A rapid survey conducted by the Vietnam Software and IT Services Association (VINASA) revealed that Vietnamese IT enterprises operating in Japan have witnessed a remarkable doubling of revenue between 2020 and 2024, signaling a significant evolution in their service offerings and a deepening of bilateral technological collaboration. The findings, shared by Mr. An Ngoc Thao, Deputy Secretary General of VINASA, at the Japan ICT Day 2024 in Hanoi on the afternoon of December 2, underscore Vietnam’s growing stature as a crucial technology partner for Japan, particularly as the latter grapples with an acute digital talent deficit.
Background of Japan ICT Day and Bilateral IT Relations
Japan ICT Day is an annual flagship event designed to foster and strengthen the information and communication technology (ICT) partnership between Vietnam and Japan. Organized by VINASA, in collaboration with Japanese industry associations like the Japan Information Technology Services Association (JISA), the event serves as a vital platform for dialogue, networking, and strategic discussions between businesses and policymakers from both nations. For years, Japan has been Vietnam’s largest IT outsourcing market, a relationship built on competitive pricing, a skilled workforce, and a growing understanding of Japanese business culture. This enduring partnership is increasingly crucial for Japan, which faces the dual challenge of modernizing its extensive legacy IT systems and driving comprehensive digital transformation across its economy, all while confronting a demographic crisis leading to a severe shortage of IT professionals. Vietnam, with its young, dynamic, and rapidly expanding tech talent pool, is strategically positioned to fill this gap and move up the value chain from traditional outsourcing to co-innovation and product development.
VINASA Survey Highlights: Robust Growth and Enhanced Productivity
The VINASA survey encompassed 20 Vietnamese IT companies actively operating in the Japanese market, providing a snapshot of their performance and strategic shifts. The participating firms represented a diverse range of sizes: ten companies employed over 1,000 engineers, five had workforces between 500 and 1,000 engineers, and another five operated with 200 to 500 engineers. This cross-section offers a representative view of the Vietnamese IT industry’s footprint in Japan.
The survey’s key revelation was the extraordinary financial growth achieved by these firms. Over the four-year period from 2020 to 2024, the combined revenue of these 20 companies surged from $672 million to an impressive $1.345 billion, effectively doubling their financial output. This growth was not an anomaly but a consistent trend, with annual revenue growth rates maintained robustly between 22% and 28%. Concurrently, the total workforce of these companies expanded by nearly 8,000 individuals, reflecting a steady growth rate of 6% to 10% per year.
Mr. An Ngoc Thao emphasized a critical insight derived from these figures: "The revenue growth rate significantly outpaced the human resource growth rate, clearly demonstrating a substantial increase in the labor productivity of these enterprises." This indicates that Vietnamese IT firms are not merely expanding their headcount but are optimizing their operations, leveraging advanced tools and methodologies, and engaging in higher-value projects that generate disproportionately greater returns per employee. This enhanced productivity is a testament to the maturing capabilities of the Vietnamese IT sector and its ability to deliver more sophisticated solutions efficiently.
Strategic Evolution: Moving Up the Value Chain
The survey also highlighted two pivotal strategic shifts among Vietnamese technology companies in Japan. Firstly, there is a clear trend towards undertaking higher-value projects that yield greater returns. This involves moving beyond basic coding and maintenance to more complex endeavors such as research and development (R&D), innovative design, and the application of cutting-edge technologies like Artificial Intelligence (AI) and Blockchain. This transition signifies a departure from being solely service providers to becoming strategic partners in innovation.
Secondly, Vietnamese firms are increasingly developing and offering their own packaged products to Japanese clients, rather than merely providing bespoke services. This shift from a purely service-oriented model to a product-centric approach demonstrates a deeper understanding of market needs, an investment in intellectual property, and an ambition to capture more significant market share by delivering scalable, repeatable solutions. This evolution is crucial for sustainable growth and positions Vietnamese companies as more integrated and valuable contributors to the Japanese technology ecosystem.
Key Areas for Future Collaboration
Japan ICT Day 2024 provided a forum for extensive discussions on critical areas ripe for deepened bilateral cooperation. Three themes emerged as particularly high-potential: the application of Artificial Intelligence (AI), the modernization of Japan’s entrenched legacy systems, and the development of green and smart manufacturing solutions.
The focus on AI reflects the global imperative for digital transformation, where AI is a central enabler for efficiency, innovation, and competitive advantage. For Japan, leveraging AI can revolutionize industries from healthcare to automotive, but it requires significant investment in talent and expertise. Vietnam’s burgeoning AI capabilities, nurtured by academic institutions and a vibrant startup scene, present a strong collaborative opportunity.
Modernizing Japan’s legacy IT systems is another monumental task. Many Japanese corporations still rely on decades-old infrastructure, which, while robust, hinders agility and innovation. Vietnamese firms, with their experience in system integration, migration, and development, can play a crucial role in helping Japanese partners transition to more modern, cloud-based, and agile architectures. This is not just about technical skill but also about efficient project management and cost-effectiveness.
Finally, the emphasis on green and smart manufacturing aligns with global sustainability goals and the push towards Industry 4.0. Japan’s advanced manufacturing sector, combined with Vietnam’s growing expertise in IoT, data analytics, and automation, can lead to innovative solutions for energy efficiency, waste reduction, and intelligent production processes. These three areas represent not only traditional market opportunities but also avenues for addressing pressing global challenges, underscoring the strategic depth of the Vietnam-Japan IT partnership.
