Vietnam: rising star of offshore IT
From the beginning of the 1990s Vietnam followed a policy of openness towards the West and began to relax its economic system. After the American economic embargo was lifted in 1994, diplomatic relations were re-established between Vietnam and the United States. In 1998 Hanoi welcomed the ASEAN (Association of Southeast Asian Nations) summit and in doing so took up a new position among the international community. By providing ideal conditions, Vietnam has become a preferred destination for offshoring, in particular for IT companies.
Information technology in Vietnam
During this same period, the country has also opened itself up to new technologies thanks to significant investment from foreign governments and multinationals. In June 2000, the Prime Minister signed a decree to build and develop the technology industry in Vietnam, a decree supported by government financial incentives. For example, software products are not subject to VAT or export taxes. A figure that speaks volumes is that in 2010 the software industry brought 1 billion dollars into Vietnam!
The success of Quang Trung Software City
Quang Trung Software City was established in March 2001. It is located in District 12, Ho Chi Minh City – the major city in South Vietnam. It has become the largest area of dedicated information technology activity in the country. At first there were 21 companies and 250 employees working there; today 22,000 people work there. It houses state, private and foreign companies. Out of the 101 companies based there, 47 of these are foreign. This success has led to Quang Trung software city being appointed President of the Asia-Oceania Software Park Alliance for 2011.
An HP centre at Quang Trung
In March 2011, Quang Trung Software City won a 10-million-dollar-project from computer manufacturer Hewlett-Packard. The American company already has large offshore operations centres in China and India and HP chose Vietnam for its new R&D centre because of its competitive salary costs. The GDC activity at Quang Trung has begun with 50 developers and HP hopes to employ 1000 Vietnamese engineers in the next few years. A company representative said they have already met local candidates who meet the high requirements in terms of technological competencies.
The HP example confirms Vietnam’s position as an offshore destination of choice for IT companies.