A number of Japanese IT firms are eyeing Vietnam as a potential outsourcing hub.

The Asian island currently shifts 17 percent of its outsourcing projects to Vietnam, generating approximately 10-15 billion yen ($101-152 million) per year. Indeed, Japanese companies consider Vietnam their third-best option after China and India for software development.

Hoang Le Minh, a high-ranking government official, confirmed that Vietnam planned to increase its outsourcing capabilities. Minh also noted that the industry was worth a lucrative $3.58 billion in 2007.

As IT Examiner previously reported, the Japanese IT services market was ranked the second largest in the world at $108 billion -- with India's share in the market limited to $1-1.5 billion. In addition, Japan transfers at least half of its IT services to China, leaving India with only 13 percent of outsourced projects.

A recent report by NASSCOM-Price Waterhouse Coopers attributed Japan's preference for Chinese outsourcing to the fulfillment of linguistic requirements. The report also considered "cultural homogeneity" to be a critical factor in the decision making process. 

Nevertheless, NASSCOM president Som Mittal believes that the Japanese outsourcing market offers lucrative opportunities for Indian software companies. Mittal recently recommended that Tokyo and New Delhi formulate a concerted strategy to increase Indian involvement in Japanese outsourcing. According to Mittal, Japan is suffering from a shortage of technical skills and an urgent need for transformation. X

Check Out
Thanhnien News
IT Examiner