Perspectives from Industry Leaders
Mr. Akira Watanabe, Director of NTTe-MOI and Deputy Chairman of the Vietnam-Japan IT Cooperation Committee under VINASA, provided further insights into the thriving collaboration. He highlighted that IT cooperation between Vietnam and Japan is continuously expanding, evidenced by over 400 Vietnamese enterprises having established partnerships with Japanese counterparts. This extensive network reflects a strong foundation of trust and mutual benefit.
Watanabe underscored Vietnam’s inherent advantages in this partnership: strong technical competence, competitive cost structures, and a nuanced understanding of Japanese culture. This cultural understanding is particularly vital in the Japanese business environment, where communication nuances and long-term relationship building are paramount. Vietnamese firms are strategically focusing on digital transformation projects, human resource research and development, and system modernization efforts, aligning perfectly with Japan’s pressing needs. He noted key sectors of cooperation, including manufacturing, automotive, finance and insurance, information security, and retail.
However, Watanabe also candidly addressed challenges that need to be overcome for the partnership to reach its full potential. These include language barriers, ensuring the stability of human resources, and enhancing international competitiveness. Addressing language proficiency through specialized training programs and promoting cultural exchange can bridge communication gaps. Investing in talent retention strategies and continuous upskilling can ensure a stable and advanced workforce. Furthermore, fostering innovation and promoting adherence to international best practices will bolster Vietnamese firms’ competitiveness on the global stage.
Mr. Junya Kawamoto, Chairman of the International Cooperation Committee of the Japan Information Technology Services Association (JISA), offered a Japanese perspective, highlighting the policy landscape and critical challenges facing Japan’s IT sector. He mentioned the Ministry of Economy, Trade and Industry (METI)’s "DX Stocks" program, which encourages digitalization initiatives among Japanese companies, reflecting a national push for digital transformation.
Despite these governmental efforts, Japan’s IT industry is confronting significant hurdles. The most pressing is a severe talent shortage, compounded by the increasing demand for digital transformation and geopolitical risks that necessitate robust digital infrastructure. According to METI data, Japan is projected to face a deficit of approximately 789,000 IT professionals by 2030. This staggering figure underscores the urgency for Japan to seek international collaboration to sustain its economic growth and maintain its technological edge.
Mr. Kawamoto emphasized Vietnam’s emergence as an "ideal partner" in this context. He cited Vietnam’s young, tech-savvy workforce, coupled with strong government support for the IT sector, as key factors. Japanese companies are increasingly looking to cooperate with Vietnam in critical areas such as human resource development, sharing advanced technological knowledge, and establishing joint business models. This reciprocal relationship offers Vietnam an opportunity to further develop its talent and gain exposure to advanced Japanese technologies and business practices, while providing Japan with the skilled personnel and innovative solutions it desperately needs.
Japan ICT Day 2024: A Catalyst for Deeper Engagement
Japan ICT Day 2024, spanning December 2nd and 3rd, was structured around three core activities: seminars, networking sessions, and company tours to Vietnamese enterprises. Attracting over 100 delegates from more than 30 Japanese and Vietnamese companies, the event provided a dynamic environment for information exchange and relationship building. The seminars offered valuable insights into market trends, technological advancements, and policy developments. Networking sessions facilitated direct interactions between potential partners, fostering new collaborations. The company tours offered Japanese delegates a firsthand look at the operational capabilities and technological infrastructure of leading Vietnamese IT firms.
The organizers expressed strong confidence that the program would significantly contribute to accelerating technological business cooperation between Japan and Vietnam. By facilitating direct engagement, knowledge sharing, and strategic discussions, such events are instrumental in deepening the existing partnership and exploring new avenues for growth.
Broader Implications and Future Outlook
The insights from the VINASA survey and the discussions at Japan ICT Day 2024 paint a clear picture of a robust and evolving IT partnership between Vietnam and Japan. Vietnam is not merely a cost-effective outsourcing destination but is rapidly transforming into a strategic innovation hub capable of contributing to high-value projects and product development. This evolution is perfectly timed with Japan’s urgent need for digital transformation and its persistent IT talent shortage.
The continued growth of Vietnamese IT firms in Japan, coupled with their shift towards advanced technologies like AI and Blockchain, positions Vietnam as a crucial player in the regional and global digital economy. The focus on modernizing legacy systems and embracing green and smart manufacturing reflects a mutual commitment to sustainable development and technological advancement. As Japan continues its "DX Stocks" initiative and seeks reliable international partners, Vietnam’s young, skilled workforce and supportive government policies make it an increasingly attractive choice.
Looking ahead, the Vietnam-Japan IT cooperation is expected to expand further, moving towards more integrated joint ventures, co-creation initiatives, and potentially even shared market development in third countries. Addressing challenges such as language proficiency and human resource stability will be key to unlocking the full potential of this partnership. With sustained effort and strategic investment, the symbiotic relationship between Vietnam’s vibrant IT sector and Japan’s advanced economy is poised to drive significant innovation and economic growth for both nations in the coming decade.
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