This study, drafted by the ITO company Officience, describes and analyses recent evolutions in the Vietnam's development, then focuses on ITsector. Actually, this growing country has emerged two decades ago and since it has known a huge leap forward. Thanks to this growth, Vietnam received more and more investings from foreign companies. This study brings out some macroeconomic and social specificities, espacially regarding the education field. Dealing with IT issues, the Officience company underlines in this study levers used by Vietnam to promote and develop that IT sector. Indeed, this sector will go on growing and Vietnam is already perceived as a future leader of worldwide outsourcing services.

1. 1
Vietnam:
Economic development and IT

2. Outline
As a country, Vietnam is certainly on the up, largely
thanks to openness policies implemented by the
government. Vietnam’s beauty is supported by the fact
that it is continuing to reveal its potential and its assets
are going from strength to strength.
So it comes as no surprise that foreign investment is
plentiful, particularly in the IT sector. Although these
investments do represent a development
opportunity, Vietnam should not simply settle for these
financial injections.
Officience | 2013 | 2
Significant efforts should be made, especially in terms of infrastructure and
regulations, to achieve the ambitious objectives that the country has set its sights on.
Becoming a central destination for global IT outsourcing will remain a distant goal without
a comprehensive policy to encourage research into and development of sectors which
will enable a high value-added economy. Focussing on meeting these goals will also help
Vietnam to differentiate itself from its other Asian neighbours.

3. Outline
The government has already launched several
initiatives to support these goals which strengthens the
credibility of their ambitions and the implementation of the
strategy. This is reinforced by Vietnam’s export profile
which is largely made up of High Tech products.
However, the government should not be the only leader of
Vietnamese development and we should expect to see an
increase in power of the local private sector in addition to
domestic market growth.
In conclusion, although Vietnam has been experiencing sustained growth for more
than a decade, it seems that it is still far from having reached its full economic
potential.
Developing the BPO-ITO sector will go hand in hand with an increasingly
sophisticated economy, which is moving towards Offshore services, and intensifying
policies to promote innovation and new technology.
Officience | 2013 | 3

4. I. Population and
economy in Vietnam
II. The IT sector and
Outsourcing in Vietnam
Summary

5. • Vietnam has a population of 89 million inhabitants who
enjoy an average life expectancy of 75 years.
• This population is still mostly rural, with just 32% of
inhabitants living in an urban area.
• The population is very young (28 years old on average)
and is increasingly adapting to western consumer habits.
A population in the midst of transition
On-going demographic transition has resulted in a very
young, mostly non-urban population
Population distribution by
age
Public spending in 2010 in
the education sector
(% GDP)
44%
of the Vietnamese
population is under
25 years old
Vietnam: 6.6%
Thailand: 3.7%
Philippines: 2.7%
France: 6.1%
Officience | 2013 | 5
0-14 years
25%
15-24 years
19%
25-54 years
44%
55-64 years
7%
>65
5%

6. 6
6.6%
Public spending on
education as a % of GDP

7. Vietnam’s population has benefited from this growth as a result of the positive
economic consequences
Vietnam’s growth benefits its population
• At 0.62 points on the HDI (human development
index), Vietnam lags behind its Philippine and
Thai neighbours. However, as outlined in a
United Nations report*, it is developing rapidly
thanks to policies on education and access to
care.
• Out of the 89 million inhabitants, there is now an
emerging ‘middle class’ of around 6 million
mostly urban people, who are significantly
boosting domestic consumption (+6.2% in 2012,
despite the crisis).
• Living standards have improved significantly
after 2 decades of economic progress.
Between 1995 and 2013, the GDP per capita
increased 6-fold to reach today’s figure of
$3500/inhabitant
• Minimum monthly salary: $80 to €110 depending
on region.
*Source: Report on Human Development 2013 published by
the United Nations Development Program (UNDP)
0.4
0.45
0.5
0.55
0.6
0.65
0.7
1990 1995 2000 2005 2010
HDI progression since
1990
A 6-fold increase
in the GDP per
capita between
1995 and 2013
Officience | 2013 | 7

