Software industry challenged by rising human resource costs

Rising costs for human resources have weakened Viet Nam’s chief competitive advantage in the software industry.

In the past, cheap labour was seen as the country’s chief competitive advantage in making international-standard software, but that advantage is declining.

The pool of employees for the software industry is still rather small, and language skills, particularly in English and Japanese, for writing software are limited.

Viet Nam, however, still maintains a balance between expenditures and human resource skills, compared to India and China.

“But this balance could collapse if the country doesn’t control inflation,” Nguyen Hung Cuong, software development director at Harvey Nash, told Dau tu (Vietnam Investment Review) newspaper.

“Vietnamese-made software for the Japanese market is only 1-2 per cent of what China sells to Japan,” Cuong added.

The small pool of skilled employees is another problem as no company is able to employ several hundred software programmers in a few months.

“This means that there is no chance for Vietnamese companies to process big software projects,” Cuong added.

Although Viet Nam is seen as a location that can produce international software, many projects remain on paper because of these limitations that the country faces.

Meanwhile, turnover from the software processing industry in Viet Nam was US$1 billion, while total turnover for the sector was $244 billion worldwide last year. It is expected yo reach $268 billion this year. — VNS

Tags: Vietnam software industry