A story of exponential growth in the developer community
My earliest memories of noodle soup were those horrible canned ones my mother would serve when she was too tired to cook. It scarred me for years until I had real noodle soup.
There are many places in the world to get a great bowl of noodle soup. I love Thai boat noodles, fish ball noodle soup of Hong Kong is sublime, and Japanese ramen is legendary. I can’t forget to mention Malaysian laksa, Sichuan dan dan noodles, or a good American chicken noodle soup. My favorite though will always be Vietnamese Pho.
That is not what took me to Ho Chi Minh City, the city formerly known as Saigon, a few weeks ago though. I was speaking on building collaborative innovation communities at the VNITO 2019 conference (see my Instagram pics here). Not only did I speak at the event, I also had an opportunity to explore the local developer culture and IT community.
Like my previous posts on Hong Kong and Singapore, I want to share what I learned about dev culture in Vietnam. One caveat though, I only visited Ho Chi Minh City and have not been to Hanoi or Danang which are also growing centers of tech & developer activity.
What did I discover? The phrases that comes to mind are enthusiastic talent, exponential growth, and burgeoning innovation.
A bit of history…
For the past two decades, Vietnam had a small but growing IT outsourcing industry. This was only possible after the government implemented economic reforms called Doi Moi Policy in 1986, opening the country to market-based activities. The result was over 6% GDP growth year over year and 10x increase in per capita GDP since the mid 80’s.
By some estimates, there are over 14,000 IT companies in Vietnam. Some of the biggest names are units of global tech giants like Cisco, Hitachi, Intel, Samsung, Toshiba, and IBM which has had a presence in Vietnam since 1994. Several long-standing, homegrown Vietnamese companies have in recent years also started to achieve appreciable scale.
FPT is the largest and oldest of the outsourcers, launched in 1988 as The Food Processing Technology Company. They are the oldest Vietnamese IT outsourcer and the largest (through their F-Soft division). TMA started with six people in the living room of its founders in 1997 and is now over 2500 employees. CMC Corporation is now over 3000 employees.
Each of these pioneers persevered through years of poor infrastructure to become trusted partners to their global client base. In 2017, A.T. Kearney placed Vietnam as #6 in their 2017 Global Services Location Index. Gartner recognized Vietnam as an Asia Tier 1 emerging-market location and top 5 location for outsourcing. Cost is one reason for the growing interest in Vietnam as an outsourcing destination, but it is not the full story.
Not just outsourcing…
It would be a mistake to assume that the Vietnam technology community is only about IT outsourcing. VNG Corporation launched in 2004 and now boasts over 100 million users across its multiple apps from games to digital content to the messaging platform Zalo.
When I first went to Vietnam in August to support a RailsGirls workshop, I visited the TINYpulse offices where the event was held. It looked every bit as startup as anything I saw in NYC or the Bay Area, which makes sense since the company is based in Seattle.
Many other companies are employing similar strategies of using Vietnam as the hub for product development. LogiGear, a leader in QA and test automation solutions, is a Silicon Valley firm that started to outsource to Vietnam in the mid-2000’s. Another firm in the QA testing market based in Atlanta, QASymphony, was built and supported by Ho Chi Minh City based KMS Technology.
Room for innovation…
In most traditional IT outsourcing hubs like India, China or Eastern Europe, the focus had been on “run the business” supporting legacy systems. This made sense in the 90’s and 00’s given the drive to optimize costs for these aging technologies.
This is changing now in the era of digital experiences, but many outsourcers are still saddled with expectations and resources tied up in legacy capabilities. Vietnam being relatively new to the market has less of its talent and resources tied up in legacy support.
At the VNITO Conference, I saw plenty of innovation emerging from Vietnam in areas like data science, machine learning, and AI. Much of the work is in applied AI, so building tangible products from AI rather than basic research, but the applications in computer vision, robotic process automation, and smart home applications are quite impressive.
A growing talent pool…
The population of Vietnam is over 96 million, making it the 15th largest country in the world. And it is a younger nation with a median age of 30.3 years old. It is a young population that is just coming into the digital era and quickly acquiring technical skills.
In their Human Capital Report, the World Economic Forum for Basic Academic Skills cited Vietnam as a top 10 country with the most engineering graduates. Many Vietnamese are also attending university overseas, helping to increase the level of English speaking skills. There are gaps in English proficiency compared to India or Philippines, but it’s narrowing.
How many people are coding though? Every year Vietnam graduates over 100,000 engineers, half of which are in ICT oriented degrees such as computer science. Based on Stack Overflow data, the growth in developers has doubled in five years from less than 300,000 to over 600,000. While not all are professional developers, it shows strong promise as a country with the second highest growth rate globally on Stack Overflow the past few years.
Geeks are the future…
There are challenges for Vietnam. They do not have the population of China, India or Indonesia which also have massive numbers of developers. The infrastructure is still evolving. But everyone I spoke with expressed the desire to achieve more. As Hung Nguyen, CEO of LogiGear, said recently:
“Young people in Vietnam are hungry. The market there is really hot and this generation now has enough money to buy a home and get an apartment. It’s quite a tremendous change in the country.”
Digital-based commerce brought $3.5 billion USD for Vietnam or 1.7% of GDP. This figure is expected to reach $42 billion USD by 2030 based on the adaptability of Vietnam as Will Nguyen, Chief Innovation Officer of KPMG Vietnam shared in his VNITO talk:
If the culture allows it…
Vietnam, as most countries in ASEAN, places high level of value in seniority and authority. The command and control hierarchy that emerges can stifle innovation and creativity.
Yet there are two characteristics inherent in work culture that are beneficial to developer culture. The first is the loyalty of Vietnamese employees. Compared to attrition rates of 20% or higher in other countries in the region, Vietnam typically sees rates ranging from 6–8% according to remoteresources.com. This fosters greater trust and unity in the teams.
The second characteristic is the innate ability of Vietnamese workers to collaborate. There is a collective spirit of teamwork, something gleaned in my conversations with developers. This enables faster problem solving and more innovative ideas because of the trust among teammates and an openness to sharing, more so than seen in other countries.
The future is now.
Most companies that entered Vietnam years ago did so because of the attractive labour costs which could be up to 90% cheaper than US based resources. The story of cheap outsourcing however is a thing of the past. The Vietnam of today is about startups, innovation, and the youth movement. The population is digitally savvy, more developers are entering the workforce, and products they are building are truly innovative.
Do you have any experience with the Vietnamese IT or developer community? Where do you see the hotbeds of tech innovation in the coming decade?
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