8. 8
41%
HDI growth since 1995:

9. 1986: Doi Moi (reformation policy)
1990: Legal recognition of private
enterprise
1995: Membership of ASEAN
2007: Joined WTO
2012: Exports at 90% of GDP
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
20052006200720082009201020112012
GDP Structure
Growth of GDP
• Over the last decade, Vietnam has experienced an
undeniable economic leap forward. GDP tripled between
2002 and 2010, supported by constant increases in
investment and exports.
• Government policy, resolutely aiming for growth, has
liberalised trade and initiated a vast flow of
industrialisation (mainly High Tech) which is a predictor of
Vietnam’s future economic characteristics.
• Although this industrial development has mainly been
initiated by the public sector, the private sector is slowly
taking over (75% of GDP today against 65% in 2009).
An economy that has sustained growth for the
last 20 years
Vietnam’s economic ascent
Policies aimed at making the country more open
internationally have triggered economic growth
“In just a few years, the
Vietnamese economy has
undergone a remarkable
economic ascent.”
French Treasury
Officience | 2013 | 9
Farming
21.6%
Industry
40.7%
Services
37.7%

10. • Exports have risen by 20% (on average) a year since 2006 to reach $120 billion in 2012.
• Trade takes place with increasingly varied destinations with a growing focus on ASEAN and China.
• 2012 was a pivotal year:
• For the first time in 20 years, the trade balance was positive.
• Telephones and related accessories moved to the top of exported products, ahead of textiles/clothing and oil.
• The range of exports has grown considerably in the last 10 years. High Tech products are slowly
replacing agricultural products.
Trade: the essential driving force behind growth
20%of exports relate to High Tech
products or services
$18bnexpected revenue from
telephone and smartphone
exports in 2013
Rising exports are both a result of industrialisation and a source of economic
dynamism. IT products occupy an increasingly important position.
World Bank
figures
illustrate the
upmarket
movement of
exported
products
Officience | 2013 | 10

11. International aid still plays a major part in financing this economic activity
• Vietnam is the 2nd largest recipient of 0%
loans from the International Development
Association (IDA); a total of $10bn over 20
years.
• Today considered as a country out of poverty,
Vietnam has seen a reduction in available funds
coming from 0% loans.
• In terms of Public Development Aid (PDA),
Vietnam has received more than $3bn a year
since 2010.
• 40% of infrastructure projects in Vietnam are
financed by PDA.
• France is the 3rd largest bilateral donor of
funds for PDA in Vietnam. French financing
rose to €745 million for the period 2005-2010.
Development supported by external aid
0
500
1000
1500
2000
2500
3000
3500
4000
1980 1985 1990 1995 2000 2005 2010
Total amount of PDA in Vietnam,
in $ millions
Financial transfers from the Vietnamese
diaspora are breaking records each year:
$8bn in 2010, $10bn in 2012
3rd
France is the 3rd largest financial
donor of PDA in Vietnam
Officience | 2013 | 11

12. 12
$29 billion
Net total of PDA received by
Vietnam since 2000

13. The World Bank regularly invests significant sums to support development
projects in Vietnam
• The world bank has played an active role in
Vietnam’s boom, by granting up to $2.4bn of
loans in just one year (2011). Recent projects
include:
• $150 million to improve the management and quality
of higher education and to encourage enrolling
children at nursery before they begin primary school.
• $250 million for the reform of Vietnam’s economic
management. The objective is to improve
productivity and competitiveness in the period 2013-
2015.
• FIRST Project (see boxed text)
World Bank focus on Vietnam
The world bank has subsidised the FIRST project (Fostering Innovation through
Research, Science and Technology) to a value of $110 million over 6 years.
This project aims to promote a knowledge-based economy, to attract talent, develop
technological research institutes and support the creation of innovative enterprises.
The FIRST project was piloted by the Ministry of Science and Technology (MOST) which is in
charge of its operational deployment.
13number of new projects
supported by the World Bank for
2013
$2bntotal amount of loans given by
the World Bank for 2013
Officience | 2013 | 13

