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Outsourcing to Vietnam? Are You Kidding? |
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Outsourcing services are equally as expansive as outsourcing products, and the competitive
capabilities of Vietnamese companies are very impressive - even when measured on a global scale.
- Ed Carroll, former VP of Engineering for Egghead.com
July 19, 2005
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Emerging 30 Years Later |
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April 30th, 2005 marked the 30th anniversary of the end to the Vietnam War...Have things changed? Today, Vietnam has
one of the most enviable economic growth rates in the world. In the last 30 years Vietnam, a country the size of
Italy with a population the size of Germany has one of the most enviable economic growth rates in the world.
Interestingly, over 60% of the population is under the age of 30, which means that most
of the people living in Vietnam today are too young to remember the fighting.
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Mixing Old and New |
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Hanoi today is a bustling city of 3.5 million, where the mixture of old and new is in constant evolution. One of
the first sights to strike the first time traveler here is the amount of rubble piled in seeming random patterns
around stacks of new brick - the amount of new growth construction can only be described as astounding. New
streets, new office complexes and new homes are going up everywhere one looks in this key industrial and government
center. Vietnamese tend to invest in land because of an old wariness of banks, driving up land prices and fueling a
building boom.
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A Global Competitor |
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With the characteristic energy of youth, this young nation is pushing hard to build a future where Vietnam is a
global competitor-and America is a top trading partner. One area in particular is in providing outsourcing services
to American businesses looking for faster, better, cheaper ways to make their products from apparel manufacturing to
clerical support centers, from software development services to contract computer product manufacturing to
integrated circuit production. Outsourcing to an overseas company may not be appropriate for every situation, but
when it does, clearly the Vietnamese want to prove that they have the capability to be a worthy business partner.
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Opportunity Arrives |
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Partnering with industry, the Vietnamese government is making a big push to expand their economy out of deep
impoverishment at the end of the American/Vietnam war; encouraging significant investments in education,
transportation, housing, and technology. Over the last several years, significant reforms, including a wide-ranging
trade agreement with the US and the promise of World Trade Organization membership in 2006, have caught the
attention of those looking for capable off-shore partners and foreign investments, now exceeding $30 billion. The
partnership between government and industry provides important impetus to this thrust. Industrial growth has been
constant at 15% annually for many years, and similar examples of extraordinary growth can be found in
telecommunications and road systems. Wireless Internet cafes are popping up everywhere and everyone has a mobile
phone, not unexpected in a society of thirty-somethings.
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Competition on the Rise |
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The Vietnamese are determined to challenge their much larger, older, and better financed competitors (India and
China). Economic growth has averaged 7-8% annually for the past 8 years, earning good profits for an increasing
number of private and public Vietnamese firms. Considering the state that the country was in following the war,
Vietnam's emergent growth can only be considered spectacular.
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Modern Infrastructure |
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As with many emerging economies, Vietnam will leap-frog the telecommunications and computing infrastructure of 30
years ago-jumping directly into advanced fiber optic cabling and wireless capabilities. And, many of the globally
largest corporations have taken notice of the investment. More and more high-technology production is moving to
Vietnam. Several multi-national companies such as IBM, Hewlett-Packard, Intel, and Infosys have well established
contracts manufacturing computers, printers, and components. These companies are in Vietnam because of the quality
of the products produced here.
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Outsourcing For a New Beginning |
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Outsourcing services are equally as expansive as outsourcing products, and the competitive capabilities of
Vietnamese companies are very impressive - even when measured on a global scale. For example, FPT Software
Corporation, one of the largest technology companies in Vietnam with over 1,000 software engineers provides software
engineering services for mission critical software products and applications to clients world-wide. FPT has deep
technical capabilities and is one of only 120 companies in the world to achieve the highest levels of software
quality certification.
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A Capitalistic Attitude |
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One might ask how this is possible under a communist government. Well, although the government is led by the
Communist Party, the government has provided tax incentives, much like non-communist governments do, to encourage
development of technology based companies and workers. Perhaps the best thing fueling their growth is the
capitalistic attitude of the people. Examples of free enterprise abound, and are sanctioned and actively encouraged
by this government. Of course, to make money, takes money, and the Vietnamese government has shrewdly bolstered the
financial infrastructure.
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Language Fluency |
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Another key attribute fueling Vietnam’s growth, is its multiple language fluency. As is common in much of Asia,
many Vietnamese speak multiple languages fluently, and English is often a second (or third) language of choice;
making it mildly easy for a non-Vietnamese speaking American to make himself understood. And these are just a few
of the clear signs that Vietnamese society is becoming more educated, more technically capable, and more globally
competitive. If outsourcing technology products and services makes good business sense, than take a close look at
Vietnam. here.
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Vietnam Partnerships |
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When Agilis Solutions went about the process of selecting a development partner, we conducted a detailed analysis of
many companies, their processes and business models, in multiple locations around the world. We chose FPT Software
Corporation, based in Hanoi, Vietnam, to be our partner primarily because of their long-term commitment to
continuous process improvement and their reputable track record working with leading technology companies (HP, IBM,
Toshiba, etc.). "This partnership is in its fourth year now, and we could not be more pleased than we are with the
quality of the delivery we receive from FPT," says Eileen Boerger, General Manager and Vice President, Agilis
Solutions.
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About the author |
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Ed Carroll has been building software products for over 20 years, with particular expertise in automating economic
analyses, decision support, and supply chain management process. He is presently a sales executive with Agilis
Solutions, and has provided strategic technology leadership for a variety of companies. He is the former vice
president of engineering for Egghead.com, and has held senior technology leadership positions at Nike and Boeing.
Contact Ed Carroll
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