As businesses across the world seek to reduce technology costs by outsourcing, FPT Corp. Chairman Truong Gia Binh believes his company, and Vietnam, are perfectly placed to meet demand for computer scientists.
Mr. Binh says the company’s earnings from outsourcing have increased 31% annually over the past decade and the company sees room for further growth.
Overseas demand for Vietnam’s IT outsourcing remains robust due to rising costs in India and China. Vietnam’s IT workers are cheaper by two-thirds, Mr. Binh said, based on his company’s rates. Vietnam had a $2.4 billion market for software and content products in 2013, and a young population—70% of Vietnam is aged between 15 and 64, according to the Central Population and Housing Census in 2012.
In addition, Hanoi and Ho Chi Minh City are now ranked in the top 10 emerging-market cities with the most developed Internet infrastructure, so demand for IT and Internet products in the country is strong.
As the biggest IT company listed on the Hochiminh Stock Exchange, FPT, which has 17,420 employees, is determined to expand locally and overseas while forming new alliances with the world’s top tech companies. Mr. Binh spoke with The Wall Street Journal about the market’s potential, earnings and the homegrown Flappy Bird mobile game. Edited excerpts:
WSJ: What is the position of FPT in Vietnam as well as in other markets with more developed IT sectors?
Mr. Binh: FPT, a listed company not owned by the state [FPT is 6% state-owned], is the biggest IT company and the third-largest Internet Service Provider in Vietnam, behind state-owned Vietnam Post & Telecommunications and military-run Viettel Telecom.
As the leading IT company in Vietnam where the total revenue [of FPT] has grown 25% a year over the last decade, while earnings from IT outsourcing activities from overseas markets have soared more than 31% a year over the same period, FPT Corp. is seeing huge room for its growth, especially in the developed markets like Japan and the U.S.
For the first time, FPT Corp.’s software operations and exports hit $100 million last year, of which Japan accounted for 52%, the U.S. 27%, and Asia-Pacific countries 12%.
Vietnam has a 12% market share in [IT outsourcing] in Japan, behind China and above Indian companies, which have a 9% market share there. FPT saw a 32% rise in revenue in Japan last year, with 130 Japanese institutional clients.
The U.S. is currently our fastest-growing market, recording revenue growth of 62% in 2013. We first entered the U.S. in 2000 and now have five offices there. We have established relations with IBM, IBM -0.25% Microsoft, MSFT -0.38% SAP, SAP.XE -2.30% Oracle, ORCL -2.04% Cisco CSCO -0.84% and Apple AAPL -0.74% and have over 40 clients, most of them are in the list of Fortune 500.
Our clients in the global market include Deutsche Bank, DBK.XE -1.90% Boeing, BA -1.27% DirecTV, Monsanto, MON -1.46% Citigroup, C -1.19% Freescale, Hitachi, 6501.TO +0.84% Panasonic, 6752.TO +0.19% Toshiba, 6502.TO -0.72% Fujitsu. 6702.TO -0.17%
WSJ: What challenges is FPT facing and how can it overcome them?
Mr. Binh: Given that Vietnam has 30.6 million Internet users, including more than 84 million broadband subscribers, and 148 million mobile phone subscribers, demand for IT services is growing very fast in recent years.
Vietnam has gained its high reputation for IT development among the emerging markets thanks to its focus on education. The country has 277 universities and colleges with IT training faculties where there are 59,000 students, but we are still facing difficulties in training skilled IT workers, especially when it comes to training in English and other foreign languages such as Japanese and Chinese.
To help resolve this problem, FPT University has expanded its faculties and is now the country’s biggest IT university, with 16,000 students who will be graduating with competency in at least one foreign language. For many students, becoming an IT technician is a career aspiration because they foresee a stable path to success.
The race to be an attractive supplier of IT workers among emerging markets is expected to last for many years ahead, and to compete in this race requires broader connections among Vietnamese companies, so that together with FPT, we can improve quality of manpower in this sector.
WSJ: Last month, the Vietnamese mobile game Flappy Bird went viral across the world. Did this help raise Vietnam’s profile as a tech hub?
Mr. Binh: The popularity of Flappy Bird will certainly create incentives for Vietnamese youth to pursue an IT career as a means to decent success and wealth.
It also shows the world know that Vietnam has talented young individuals, who are capable of innovating and creating new things, rather than that Vietnam only has cheap labor. I hope that Vietnam will become a more attractive tech hub to the international community.