14. I. Population and
economy in Vietnam
II. The IT sector and
Outsourcing in Vietnam
Summary

15. Attractiveness of Vietnam and its IT sector
Vietnam is 8th in the AT Kearney 2011 Global Services
Location Index, moving up 2 places compared to 2010.
Scores:
• 24th in people skills and availability
• 1st in financial attractiveness
• 39th in business environment
Vietnam is the 5th most popular country for Offshore IT
according to a study carried out in 2010 by ‘Offshore
Development’.
5% of IT directors questioned cited it as a favourite
destination.
Vietnam receives varying amounts of FDI but
sums have exceeded $10bn a year since 2008.
According to the World Bank, Vietnam is receives
the 2nd largest amount of foreign investment in
ASEAN (in FDI/GDP).
FDI is now changing and is increasingly related to
the high tech industry, distribution and services.
HCMC and Hanoi are ranked 16th and 23rd
respectively in Tholons’ Top 100 Outsourcing
Destinations (2013).
Vietnam belongs to the ‘emerging’ market category
for IT and BPO, the same as the Philippines
5th most popular
destination for IT directorsLarge western and Asian groups have invested
significant amounts to develop the BPO-ITO
industry in Vietnam:
• 2006: Intel invested $1bn for the assembly of computer
parts
• 2009: Cap Gemini bought IACP Asia (IT firm)
• 2011: NTT Docomo (Japanese giant) acquired 25% of
VMG Media (Vietnamese telecoms leader)
• 2013: Samsung invested $1.2bn in a microprocessor
factory
Officience | 2013 | 15

16. 16th
Ho Chi Minh City’s ranking in
the TOP 100 Outsourcing
destinations

17. • $3bn from the state in 2010 for infrastructure
development
• Development or creation of High Tech zones
in Hao Lac, An Giang, Quang Nam, Thua
Thiên-Huê and Vinh Phuc
• Improving infrastructure is currently one
of the greatest challenges for Vietnam
• VAT exemption for export of goods and
services
• Simplification of foreign investment
procedures
• IT development lies at the heart of the 2020
Strategic Plan
• State Objectives: Turnover of $15bn for
technology, software and IT services
industries for 2020
• FDI: $10.5bn in the first half of 2013
• Groups present in Vietnam:
Hitachi, Fujitsu, Samsung, NTT, Accenture, I
BM, Intel, Cap Gemini, Sony, Oracle etc.
• Creation of Joint Ventures between
Vietnamese and foreign firms in BPO
(e.g. F-Agrex in 2013)
• Software industry: more than 1000
businesses as of 2011, which generate $1bn
revenue
• The percentage of students in higher
education is increasing by 9% each year
• 260,000 students graduated from universities
and higher education establishments in 2012;
80% of these in the sciences
• Hubs of excellence collaborate with
international ones (HUST with French CNRS)
• Vietnam has 300 higher education
establishments which train IT engineers
(compared to 10 in 2000)
IT in Vietnam: cluster dynamics
Education Infrastructure
Public
Powers
Private
Sector
Officience | 2013 | 17

18. 300
Higher education
establishments which
train IT engineers

19. BPO-ITO sector in Vietnam: the stakeholders
• Trained in Eastern Europe
• Core work does not have an international
focus
• Product meets local quality standards
Examples: FPT Software, Lac Viet
• Often founded by Viet Kieu
• Trained in Western Europe
• Beneficial alliance of a local cost structure
and international quality standards
Examples: Global Cybersoft, Officience
• Local production centres
• No sales team on site: relationships take
place via head office
Examples: Capgemini, IBM
Pentalog, CapgeminiGlobal Cybersoft
1997 2000 2005 2008 2009
TMA Solutions IBM
Source: Vietnam Outsourcing Portal
Officience
Arrival of foreign IT firms in Vietnam
2006
Alcatel
2010
Cisco
Officience | 2013 | 19

