The local software outsourcing industry has posted strong growth this year, contradictory to the slackened performance of local hardware makers and retailers, an industry source said.

“The software outsourcing industry’s sales might register growth of up to 20-30% year-on-year this year,” said Chu Tien Dung, chairman of the HCMC Computer Association.

Software outsourcing companies received many orders from partners in Japan, North America and Europe in the first six months of the year, he said, adding this year’s software outsourcing prices are more stable than in 2008 and 2009, he noted.

One of the reasons behind the software outsourcing market’s stability is that Japanese firms have shifted from China to Vietnamese companies. Besides, economic recovery of many markets like the U.S., France and Germany has also left positive impact on the local software outsourcing market.

FPT Software, the country’s biggest software outsourcing enterprise, informed it has secured regular contracts from Japanese partners since the beginning of the year.

Japan is still the biggest partner of the local software outsourcing industry and the country is inclined to shift outsourcing contracts from China to Vietnam, said Hoang Nam Tien, chairman of FPT Software. At present, Japan places 78% of its software orders at China, and the balance for Vietnam.

FPT software is looking to recruit over 500 more information technology engineers this year to realize big outsourcing contracts from Japan, Tien remarked. The company has set a target of achieving US$100 million in sales for 2013, higher than the US$80 million achieved in 2012.

Similarly, several other big software outsourcing firms like TMA Solutions, Global CyberSoft, LogiGear, KMS Technology and VietSoftware also recorded better business performance in January-June as compared to last year.

Despite its recovery, the local software outsourcing industry is still confronted with imminent problems, with difficulties in developing new markets identified as one of such challenges.

Vietnam’s software outsourcing industry still depends on the Japanese market which represents up to 70% of the industry’s total sales. It is hard for industry players to tap new markets such as the EU and the U.S. due to capital shortage for marketing and sales.

One more problem faced by market players is financial constraints. Without big fixed assets such as machinery or factories like entities in other sectors, software companies find it hard to gain access to loans for operational development.

Furthermore, numerous software outsourcing enterprises are short of highly-skilled people to ensure the quality as well as the deadlines of outsourcing contracts.

The software and digital content services industry posted total revenue of US$2.3 billion last year, with the software sector contributing over US$1.17 billion, the Ministry of Information and Communications reports.