August 16, 2001	atimes.com

Southeast Asia Vietnam stakes its high-tech claim HANOI - Last week's American information technology (IT) mission to Ho Chi Minh City is a sure sign that the world is waking up to the potential of Vietnam as an offshore high-tech center. While China, India and Singapore are the most popular destinations for high-tech firms in the region, Vietnam may be on the verge of becoming a viable alternative. A number of major US technology firms, such as Borland and Fonix Corp, were among the delegates looking for investment opportunities in anticipation of a bilateral trade agreement between the countries to be ratified by Congress later this year. The authorities are keen to roll out the red carpet: Ho Chi Minh City's municipal government has set a five-year investment plan for the software industry; a software park opened on the city's outskirts in March; the Japanese and Indians are helping set up IT training centers; and the central government has its own IT development strategy. But growth depends crucially on attracting the foreign players and harnessing domestic capital and talent. About 30 software development companies are already operating in Vietnam. Most are foreign-owned, with the top three of four employing more than 100 programmers. The likes of Nortel, IBM, Bayer, Sony, Cisco and Anheuser Bush are already outsourcing, either directly or through channel partners with an onshore presence in the United States and Europe. Hong Kong-based web applications firm Diffinc Innovations decided on Vietnam after experiencing quality problems in India. "We are happily dealing with Vietnam," says chief information officer Paul Gresham. "While it is true there is a lack of spoken English at the lowest levels, the understanding of technical English specifications is far greater than in China or India." He cites managerial support, teamwork and technical skills as the most important factors. "We were very impressed by the industry's team spirit and skilled management, which sets Vietnam apart from other development centers," he says. Diffinc Innovations actually plans to close in-house development centers in China and Singapore and replace them with operations in Vietnam. US developer Cogita Solutions is thinking along similar lines. After trawling Southeast Asia in search of channel partners, the firm finally cut a deal with FPT, Vietnam's largest (and state-owned) IT company with around 400 programmers. The deal paves the way for the development of enterprise-level projects. "The Vietnamese have a gift for studying mathematics and science. This is the perfect foundation for training a generation of highly-skilled software developers," says chief operating officer Brad Reynolds. "Much of the work we do here is high-end, object-oriented stuff - in contrast to the grunt work that made India famous." Reynolds adds that timing is the critical element in terms of accessing an emerging market such as Vietnam. "If a company our size goes to India no one is going to get excited - we're not Sun or IBM. In Vietnam, service levels are much higher for smaller projects because the market is still emerging." And the rewards are high. Industry observers claim developing software in Vietnam is 90 percent cheaper than in the US and between one-third and one-seventh of the cost of India. A top-notch Vietnamese programmer may earn US$600 a month, a small fortune locally but a fraction of what is paid in India. Moreover, leading IT firms in Vietnam retain key staff and keep project teams together for months at a time. This ensures continuity and familiarity between client and contractor. Alex Pierson, business network vice president at telecom giant Nortel Networks, warns that a long-term approach is needed for investment. "Vietnam is no place to come for a one-off project. As an emerging market, the country should only be approached on a medium to long-term strategic basis," he says. He says interested developers should seek out a partner in emerging markets such as Vietnam. In 1997, Nortel started working with TMA solutions, the largest privately-owned software developer in Vietnam, with over 100 highly-trained programmers. (Asia Pulse)

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