20. Geographical dynamics of the cities
• Ho Chi Minh City (HCMC) was ranked 5th and Hanoi
10th in the Top 50 emerging outsourcing cities in
2009 and 16th and 23rd out of all countries in 2013*.
• Danang is gradually becoming the 3rd outsourcing
destination in Vietnam, in particular for software.
• HCMC is recognised as a specialist outsourcing
destination for product development and testing.
Market
Traditional
Involving industry and textiles
Hanoi
Moving towards innovation
IT, energy, biotechnology
Ho Chi Minh City
Type of company Domestic, with State enterprises
Highly international, with foreign
businesses present
Home Internet access 22% of the population 33% of the population
*Source : TOP 100 Outsourcing destinations, Tholons
The two largest cities are not home to the same types of industry. Ho Chi Minh City is
taking on the leadership for developing high-tech industries and IT services.
Officience | 2013 | 20

21. 21
“Danang is gradually becoming the 3rd
outsourcing destination in Vietnam”

22. • Outside these 2 cities, suburban zones are emerging
and developing into technology parks. Hoa Lac, in the
north, is an expanding High Tech Zone and by 2017 will
be home to the brand new aerospace research centre.
• In Vietnam, technology development is decided
according to location, where the state allocates certain
regions the status of favoured developer for specific
technological areas. The network is set out in this way:
• North Vietnam: IT, electro-mechanics, automation, new
materials and biotechnology.
• Central Vietnam: IT, clean technologies, automation,
petrochemicals and naval construction.
• South Vietnam: IT, precision mechanics, chemical
products, rubber processing, biotechnology, electro-
mechanics, energy and petrochemicals.
The arrival of active suburban zones
Technology development is no longer just the privilege of the two largest cities in the
country. IT activity in the suburbs is leading to a new geography.
“By 2017, Hoa Lac will
be home to the new
Aerospace Research
Centre.”
IT will be developed in
all 3 areas of the
territorial network
Officience | 2013 | 22

23. BPO-ITO perspectives in Vietnam (1/2)
• Developing the IT sector is one of the objectives set out in the 2011-2015 Plan and in the 2020 Strategy. It
sets out 5 operational priorities which predict a huge leap forward:
• BPO & ITO sector in Vietnam in 2012:
• $1.5bn of revenue annually
• More than 100,000 people directly or indirectly employed
• According to McKinsey Global Institute, the market for
Offshore Services will be a major source of growth for
Vietnam over the next ten years.
• The sector benefits from a pool of young, cheap
graduates. But to profit from this, Vietnam needs to
differentiate itself via better talent and infrastructure
management.
Vietnam has ambitions to become a world leader in IT by 2020
Attract service
providers and
multinationals to
stimulate demand
Construct a stable pool
of talent, oriented
towards quality and
availability
Create a network of
infrastructure
conforming to
international standards
Implement an
enabling regulatory
framework
Virally promote the
‘Vietnam brand’ in
international forums
BPO-ITO: an expanding sector which is set to
continue growing 100,000employees in the BPO-ITO sector
Officience | 2013 | 23

24. 24
“Vietnam has the
potential to become one
of the top ten locations in
the world for offshore
services.”
McKinsey Global Institute

25. ► Vietnam benefits from certain defining characteristics in the outsourcing market, such as the
joint language skills of both French and English
► It is experiencing sustained growth in the niches of BPO or ITO, as evidenced by Officience’s
success.
 The increased range of skills and infrastructure development should strengthen Vietnam’s
position on this specialist market segment.
Niches
► Vietnam is searching for new partners in eastern countries or Japan.
► To meet partners’ expectations, Vietnam must, like it’s neighbours, reduce the impact of
bottlenecks (infrastructure) which can hinder expansion.
 Regional links already exist between Indonesia and Thailand to reduce these
bottlenecks. These could be extended to include Vietnam and create synergies which
would strengthen the global attractiveness of the region.
Developing
regional
coordination
► In many countries (USA, Israel, Norway etc), public purchase has stimulated growth in the
software industry and innovation in the local economy.
► This leads to an increase in domestic demand, a driving force for growth in the abovementioned
countries.
 Vietnam, where the IT economy benefits little from domestic demand, could adopt a similar
scheme and stimulate the market via orders for local industries.
Investing
in the
domestic
market
• The current situation of the ITO industry in Vietnam
and recent policy direction have led to potential
development opportunities in 3 areas:
BPO-ITO perspectives in Vietnam (2/2)
Niches Coordination
Internal Market
Officience | 2013 | 25

