November 24, 2019

Offshore Quality Assurance – Old concept, new understanding

Rikkeisoft’s mission is to become the number 1 IT Company of Vietnam and an influential player internationally. Chairman Ta Son Tung started Rikkeisoft with a steadfast belief in its big mission. Until now, RIKKEISOFT has been asserting that their belief is based on strong ground. 


The company enjoys the best growth in IT Outsourcing industry in Vietnam in several years. Almost every Japanese corporations know RIkkeisoft when they come to Vietnam. “We have the best brains to help our company overcome problems, and solve the hardest equations”, said by Mr. Ta Son Tung.


Outsourcing Part 1: Hidden waves in Japan’s Outsourcing market

Part 1: Reality of Japan’s software outsourcing market during the 2010s


I. The development of Outsourcing (Offshore)


15 years ago, when Fsoft entered the Japanese market in 2002, offshore companies’ tasks were among the simplest in the software development procedure such as design-based coding or Unit Test. Hard work pays off gradually, the more level they go up, the more difficult the task they can handle. Because of that, after 15 years, besides FPT and Rikkeisoft, several companies can now take on precise solution making based on problem analysis and customer demand. Customers also are no longer hesitate in giving Vietnam’s side more demanding orders.

While companies used to hire offshore because they are cheap, now they hire offshore because they don’t have the capability or lack of capable manpower. Moreover, it is because they had trusted offshore worker’s ability

Venture Capital companies such as LINE, Rakuten, Softbank, Gree…etc, have started employing more and more offshore workforce. Previously those companies only employ Japanese.

On the offshore side, their companies are able to handle more jobs and even give advice to customers. They can do great in many stages, even product design. They can work face-to-face with engineers on the other side instead of the interpreter. Communication, electrical and cyberinfrastructure also get better over time. The more one looks into the history of offshore development in Korea, China, and India, the more they understand that this development is natural and is a great opportunity for Vietnam. 


To Rikkeisoft, the current offshore situation has many new changes.  

1 year ago (4/2016), a director of a Vietnamese IT company, who has been living in Japan for 10 years and have high reputation among Vietnamese enterprises, shared his opinion with me: “One Month Man in Tokyo [thì cũng chỉ từ 50-55 Man thôi, không hơn được đâu cháu ạ], if you ask for more, they would rather hire Japanese firm and not our companies.” However, this year Rikkeisoft sign a contract with a Japanese firm within the aforementioned price range, while it is able to negotiate nearly double the price range to customers.  

Similarly, many offshore-using firms have a “rule” that the maximum range for an offshore contract should be 400,000 JPY and below. If being asked for more than 400,000 JPY, they would move to other markets such as China. Many Vietnamese companies believe that offshores cannot earn more than 400,000JPY/MM. In 2017, Rikkeisoft handled many projects where we are able to ask for more than that number, and even receive requests from customers for more worker if possible. 


How can Rikkeisoft do many things that are deemed impossible or unthinkable in the Japan-oriented IT outsourcing industry?

To explain, there are both subjective and objective reasons

The objective reason is: Japan’s economy is recovering with many new projects and new opportunities. Meanwhile, the subjective reason could be: Rikkeisoft is creating a new concept: Quality Offshore. It sounds very old, but it is also very new. In this article, Tùng will go into more detail and talk more about it.

Rikkeisoft’s goal is to create a “quality” company that helps to boost “Viet value”, and brings “Made in Vietnam” products to the global market with a corresponding price. The aim that Chairman Ta Son Tung is looking at is the IBM model, not Fsoft.  He strongly believes that other outsourcing companies can totally bid more than 4000$, and stop sticking with 2-3000$ forever. Let’s raise the value of those proposal websites, design websites or codes that we created. Let’s raise the value of the Vietnamese people.  


II. “To go global, you gotta believe in yourself!”


In 2011, I joined the Japan IT day event in Hanoi for the first time, and I heard many discussions from Vietnamese and Japanese companies. Several Company Directors concluded that $4000 was the highest bidding for offshoring.  Because China’s employee fee rises up too quickly and passes $4000/MM, Japan has been moving its business to Vietnam. After that, in some big events of VINASA, many “experts” had made that same statement.

But after 6 years, Vietnam’s business hasn’t seen any “signal”. If there is any, only FPTsoft may be able to receive it. In reality, many Japanese enterprises keep increasing offshore to China despite the high expense.


So, is 4000USD/MM really the upper bound limit for offshore?

4000USD/1MM became an invisible cage that many offshore companies imprisoned themselves in. In the same fashion, is 6000USD/1MM the upper limit for onsite in Japan?

In my opinion, if Vietnamese businesses really have the skills to provide similar services just like their Japanese counterparts, why can’t they ask for the equivalent price? How many companies in Vietnam can confidently tell their 1MM customers that their engineers want > $10,000?  Cost competition is never the ultimate solution. Let’s improve the Viet value by increasing your quality, capability, and confidence in your ability!


Source: Personal page written by Rikkeisoft's Chairman Ta Son Tung

Editor: Phuong Anh Le

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