The Government must create a new agency responsible for training employees for the burgeoning software and IT services industry, Deputy Prime Minister Nguyen Thien Nhan has said.

The ministries of Education and Training as well as Information and Communications should take the lead in organising the effort, he said.

Nhan made his remarks at the 14th annual Viet Nam Computer Electronics World Expo meeting held on July 15 in HCM City.

The Government plans to earmark VND900 billion (US$50 million) for the training of IT staff, who are in high demand among local and foreign companies over the next five years, Nhan said.

Nhan asked the Ministry of Information and Communications to outline a plan to help the IT industry develop quickly and sustainably.

He also asked authorities to provide the Prime Minister with ideas and incentives to aid the IT sector to reach new heights over the next three years.

Nhan said the Government would help the software and IT services industry become a major sector of the country’s economy.

Nguyen Trong, former chief of the National IT steering committee, said no other industry in the next 15 to 20 years could bring as much benefit to Viet Nam as the local software and IT services sector.

He said it was realistic to place Viet Nam among the world’s leaders in the industry by 2025.

However, the country’s software and IT services industry is still relatively small, with total turnover of US$648 million, or 0.5 per cent of last year’s Gross Domestic Product (GDP).

"Most companies in the industry have limited capital of around VND2 billion ($110,000), with no more than 15 programmers," Trong said.

But the industry, which includes software and online games production as well as IT services, has great potential compared to other local sectors.

Trong said the proportion of added value in most local industries was only 25 per cent while software and IT services was 56 per cent.

In 2007, the average contribution to GDP for every 1,000 staff in all sectors was VND26 billion ($1.5 million), he said.

During the same year, labour capacity for every 1,000 employees in top revenue-earning industries such as mine exploration was equal to VND281 billion, while the gas, electricity and water supply labour capacity amounted to VND202 billion.

Software and IT services ranked third in 2007, with VND166 billion, but in 2008 the figure increased to VND240 billion.

"We can easily see that software and IT services can develop in a sustainable way more than the mine, gas, or electricity and water supply industries that exploit natural resources," Trong added.

Global top 30

With Viet Nam ranked among the 30 best countries for outsourcing, the potential for growth is huge.

HCM City is ranked among the top 31 cities in the world for the rate of development in software and IT services.

"The biggest obstacle to overcome is that we have to make around 1 million software programmers reach an international level," Trong said.

"This goal is not beyond our reach but requires great determination from the Party and Government, and civil society’s complete agreement and effort."

Chu Tien Dung, chairman of the HCM City Computers Association, noted that in 2008 the total revenue of the IT industry of $4 billion remained high, with a growth rate of 49 per cent.

"This year, however, the industry will suffer more because of the global crisis," he said.

Revenue from software and IT services increased by 50 per cent in 2007 and 47 per cent in 2008.

In 2008 the total number of staff was 30,000 and the average annual productivity value was $11,000 per employee per year.

The average return on investment in 2008 was about 25 per cent.

"This shows a tendency that software and IT services have become more and more promising, with an improvement in national reputation and brandname," he added.

However, the annual productivity value per person of $11,000 is equal to only 45 per cent of that in India and 65 per cent in China.

"We have to improve our skills and acquire contracts for more complicated jobs to be able to compete with strong IT companies in India and China," Dung said.

By maintaining a year-on-year growth of 40 per cent, the industry would reach $6.2 billion in revenue or 2.5 per cent of GDP by 2020, he predicted.

Software companies

Dung proposed that the Government invest in promising software companies and assume the mantle of leader in encouraging the development of national major products and technologies as well as human resources training.

"The current number of 30,000 programmers is far from our target of 1 million by 2025," he said.

The deputy director of the HCM City Information and Communications Department, Nguyen Anh Tuan, said the industry had become more competitive because of low labour costs and improvement in workforce quality, restructuring, and reorganisation of software companies. These assets, along with advanced internet and telecommunications infrastructure, would allow the country to narrow the gap between strong IT nations such as India and create a solid position in the outsourcing market.

"We have pledged to support the industry by increasing IT applications in Government offices, and accelerating investment and brandname promotion activities, as well as speeding up the development of software concentration zones," Tuan said.

Nguyen Lam Phuong, deputy director of FPT Information Systems, the country’s leading software company with 4,500 programmers, said that in a global crisis software companies should recruit high quality human resources at a reasonable cost to prepare for future development.

"By 2015, the FPT will focus on portable software and development that brings high value in return such as system design, research and development, structure and programme construction," he added.