Software outsourcing firms ride out tough times

The software outsourcing sector is powering ahead again as many local firms reported better results last year than in 2008 and 2009 when the financial crisis struck the global economy.

Pham Tan Cong, general secretary of the Vietnam Software Association, said 2010 saw the outsourcing sector recovery gaining steam with its traditional markets like Japan and North America improving.

It was tough for Japan’s information technology industry in 2009, thus rattling the domestic software industry. Japan is a huge IT market with an annual turnover size of $130 billion, said Cong.

As the economic crisis bit, Japanese IT companies shut down their Vietnam branches, hurting the software outsourcing sector in Vietnam that is seen as the third largest outsourcing market for Japanese companies.

“Japan companies are coming back with many deals clinched with Vietnamese software businesses,” Cong said.

He said he expected the sector to earn around $1 billion from outsourcing deals, up from the $800 million achieved in 2009.

HCM City’s Quang Trung Software City (QTSC) that is home to over 100 software companies has registered good business results as well.

Chu Tien Dung, chair of Quang Trung Software City Development Company, told the Daily that companies based in this IT park in District 12 did better business last year. The number of poor-performing businesses, including those at risk of shutdown, fell about 60 percent last year compared with a year earlier.

In terms of revenue, the enterprises at QTSC attained average revenue growth of over 30 percent in comparison to 2009 due mainly to the many contracts from traditional markets such as Japan, North America and Europe.

Dung noted another factor that contributed to good revenue growth was that prices were stable and in some cases, higher than those at the height of the economic crisis.

Investment activity also started to revive at QTSC last year with 12 new software companies licensed into the park, three of them foreign. That was not a big number, Dung said, since the global software industry had yet to gain full recovery.

Back to domestic market

Given the tough times, local software companies are deepening their presence in the home market although foreign markets still make up 80 percent of their business operations.

TMA Solutions, Toan Cau and Global CyberSoft are cases in point.

TMA Solutions provides products and services for mobile phone networks and this business reorientation helped it achieve a year-on-year increase of 8 percent in revenue last year.

Toan Cau offers medical software for hospitals and healthcare centers. At least 93 health organisations are using Toan Cau’s products.

Global CyberSoft is spurring its presence in the local market by providing Enterprise Resource Planning (ERP) solutions for local enterprises and has won a huge contract with Bitexco to deploy ERP at the Bitexco Financial Tower.

Ngo Van Toan, vice president of Global CyberSoft, told the Daily his company’s business was good in terms of turnover, profit and clientele.

Outsourcing companies in the country may gain stronger growth this year given local and world economic prospects, he said – Saigon Times

Tags: Software outsourcing