Vietnam’s Tech Industry Grows Quickly, Boosts Exports

Vietnam’s IT and electronic hardware industries grew substantially between 2008 and 2012, according to the 2013 White Book on Information and Communication Technology (ICT) in Vietnam, an annual publication by the Ministry of Information and Communications. Official data states that these industries generated $25.5 billion in 2012, a five-fold increase from just five years before. Export-oriented hardware production accounts for the vast majority of revenues, but IT services such as software and digital content development also contribute substantially to the Vietnamese economy. 

VN tech total revenues
Of the three tech industry sectors included in the study, Vietnam’s hardware production sector showed the highest level of growth between 2008 and 2012. Fueled by strong global demand for hardware exports from leading manufacturers like Samsung and Nokia–both of which have large factories in Vietnam–it generated $23 billion in 2012, up from just $4.1 billion in 2008. This makes it one of the largest and fastest-growing export sectors in the country. 

VN hardware total revenue
Vietnam’s IT services industry, though much smaller than hardware production, also grew quickly between 2008 and 2012. Both the software and digital content now contribute over $1 billion to the Vietnamese economy each year. According to the Vietnam Software and IT Services Association (VINASA), they continued to grow in the first quarter of 2014. Despite perpetual challenges, such as finding and retaining qualified IT staff, BDG believes this sector holds substantial potential for continued growth. 

VN software content total revenue
The hardware production sector generates substantially more revenues than Vietnam’s IT services sectors, but it accounts for a minority of total tech firms in the country. This is because the hardware sector favors large companies that can achieve economies of scale in production. The software and digital content industries, on the other hand, contain countless market niches that can support a huge number of boutiques.

VN IT enterprises
Despite accounting for a minority of total tech firms in Vietnam, however, the hardware production sector employs a much larger portion of the country’s tech workers. Many of these workers are unskilled or semi-skilled factory laborers whose average incomes fall roughly in line with those of other manufacturing sectors. 

VN IT employee numbers
Following years of growth, BDG believes that Vietnam’s tech industry presents great potential for further expansion. It benefits from a growing domestic market and strong government support, among other advantages. 

BDG tracks many aspects of Vietnam’s tech sector. One particular area that excites us at the moment is the software outsourcing industry, which we will be covering in more detail in the coming weeks. If you are a member of this industry and want to exchange ideas or obtain coverage in upcoming articles, please contact us for more information.