. Namely, the market research is considered an active approach to enter into the market. The market research also helps you understand the latest development in the target market, thereby making marketing decisions quickly. The international business environment is quite volatile, that‘s why you need a proactive approach like that and it is really your competitive advantage.

Through the market research, you can form the idea of developing a new product and choose the correct strategy for that product in each specific market. Through research, you also do not have to waste money and effort for the false hope, especially when you export the products to oversea for the first time. On the other hand, it should be noted that although the market research does not make sure success in business, it will help you avoid many wrong decisions.

Market research service can:

• Help find the biggest market for your products, the fastest growing market, trends and prospects of market, conditions, business practices and opportunities for your product on the market.
• Allow to make efforts effectively in a field or a certain range. After that, you can set the priority for a specific target market and plan for the future market.
• Help understand the competitors, including strengths and weaknesses, mistakes and their causes of success.
• Help find ideas to develop new products.
• Helps strengthen business relationships with partners.

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Set-up Branch Office in Vietnam

The Branch of a foreign business entity in Vietnam (referred as “The Branch”).

Means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its license forestablishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

Set-up Branch Office in Vietnam

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

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Set-up Representative Office in Vietnam

A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam.

Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services), but the representative Office is permitted to

• To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;
• To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;
• To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;
• To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

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Vietnam is Increasingly Attracting Capital from the US

Vietnam is taking every opportunity to grow its economy and improve the living standard. This is not a vain dream since Vietnam has young and plentiful work force. That is why multinational companies wish to come and set up company in Vietnam.

• Japan Increases Investment in Vietnam in Finance and Services
• Why Japan Investors Invest in Vietnam

The year 2015 marked the 40 years since the war end and the 20 years of normalized the relationship between Vietnam and the US. Vietnam began the process of innovation since 1986 but not until 1995, foreign investment in Vietnam began to flow in when the Government established formal diplomatic relations with the United States and joined the National Association of the South East Asia (ASEAN).

In recent years, foreign investment in Vietnam has accelerated. The Korean company is particularly excited with this market. Samsung Electronics is operating and building three plants at three locations – Ho Chi Minh City, Thai Nguyen and Bac Ninh. In total, this giant electronic corporation has poured more than USD 10 billion in Vietnam.

Vietnam is also expected soon to welcome a “wave” of investment from the US. The Procter & Gamble (P&G) – a consumer goods manufacturer is building a factory in Binh Duong with the cost of 100 million USD. The plant will produce Gillette razors.

Since starting operations in Vietnam in 2008, Intel is also pouring money into this market. This semiconductor giant is planning to manufacture in Vietnam the most of advanced processor for personal computers in the future.

Moreover, other big names come from the US that are expanding operations in Vietnam are Starbucks and McDonald’s. They opened their first store here in December 2013 and February 2014.

There are a number of factors that make foreign investment in Vietnam explode. One of the most important reasons is the low labor cost. Labor cost hikes in China are the reason why many multinational manufacturers turned their attention to Vietnam where the cost is 50% cheaper. Besides, the purchasing power of Vietnam consumer is increasing, inflation has been curbed and many easing regulations to boost growth are also the reason why continuous investments are poured tin..

However, the biggest attraction for most foreign investors is the Trans-Pacific Partnership agreement (TPP) about free trade in which Vietnam is one of 12 countries that participate in negotiations. In mid of this year, General Secretary of Vietnam, Mr. Nguyen Phu Trong will visit the United States. TPP agreement will be the main topic of the conversation with the US officials. If the two countries can reach an agreement, the US will become even more important partner of Vietnam’s economy in the future.

In a press conference in HCM city in January 2015, US Ambassador in Vietnam – Mr. Ted Osius was upbeat about the impact of the TPP to Vietnam economy and the US investment here. TPP agreement “will allow the US to become the number one investor and trading partner of Vietnam” he said.

In about 4.5 million Vietnamese living overseas, about 2 million are living in the US. In particular, many people have made a name in the business world. They are Mr. Henry Nguyen – who brought McDonald’s to Vietnam and Mr. David Thai – founder of Highlands coffee chain.

According to the Ministry of Foreign Affairs of Vietnam, approximately 180,000 companies in the United States are owned by Vietnamese, achieved a total revenue of 20 billion USD. Strengthening ties between the two countries could stimulate greater cash flow stream across the Pacific.

The Ministry of Planning and Investment of Vietnam is estimated to spend 500 billion USD in over 10 years to develop the infrastructure necessary for sustainable growth. However, Vietnam can only able to meet 40% of the above figure, through the Government budget, ODA and private capitals.

That is why the Government wants to attract FDI. The Vietnam Government has set a target to create an industrial economy by 2020. Six priority areas are agriculture, forestry and fisheries processing, agricultural machinery, electronics, shipbuilding, environmental and energy saving, automobile production.

The transition from growth based on FDI into industrial-based growth can be rather difficult. However, Vietnam has shown it is serious and is still on track.

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