26. The IT environment in Vietnam – SWOT Analysis
STRENGTHS
► Ultra competitive salary costs
► Stable GDP and export growth
► Good levels of education, education system
produces graduates qualified in technology
► Government support for the ICT sector
► Geopolitical stability
WEAKNESSES
► Young and relatively inexperienced working
population
► Reputation of the local business environment
► Opaque regulatory practices
► Little protection of intellectual property
► Telecom and IT infrastructures still insufficiently
developed
OPPORTUNITIES
► Costs which remain among the lowest, low
salary inflation
► Explosion of IT outsourcing in emerging
countries, in particular SE Asia
► Fall of European countries carrying out BPO
► An domestic market as yet untapped
► Simplification of investment procedures
THREATS
► Regional competition from other BPO rising
stars (language skills, reliability, ability…)
► High rate of cyber crime
► Lack of local private finance (PDA supports
40% of infrastructure financing)
► Risk of compartmentalising to certain activities
with low added-value
Officience | 2013 | 26

27. Appendices
Summary

28. About Officience
Officience | 2013 | 28
Officience is a pioneer in the global outsourcing of services in
Vietnam
• Business Process Outsourcing (BPO) and
Process Optimization
• IT Outsourcing (ITO)
• Multimedia content management
• Consulting
• Founded in 2005
• 300 employees
• Multicultural management
• Headquarters in Paris and HCMC
• Client portfolio from start-ups to
multinationals
4 core competencies Key information
Guided by the Shared Value principle, we aim to sustainably develop
Vietnam to the benefit of our clients, by designing and implementing
tailor-made outsourcing solutions.

29. Talk to us about Vietnam
Officience | 2013 | 29
www.officience.com
Julie DUVERGÉ
Shared Value Maven
julie.duverge@officience.com
Huy Canh Duong
Positive Globalization Maven
huycanh.duong@officience.com
Ngoc Anh VU
Vietnam Development Maven
ngocanh.vu@officience.com

30. References
Ambassade de France au Vietnam, Fiche Vietnam sur l’enseignement supérieur
AT Kearney, Global Services Location Index™, 2011
BPO Outcomes, http://bpooutcomes.com/vietnam-bpo-destination/
Données statistiques de la Banque Mondiale, http://donnees.banquemondiale.org/pays/viet-nam
Fiche pays du Vietnam publiée par la Direction Générale du Trésor, http://www.tresor.economie.gouv.fr/pays/vietnam
Le courrier du Vietnam, http://lecourrier.vn/lecourrier/fr-fr/home/default.aspx
McKinsey Global Institue, Sustaining Vietnam’s growth: The productivity challenge, Février 2012
Portail Offshore Developpement, Etude de Juin 2012 sur les services
IT, http://www.journaldunet.com/solutions/dsi/externalisation-informatique-offshore.shtml
Publications de la Chambre de Commerce et d’Industrie française au Vietnam :
Brèves économiques et réglementaires du Vietnam - Mai-Juin 2013
Le secteur High-Tech au Vietnam, Nov 2010
Le Vietnam attire plus de 8,5 milliards de dollars d'IDE depuis janvier, Mai 2013
Investissement : de grands projets prévus au Vietnam, Mai 2013
The World Bank, Taking stock an update on Vietnam’s recent economic developments, Juillet 2013
Tholons, Top 100 Outsourcing Destinations 2013
Vietnam Outsourcing Portal, http://www.vietnamoutsourcing.org
VOV 5, http://vovworld.vn/
Officience | 2013 | 30