Software Outsourcing Industry in Vietnam amid Covid-19 pandemic

Due to the online working nature, the impact of Covid-19 on the Software Outsourcing industry seems to be progressing slower and less lethal than in some other industries. However, after a month and a half since most countries entered a lockdown, Vietnam Software Outsourcing Industry has experienced both pessimistic and optimistic influences.

Impacts on Japan market & English-speaking market

With advantages in similar cultures, languages, and small time differences, Japan has contributed to over  50% of the IT revenue in Vietnam. The remainder comes from Korea, the US, and other English-speaking countries.

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For companies that heavily rely on Japanese markets, business strain is increasingly large. Even in early March when US and Vietnam were already under serious precaution, many Japanese clients maintained normal operations in their physical offices. Most still required face-to-face meetings. It is easy to understand how work culture makes it challenging for Japan to quickly impose a work-from-home policy. For that reason, even though existing projects are not stopped, companies have seen fewer and less new opportunities.

Vietnamese Representative offices in Japan were frozen after Prime Minister Shinzo Abe declared a state of emergency to the entire nation. Rakuten and U-next are among the very few pioneers to apply a digital signature to make the transformation to remote working smoother. The majority of enterprises, especially conglomerates, have probably never considered this as an option.

For companies that serve mainly English-speaking markets such as the US, Canada, and Europe, the situation does not look as dark. A few luckily have been able to keep all their business. Some even see an increase in revenue due to their pre-coronavirus sales method via SNS and freelancer websites which do not require physical meetings. These are generally small startups, up to about 100 employees. Their leaders and engineers are young, smart, and hungry.

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Impacts are also different in the size of companies & the customers they deal with

Smaller companies that do not have the burden of enormous managerial costs are more resilient in difficult times. They hastily trim down inessential expenses and move their inherent streamlining organization to a remote model. Their customers are also more susceptible to the changes. This certainly helps minimize the damage.

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Meanwhile, bigger companies with higher overhead can hardly afford to lose one business. Some must delay the telework transformation for as long as possible to satisfy their client’s security requirements. Even though this means ignoring restrictions from the local government and risking employees’ safety. One of the largest IT companies in Vietnam has recently announced an extremely aggressive cut of 20% in managerial expenses. That includes a complete stop to other offline team building, vacation, and award budgets.

If this lockdown and precaution continue for months longer, nearly 200 thousand IT workers in Vietnam will face real challenges if we do not adapt and keep on seeking new business chances. Ekotek promises to continue supporting startups in Blockchain Technology and Web & Mobile Application development. Our technology investment scheme and flexible payment schedule will empower your amazing ideas so that they will not be defeated by the Coronavirus.