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Nov 2016 - IDC Presentation - Doc # AP41930416

1H16 Country Report on IT Services — Vietnam

Author: Quyen Truong
On-line Presentation

This IDC Presentation provides a detailed analysis of the market and competitive landscape in IT services in Vietnam from January to June 2016 (1H16). It covers the market size movements and growth trends in each of the macromarkets (i.e., project-oriented, outsourcing, and support and training services) and key industries such as finance, manufacturing and resources, public sector, distribution and services, and infrastructure. The report also provides a market and vendor analysis of 3rd Platform technologies as the key market drivers. The competitive analysis section includes key strategies and activities of large global and local IT service providers (SPs) in the market.

The data and insights within this presentation are part of the "Asia/Pacific Semiannual Services Tracker" research, which covers 14 foundation markets across 14 Asia/Pacific countries.

In 1H16, Vietnam's gross domestic product (GDP) only rose 5.5% year over year (YoY), which was lower than the 6.3% growth recorded in the same period in 2015. The weak GDP growth rate was the result of the restructuring of the government's upper management team after the national elections in May 2016. Because of the national elections, many public sector projects in the central and local states were delayed to 2H16 and 2017. This has impacted the new ICT investment by government and state-owned companies in 1H16.

However, the enforcement by the Prime Minister's department of Decision No. 80/2014/QD-TTg, which requires state agencies to outsource some of their IT services to local ITSPs, has helped offset the negative impact of the weak GDP growth in 1H16. The government's continued efforts to improve the business environment by investing in egovernment infrastructure, such as online tax and custom business registration simplification, will continue to help drive the growth of the IT services market in 2016 and 2017.

Moreover, the total foreign direct investments (FDIs) from both new and existing projects in 1H16 has reached US$11.3 billion, an increase of 105.4% from the same period in 2015. The high FDI growth, especially from the manufacturing, construction, real estate, science, and retail industries, is showing strong signs of improvement in IT spending, which is also driving the IT services market. There is a growing demand for enterprise resource planning (ERP), customer relationship management (CRM), supply chain, distribution, and logistics ICT system in these industries, aimed at increasing operational efficiency and reducing capital costs.