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Should IT firms do software outsourcing or focus on high added-value products?

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Vietnamese IT firms should strive toward new technology trends such as Cloud, Mobility and Big Data rather than continue doing low-level software outsourcing, experts say.

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Lam Nguyen Hai Long, chair of VNITO Alliance, an organization of Vietnam software outsourcing enterprises, said it aims to promote the Vietnam ITO/BPO sector. 

The director of Quang Trung Software City (QTSC) said the 4.0 industrial revolution is bringing great opportunities to enhance service value and become a high-quality IT service center in the region.

Director of the IT Department Dao Dinh Kha said Vietnamese IT firms have great opportunities to develop thanks to high demand from the large markets such as the US and Japan. 

However, most of them focus on doing outsourcing of products in low- and mid-end market segments. It is necessary to rethink business strategies to strive toward growing technological trends in the world such as Cloud, Mobility and Big Data.

What should Vietnamese IT firms do  — continue software outsourcing for modest income, or conduct R&D and export finished products which can bring higher added value.

A businessman said Vietnam needs to ‘face the facts’, i.e in the current conditions, when it still doesn’t have capability to do R&D, it should focus on doing outsourcing and consider this the ‘launching pad’ for it to approach higher-level links in the global value chain.

“It is now the time to build up the workforce, learn technology and business knowledge, the prerequisites for Vietnam to prepare for more complicated jobs,” he commented.

“It is undeniable that doing outsourcing is the industry which brings low added value. However, we need to do what fits our capability,” he added.

According to Mai Hoai An, deputy chair of VNITO Alliance and CEO of IMT Solutions, Vietnam IT outsourcing firms now have great opportunities to develop.

The outsourcing demand is still very high, especially from the US and Japan. New technologies such as blockchain, cloud and AI are creating great opportunities for Vietnam firms, including startups.

As the labor cost in the traditional markets such as India and China is on the rise, multinational conglomerates tend to look for new partners in their China+1 and India+1 strategies.

It is a difficult job to create products with high added value. In general, more than 90 percent of technology startups will be dissolved after three years of operation.

An believes that if an IT firm is doing outsourcing well, it should focus on the job and become a master in its field. With low risks, IT outsourcing is suited to countries which still don’t have big investment resources.

 

 

Source: VietNamNet

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