"The number 1 favorite partner of Japanese enterprises" The size of the Japanese IT outsourcing market is about 30 billion USD. With a growth rate of 9-10%/year, it is expected to reach about 50 billion USD by 2028, and about 60 billion USD by 2030. Currently, the revenue of Vietnamese IT enterprises in this market has only reached nearly 3 billion USD (approximately 10%), the growth rate in the previous period always reached 30%, but recently it has only reached about 10%/year. Raising the annual growth rate of Vietnamese IT enterprises in Japan back to the 20-30% mark is the goal of the Vietnam Software and IT Services Association (VINASA) and its member enterprises. This goal is feasible when Japanese partners have an increasingly high demand for cooperation and Vietnamese IT enterprises are quite well prepared for the "Japan-advancing" journey.

Mr. An Ngoc Thao, Deputy General Secretary of VINASA. Photo: Provided by the character

Mr. An Ngoc Thao, Deputy General Secretary of VINASA, summarized: “The IT development cooperation relationship between Vietnam and Japan began more than two decades ago, right after the formation of the Vietnamese software industry. In 2002, when VINASA was just established, Japanese partners came to discuss cooperation. By 2014, Vietnamese IT enterprises had become important partners of Japan, ranking second (after China) in terms of scale and being the number 1 favorite partner in the hearts of Japanese enterprises”. Going back in time, when not many Vietnamese enterprises knew about the potential and opportunities in the "land of cherry blossoms", VINASA went ahead to "explore the way", cooperating with Japanese state agencies, associations, enterprises, and universities to learn a variety of knowledge and experience, from training programs to good policies to support IT enterprises, from working culture to specific operations of a Japanese enterprise such as sales, human resources, engineering, etc. This is a valuable source of capital to help Vietnamese IT enterprises confidently explore the Japanese market. Up to now, VINASA has established partnerships with about 30 Japanese organizations/associations related to IT (typically IPA - IT Promotion Agency, JISA - Japan IT Service Industry Association, and specialized associations on embedded software, computers, etc.), along with many major trade partners (JETRO - Japan External Trade Organization, AJC - ASEAN - Japan Center, etc.), and a number of local governments (Kanagawa, Yokohama, Osaka, Fukuoka, etc.). On August 6, VINASA will coordinate with JETRO and JISA to organize the 11th Vietnam IT Day program in Japan, under the auspices of the Ministry of Information and Communications, to convey the message: Vietnam is ready to be a comprehensive IT partner to support Japan in developing a sustainable digital economy; Vietnamese IT enterprises are committed to accompanying Japanese enterprises. "In recent years, the Japanese economy has faced many difficulties after the Covid-19 pandemic, the yen has fallen by 30%, while the profits of Vietnamese enterprises implementing IT projects for Japanese partners only fluctuated 20-30% of total revenue, meaning there is a risk of no profit. However, most Vietnamese IT enterprises have never thought of giving up the market and Japanese partners, but have always accompanied, shared, and found solutions to overcome difficulties together," Mr. Thao emphasized. "Vietnamese IT enterprises will not only stop at simple tasks but will work with Japanese partners to improve competitiveness, contribute to socio-economic development, thereby further promoting the advantage of being "the first choice of Japanese enterprises". Through Vietnam IT Day 2024, VINASA and Vietnamese enterprises hope that Japanese partners will continue to "stand side by side" to raise the Vietnam - Japan IT cooperation relationship to a new level, worthy of the comprehensive strategic cooperation relationship between the two countries," Deputy General Secretary VINASA shares more.

Vietnamese IT enterprises are ready to accompany Japanese partners to find solutions to overcome difficulties. Photo: VINASA

Two great cooperation opportunities Previously, the IT cooperation relationship between Japanese and Vietnamese enterprises was purely project delivery or human resource dispatch (Vietnamese enterprises prepared human resources, transferred them to Japanese enterprises for use and management, and returned the people after the project ended). Now, most Vietnamese IT enterprises have increased in scale, upgraded their management skills, and their human resources are always ranked at the top of international rankings, plus the ability to anticipate new technology trends such as AI (artificial intelligence), big data (big data) ..., and can also undertake IT system conversion consulting for Japanese enterprises. Some Vietnamese IT enterprises have products specifically for the Japanese market. “In the past, it was impossible to find a Vietnamese IT enterprise with a scale of 300 or 500 employees, but now we have enterprises with tens of thousands of employees, about 15 IT enterprises with a scale of more than 1,000 employees, about 30 enterprises with a scale of 500-1,000 employees, about 100 enterprises with a scale of 200-500 employees, and hundreds of enterprises with a scale of about 100 employees. Vietnamese IT enterprises that are partners with Japan are all approaching the level of 100 employees. The scale of Vietnamese IT enterprises is large enough to meet the basic digital transformation needs of Japanese enterprises. In terms of qualifications, Vietnamese IT enterprises in the past mainly only had human resources as developers (software developers), testers (testing staff) ..., now there are also system architects, who can sit with Japanese enterprises to research and develop to modernize the entire old system and develop new models", Mr. Thao excitedly informed. Vietnamese IT enterprises are converging many favorable conditions to be ready to "speed up" in the "land of the rising sun". It is estimated that each year, Vietnam has about 84,000 IT engineers graduating from 168 universities and 520 colleges and vocational schools (according to data from the Ministry of Information and Communications). The training programs of many universities have approached the actual needs of Japanese enterprises very closely. Along with that, Japanese is no longer a big problem, many IT engineers communicate well in Japanese.

