Peggy Aycinena is a freelance journalist and Editor of EDA Confidential at www.aycinena.com. She can be reached at peggy at aycinena dot com.
Vietnam, the Franchise: Asia’s newest Tier 1 Outsourcing Destination
July 30th, 2015 by Peggy Aycinena
If you had told me in 1975 that 40 years later Silicon Valley would be hosting an informational meeting to advertise an upcoming tech conference in Vietnam, I would have said you were crazy.
Like millions of others in April 1975, I watched apocryphal images on the nightly news of thousands of refuges being airlifted off rooftops in Saigon and military helicopters being pushed off the decks of aircraft carriers to make room for the human detritus of the final throes of decades of war, the last 10 of which included overwhelming American involvement and a death toll far in excess of a million lives.
Even today, that war, its architects and aftermath, are proving themselves to be contentious, divisive topics in American homes and in our national arenas of political mud-slinging.
Yet this blog is not about all of that; it’s about the aforementioned tech conference. But to start without a brief mention of 1975 is to write about a small brochure lying on the tabletop while a massive elephant stands muddy and mute in the middle of the room. At least for people of my generation.
In Vietnam today, however, folks of my generation are no longer the norm. The population now stands at 93 million-plus, the median age is 30, the country is young and optimistic, and looking to its future as an admired destination for tourists and international business interests alike.
All of which will be more than obvious if you are in Ho Chi Minh City this fall, from October 14th through 17th, attending VNITO 2015, the Vietnam Information Technology Outsourcing Conference 2015.
There you will learn why companies as diverse as “Intel, Samsung, LG, Foxconn, Alcatel-Lucent, Avaya, Bosch, NTT, Cisco, Hitachi, Sharp, NEC, Google, Boeing, and Deutsche Bank have moved their high-tech operations and outsourcing to Vietnam.”
At VNITO 2015, you’ll hear that thought leaders as diverse as Gartner, IDG, KPMG, A.T. Kearney, Tholons, Tower Watson, and the World Economic Forum are seeing in Vietnam an emerging Tier 1 location for tech-outsourcing, awash in more newly-minted engineering grads than most of the rest of the world, and full of regional and national governmental entities enthusiastically promoting Vietnam, the Franchise, as a competitive alternative to the other great tech-outsourcing franchises of the last 20 years, namely China and India.
Not everybody had to wait until mid-October to learn all of this, however, because yesterday VNITO 2015 hosted an informational meeting in Palo Alto, so Silicon Valley could hear the pitch and spread the word.
To help with the messaging on Wednesday morning, several distinguished business leaders offered testimonials: Hung Nguyen, CEO at LogiGear, Jan Fraser, Test Director at Anki, and Le Nguyen, Chairman of TMA Solutions.
These folks have all had experience outsourcing projects to Vietnam, or owning/managing the companies that handle the outsourced projects. Their comments were quite compelling and made me realize:
* The government of Vietnam is busy constructing vast industrial parks in several of the country’s largest urban centers.
* It’s true, Vietnam is a communist country – although several speakers referred to it as socialist – but like China, it is finding a way to pursue commercial enterprise through a heady mix of strict governmental controls and forward-looking investments.
* Although there are serious ‘lost in translation’ issues for projects outsourced to India, these problems do not crop up in Vietnam. People in Vietnam have intense pride and sense-of-ownership of their projects and ergo, become more than just contractors. They become like virtual employees who care about their projects and offer substantive advice of great use to the client-company team.
* Although there are widely known problems protecting intellectual property in China, this is absolutely not an issue in Vietnam – a country where everyone understands that protecting corporate secrets is crucial to the viability of the Franchise: “There is no market for stolen IP in Vietnam.”
* In the old days, getting ahead was all about who you knew. Today, however, bright young engineers coming out of universities in Vietnam are achieving great things based on their own merit and accomplishments, not on who they know.
* Vietnam, the Franchise, is extremely cost effective, particularly in light of the growing costs of outsourcing to China and India.
* Most fascinating: As everywhere in the world today, people in Vietnam spend a lot of time in the work place. There are a lot of marriages between work colleagues as a result, a phenomenon downright prohibited in other countries, but encouraged in Vietnam. Some companies even give out special cash awards to employees who marry within the organization.
* Most important: Companies that have had off-shore operations in India and China have suffered the affects of time-zone issues, communication problems, and mis-matches between goals and rewarding behaviors. None of these things are problems in Vietnam.
Okay, so there it is: You need to attend VNITO 2015 in October where you’ll gain further insight into Vietnam’s business and investment environment. Over 200 companies will be exhibiting, along with 20+ universities, and 150+ multi-nationals, all involved in the outsource-to-Vietnam movement.
Tom Quan, himself a survivor of those dramatic days in April 1975, was on hand Wednesday morning at the Crowne Plaza in Palo Alto. He noted that it’s not just IT that’s being outsourced to Vietnam. Companies in EDA and IP are also participating in the trend, including organizations like Dolphin Integration, eSilicon, and Uniquify.
I’ve known and respected Tom for a long time. [You can read his story here.] If Tom says Vietnam is a place that EDA and IP vendors should be looking to for quality work, pride, and ownership of outcome, that’s gotta be the case. It’s just gotta to be.
Countries producing the most engineers today include China, India, Russia, U.S., Iran, Japan, Korea, Indonesia, Ukraine, Mexico, France, Vietnam.