How Difficult It Is To Own An IT Company in Vietnam
Owning an IT company in Vietnam can be a lucrative business, but it is not easy. In order to attract additional investments into the IT industry, the Vietnamese government offers IT companies in Vietnam alluring perks in the form of incentives. This is done in an effort to take the country's IT sector to a completely new level.
However, there are many challenges that you will need to overcome, including the lack of skilled workers, complex regulations, and licensing requirements. Furthermore, competition for customers is strong, so you will need to develop innovative solutions that differentiate your offering from others. And finally, Vietnamese consumers are very price sensitive, which means that prices must be fair without compromising quality or service levels.
This article will show you the challenges when owning an IT company in Vietnam.
Human Resource Challenges - Lack of skilled workers
One factor that makes it difficult to build a strong IT company in Vietnam is the lack of skilled workers. Though there has been a recent uptick in the number of IT companies in Vietnam, the shortage of qualified professionals limits their growth potential.
Skilled labor is in high demand in Vietnam especially in the technology industry, as it is a rapidly developing country with a growing economy. Many multinationals have already recognized this and started to recruit foreign workers from countries like India and the Philippines to fill their IT jobs. However, Vietnamese nationals are not able to compete with these wages, which means that IT companies are forced to look abroad for talent. This has led to a large influx of foreigners into Vietnam, which is not always welcomed by locals.
It can be difficult to own an IT company in Vietnam, due to the fact that the country has a number of legal inconsistencies. For example, although there are no restrictions on foreign investment in the telecommunications and information technology sectors, every new technical tool, website, and feature has to follow information technology law strictly. They must be clear, and not include wrong government information, prohibited products, or even incite violence.
All paperwork must be written in Vietnamese, and all foreign paperwork requires certified Vietnamese translations. These translations must first be notarized or certified by courts in the home country, and then they must be authenticated by a Vietnamese embassy. This makes it much more difficult for foreigners. In addition, tax regulations are also complex and often burdensome for businesses.
Despite these challenges, there is growing interest in the IT sector among entrepreneurs and investors. However, until these legal inconsistencies are resolved, it will be tough for IT companies to thrive in Vietnam.
Weak Intellectual Property Rights
IPR is safeguarded by statutes in Vietnam, although they are not effectively enforced. Before exporting, you must take the appropriate steps to protect your intellectual property. If there is an infraction, you must cooperate with the appropriate inspectors across several ministries.
IPR infringement is still a concern in Vietnam and can discourage foreign businesses from doing business there. Vietnamese lawmakers have passed legislation to safeguard intellectual property rights, including copyright, industrial property, and plant varieties, in an effort to solve the issue.
The organization in charge of registering intellectual property is the National Office of Industrial Property of Vietnam (NoIP). Foreign businesses that want to register their intellectual property must submit an application through an authorized agent who can submit it to NoIP.
Lower income (in comparison to other countries in Asia)
It's no secret that Vietnam is a developing country, which means that the economy is still in the early stages of development. This has led to a number of challenges for businesses operating in the IT sector, one of which is the fact that wages are lower than those in other countries in Asia.
The usual range of gross salaries for those working in the information technology sector in Vietnam is 4,348,772 VND - about 185,45 USD (minimum salary) to 22,755,957 VND - about 970,40 USD (highest average, the actual maximum salary is higher). This is the monthly wage in its entirety, including bonuses. Different employment positions can pay significantly different amounts, according to Paylab’s survey.
This makes it difficult for IT companies to attract and retain qualified employees. In addition, many Vietnamese businesses struggle to compete with larger, more established companies from other countries in terms of pricing and quality. This means that it's often difficult for these companies to make a profit.
Despite these challenges, there are still some ways that IT companies can survive and even thrive in Vietnam. One strategy is to focus on niche markets where there is potential for growth. Another approach is to diversify into new areas such as consulting and software development. And lastly, it's important for these companies to develop strong relationships with local clients so that they can stay ahead of the curve with regard to technology trends.
Bureaucracy and Transparency
Bureaucracy is a term that refers to the systematic and organized way in which government institutions operate. It can often be a major obstacle to business growth, as it can take a long time for approvals to be granted, making it difficult to get started and expand. This is especially true in Vietnam, where the bureaucracy is notoriously slow and opaque.
Transparency is another issue that often hamstrings business development in Vietnam. This refers to the level of information that businesses are allowed access to, and how easily they're able to share data with other entities within the same industry or across sectors. This can make it difficult for companies to compete on a level playing field because they're not able to understand what their competitors are up to or replicate their strategies.
Vietnam has great potential to become the next big market for IT companies. This is due to the rising demand for skilled professionals in various departments, and skyrocketing adoption rate of cloud infrastructure and online platforms. There are trustworthy IT companies with experienced and skilled workers in Vietnam
However, if you’re planning to start up a business related to technology at home or abroad, make sure you get your plans verified by a trusted professional advisor before taking any decisions. Moreover, there are still many obstacles that the company’s owner needs facing such as paying taxes, time-consuming procedures, and weak Intellectual Property Rights. So bear that in mind as well!