Many business opportunities await Vietnamese IT enterprises in Japan. Photo: VINASA

“Two big business development opportunities in the Japanese market are waiting for Vietnamese IT enterprises,” said the Deputy General Secretary of VINASA. The first opportunity is to modernize Japan’s long-standing systems. In the 70s and 80s of the last century, some major Japanese industries such as manufacturing, finance, retail, etc. were one step ahead of the world. However, because of their large scale, their system modernization process was slower than many other countries, not meeting development requirements and not creating competitive advantages. For example, Japan’s banking system is worth trillions of USD, and even a small change will affect many agencies, businesses, and many people, so managers will have to consider very carefully and for a long time before deciding to change. Or in the manufacturing industry, Japanese enterprises have completed the digitalization step, automating the production process, but the next step of the digital transformation process is to optimize the entire system, apply new technology (such as big data, AI ...) to launch new production models, new products, thereby improving adaptability and competitiveness, but they have not been able to do it. Vietnamese enterprises can join together, research new technology solutions for this potential market. The second opportunity is to combine digital transformation with green transformation, towards sustainable development (ESG). The Japanese government aims to achieve Net Zero (net emissions of zero) by 2050, and commits to significantly reducing it by 2035. Japanese enterprises, especially manufacturing enterprises, are having a headache solving many "problems" related to green and sustainable development standards such as: Modernizing production systems to protect the environment; Applying technology to optimize the internal management system of enterprises (regarding people, machinery, equipment, energy, etc.) in the direction of ESG standards being applied. This is not a small market for Vietnamese IT enterprises. "Barriers" that need to be overcome The Deputy General Secretary of VINASA noted a number of major issues that Vietnamese enterprises need to focus on solving if they want to successfully conquer the Japanese market. First of all, in terms of infrastructure. 80% of the revenue of the Japanese IT outsourcing market belongs to Chinese enterprises. In addition to the story of high level, Chinese enterprises also have a hard infrastructure system (offices, equipment, ecosystem of providing enterprises) and a very large technology infrastructure. Meanwhile, Vietnamese IT enterprises have not prepared enough infrastructure to receive large projects from Japanese enterprises. Rarely do Vietnamese IT enterprises have their own buildings with their own infrastructure systems and production centers with thousands of people. “Most Vietnamese IT outsourcing enterprises have not been able to participate in large enough “problems”. For example: Japanese games often aim to serve millions of people, while the scale of Vietnamese game projects is much smaller; Production solutions of Vietnamese IT enterprises have not been deployed at the scale of hundreds of factories worldwide, with hundreds of thousands of workers. Hopefully, in the near future, large enterprises can cooperate with small enterprises in Vietnam to solve larger “problems”, confidently accepting larger projects from international partners”, Mr. Thao commented. On the other hand, the human resources of Vietnamese IT enterprises are very good at technology but lack in-depth knowledge of specific fields, such as finance, insurance, etc. To overcome this limitation, VINASA is encouraging Vietnamese IT enterprises to cooperate with Japanese enterprises so that Japanese experts in various industries/fields can sit in R&D with Vietnamese technology experts. At the same time, Vietnamese outsourcing enterprises are encouraged to cooperate with Vietnamese enterprises that already have products and solutions in the fields of fintech (financial technology), agritech (agricultural technology), e-commerce (e-commerce) ... on the journey of "Go Global" (towards the global market). In reality, the relationship between Vietnamese IT enterprises is quite loose, and has not yet formed a large-scale business alliance to welcome large projects, then divide the work so that all parties benefit: Large enterprises act as general contractors, do infrastructure, provide tools and databases ...; Medium enterprises do system design; Smaller enterprises undertake software development, testing ... "The key issue now is the mindset of business leaders ready to "play big". There are still many outsourcing business leaders who are satisfied with the steady flow of orders and stable cash flow, without thinking about growing stronger and aiming for a higher goal, which is the responsibility to serve the country and contribute to affirming Vietnam's position on the international stage," said Deputy Secretary General An Ngoc Thao. Acting as a "bridge" between Vietnam and Japan, in addition to a series of exchange programs or small-scale events, VINASA organizes 3 major programs every year that can help Vietnamese IT businesses expand their path to Japan.

Photo: VINASA

Japan ICT Day in Vietnam - bringing Japanese enterprises to Vietnam. In addition to traditional activities such as exhibitions, conferences, business connections, etc., VINASA aims to design "Company tours" - visiting enterprises with capacity and solutions in each narrow field, helping Japanese enterprises connect deeply with Vietnamese enterprises according to the appropriate scale and field requirements. Japan ICT Week in Japan - bringing Vietnamese enterprises to participate in Japanese events. Every year, about 30 - 40 Vietnamese enterprises are present at the Vietnam Pavillon exhibition area within the framework of this event. This is a "red address" to help Japanese enterprises find outsourcing partners; a good channel for Vietnamese IT enterprises to have regular orders every year. Vietnam IT Day in Japan - coordinating with enterprises/organizations of Vietnam and Japan to organize a large-scale event in Japan, telling stories about the capacity and solutions of Vietnamese IT enterprises ready to meet the needs of digital transformation in Japan.