Vietnam’s IT Sector: 5 Industries to Watch
- Vietnam’s information technology sector is experiencing high growth, driven by low costs and high-quality labor.
- Vietnam has now become the eighth largest provider of IT services globally.
- The IT industry is supported by the government with tax and labor incentives, further propelling its growth.
As Vietnam moves from low-tech manufacturing to a service-oriented economy, the country’s information technology (IT) market is increasingly gaining traction, giving competition to IT firms in China and India. This has partly been encouraged by the growth of Vietnam as a regional market for domestic enterprises and global technology vendors.
As Vietnam adopts Industry 4.0 across all industries, investors should consider the benefits of locating their IT business to the country. To understand such strong growth, and what is contributing to it, we examine five sub-sectors that show potential and are currently trending in Vietnam’s IT sector.
Vietnam’s fintech industry is expected to reach US$7.8 billion in revenue by 2020. A rising middle class, growing internet usage, and a young population present a great combination for the fintech sector to thrive. An estimated 120 companies and brands cover a wide range of services, from digital payments to wealth management and blockchain.
Digital payments is the most popular segment, with mobile payment apps MoMo, Moca, and Zalo Pay leading the way. Peer-to-peer lending (P2P) is also becoming increasingly popular, with Tima, Growth Wealth, and Trust Circle among the most popular.
Blockchain and cryptocurrency is the third segment in this sector that is increasingly gaining traction. Several companies like TomoChain and Kyber Network deal in cryptocurrency, allowing consumers faster and cheaper transactions. In 2018, Vietnam held its first-ever international conference on blockchain and its potential for development in the country.
The artificial intelligence sector (AI) industry in Vietnam shows strong potential. While still developing, AI in the country has followed global trends in application to human resources, education, healthcare, agriculture, transport, and e-commerce.
A good example of how AI is being used domestically can be found in an one of the leading IT companies in Vietnam RIKKEISOFT , which has established its affliated company RIKKEI.AI to research and implement various projects applied AI. RIKKEI.AI has used AI in solving the problem of traffic jam, helping the disabled people, as well as contributing to E-government with Chatbot, Peeling tape.
In August, the government issued Resolution No.50-NQ-TW, encouraging FDI by increasing the number of businesses to 50 percent by 2025 in advanced technology and Industry 4.0 – this could help develop AI further.
Vietnam’s e-commerce market could be ranked third after Indonesia and Thailand by 2025, according to the E-Business Index 2019 report by the Vietnam E-Commerce Association.
Vietnam’s e-commerce activity is most active in Hanoi and Ho Chi Minh City. However, developement and logistics costs remain challenges for e-commerce companies in the country. That’s why most Vietnamese corporations choose the third party – IT Outsourcing Company which can help them build e-commerce sits without spending large amount of money and effort. Over the last four years, RIKKEISOFT has gained trust and reliability from big corporations in building E-commerce sites, AWS E-commerce integration.
Software outsourcing has gained traction over the last decade in Vietnam. According to a survey by US-based software vendor BetterCloud, 73 percent of organizations will use software outsourcing.Vietnam has emerged as a cheaper outsourcing destination compared to traditional markets, such as China and India. This helped the software industry reach revenues of US$8.8 billion in 2018, according to the Vietnam Software and IT Services Association.
The government is developing high-tech parks and is also offering several incentives to further the industry. For example, Da Nang has developed as a software outsourcing center, particularly for Japanese businesses. Recognizing the market’s demand, RIKKEISOFT has already expanded its branches to DaNang since 2016. The international enterprises are now easily accessing to RIKKEISOFT’s services in Hanoi, Hochiminh city, and Danang as well. In the near future, we are planning to expand our business to all the cities of Vietnam.
Vietnam’s education technology (Edtech) has received investments worth US$55 million in 2018. This investment is largely driven by Edtech centers’ ability to bridge the gap between traditional education environments and learning needs inspired by the private sector.
Most recently, Vietnamese startup Everest Education secured a US$4 million investment by a Hong Kong-based equity firm. Organizations like Everest Education provide tech-enabled personal learning through a network of centers and partner schools.
Vietnam’s kindergarten through grade 12 population is a large market with locals spending up to 40 percent of their disposable income on education. It’s no surprise that foreign investors from Japan, Singapore, South Korea, and Australia are showing interest.
Still, challenges exist, and Vietnam needs to develop large scale IT outsourcing to compete with global players. In addition, more attention will be needed to improve English speaking skills to cater to global firms.
Strong growth trajectory, supported by government
The government prioritizes investment in IT and incentivizes investment in this space. IT companies are eligible for a corporate income tax exemption for up to four years, followed by a 50 percent tax reduction for up to nine years. Subsequently, this is followed by a 10 percent CIT rate (compared to the traditional 20 percent for a period of 15 years). The government unveiled similar CIT incentives for computer programming activities as well, including a value-added tax of zero percent.
More From Blog
December 4, 2023
Data-Driven Customer Experience: Guide For The Best Strategy
In the age of data, customers’ needs have evolved – it’s all about personalization. Data-driven customer experience is the solution to tailor every interaction. But how can you do it? In this blog, we’ll show you the way. With data-driven customer experience, you can anticipate customer desires and deliver personalized interactions to drive more sales. […]
December 3, 2023
Top 7 Mobile App Data Analysis Tools for 2023. How to Choose the Right Tool?
Help organizations and individuals understand and leverage information from data to make informed decisions, improve performance, and drive progress in various fields. This is of significant importance in ensuring success and competitiveness in today’s business and societal environments. To choose which tool is right for your business? Following this article below. Why is mobile app […]
November 30, 2023
Data Analytics Best Practices – Top 15 Tried-And-True Methods
Data analytics, the process of examining and interpreting data to make more strategically guided decisions, plays a pivotal role in fields as diverse as business, healthcare, finance, and scientific research. It’s crucial to follow data analytics best practices that enhance the quality of analysis and drive better outcomes. What Is Data Analytics? How Important Is […]
November 27, 2023
Data-Driven Business Strategy: Using Analytics to Drive Growth
Organizations today have more data at their fingertips than ever before. But many struggle to actually make full use of it to inform business strategies and decisions. Adopting a data-driven approach is key to remaining competitive and unlocking growth in the modern market. For companies new to using analytics, the idea of becoming a data-driven […]
November 26, 2023
Data Acquisition: The key to success in the digital economy
Data acquisition is a cornerstone of success in the digital economy. It empowers organizations to make data-driven decisions, gain a competitive edge, enhance customer experiences, and drive innovation. To thrive in the digital era, businesses must prioritize data acquisition as a strategic asset and invest in the necessary tools, talent, and processes to harness the […]
November 23, 2023
9 Business Intelligence Tools Comparison: Which One is for You?
Many businesses and organizations today are looking to deploy business intelligence (BI) tools, often for the first time. Without a clear understanding of key criteria, it’s easy to end up with a solution that doesn’t fully meet your needs. This business intelligence tools comparison article provides a comprehensive guide to discovering, comparing, and selecting the […]