IT world attracted to Vietnam thanks to low pay for workers

Though they have similar qualifications to IT workers in Malaysia and Thailand, Vietnamese IT staff receive pay which is only higher than in Laos, Cambodia, Myanmar and Bhutan, according to Nguyen Thu Giang, secretary general of Vinasa (the Vietnam Software Association).

Vinasa estimates that there are 190,000 IT engineers, 2.7 times higher than 10 years ago, but still low compared with the demand for IT workers. 

In terms of revenue, over the last 10 years, the figure from software and IT service sectors increased by 5 times, from $600 million to $3.2 billion.

The productivity and labor output value in the software industry and IT services in Vietnam is higher than other economic sectors in the country by 3-10 times. The percentage of Vietnam’s content value in the industry is also very high, about 90-95 percent.

Vinasa believes that Vietnam has been one of the most attractive software outsourcing countries for many years thanks to a high-quality labor force with competitive prices.

However, the problem is that experienced IT engineers receive salaries which are 2-3 times lower than engineers from Malaysia and Thailand, which have the same IT qualifications with the income of $2,000 for Vietnamese vs $4,000-6,000.

According to Asian-Oceanian Computing Industry Organization (ASOCIO), the average salary a new graduate engineer receives is $280 a month, while 3-year experienced engineer receives $520. A mid-tier manager can receive $1,000 a month and high-ranking manager $2,000. The figures are 1/3 of Malaysia’s, 1/4 of Taiwan’s and 1/5 of Japan’s and South Korea’s. 

Since the pay is low, Vietnam is more competitive than other regional countries, such as China, Singapore, Thailand and the Philippines when attracting foreign technology firms.

However, labor experts believe that the average pay in the field will increase rapidly in the time to come for many reasons, including the lack of workers.

If so, it would be a challenge for Vietnam to attract foreign IT firms, because investors may think of heading for countries where they can expect lower production costs.

VietnamWorks, a job and recruitment network in Vietnam, in a report released in late 2015, showed that with the average growth rate of 8 percent per annum, Vietnam may lack 1 million IT workers by 2020. 

In the last three years, while the number of jobs in the IT & software industry has increased by 47 percent per annum, the number of workers has risen by only 8 percent only.