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current situation of outsourcing development, a number of favorable factors promoting this industry as well as analysis of outsourcing activities FPT Software
TABLE OF CONTENTS Acknowledgements i Abstract ii List of Abbreviations iii List of Charts and Tables iv INTRODUCTION 1 I Rationale 1 II The significance of the study 2 III Aims of the study 2 IV Research questions 3 V Scope of the study 3 VI Methodology of the study 3 VII Design of the study .4 CHAPTER ONE: LITERATURE REVIEW 5 1.1 The concept of software, outsourcing, and software outsourcing 5 1.1.1 Software definition 5 1.1.2 Outsourcing concept 5 1.1.3 History of software outsourcing 7 1.1.4 Types 7 1.1.5 Advantages of software outsourcing 9 1.1.6 Disadvantages and concerns .11 1.2 Software Outsourcing industry in the world, India and China .11 1.2.1 In the world .11 1.2.2 In India and China .12 CHAPTER TWO: SOFTWARE OUTSOURCING INDUSTRY IN VIET NAM 15 2.1 Overview 15 2.1.1 The introduction of Software outsourcing to Vietnam 15 2.1.2 Key players .16 2.1.3 Principal services 18 2.1.4 Markets for Vietnam software outsourcing industry .18 2.1.5 Achievements 19 2.1.6 Main objectives .21 2.2 Prospects of Vietnam software outsourcing 22 2.2.1 Appealing factors 22 2.2.2 Highly appreciated by the big software outsourcing service providers 30 2.2.3 Increasing government support .32 2.3 Situation 33 2.4 Opportunities 36 2.5 Challenges 40 CHAPTER : A CASE STUDY OF FPT SOFTWARE 43 3.1 FPT software in general .43 3.1.1 Formation and main services 43 3.1.2 Vision .43 3.1.3 Strong business results 44 3.2 Businesses 46 3.2.1 Enterprise Resource Planning (ERP) service 46 3.2.2 Web Meister (WM) 48 3.3.3 FPT.iHRP .48 3.3 Success factors 49 3.4 Direction and challenges 53 CHAPTER 4: RECOMMENDATIONS 56 4.1 Strong commitment of the government 57 4.1.1 Financial support 57 4.1.2 Promotion 58 4.1.3 Legal and Regulatory framework 59 4.2 Human resource and training 59 4.3 Associated solutions 62 4.3.1 Enhance the IT infrastructure 62 4.3.2 Copyright protection 63 4.4 Open source software (OSS) development 63 4.5 Set up quality control system 64 4.6 Other suggestions 65 CONCLUSION 67 REFERENCES 70 ABSTRACTS Information technology (IT) is seen by the Vietnam Government as one of the most significant driving forces for the economic development and social advancement It steps up the reform process, intensifies the industrialization and modernization of economic sectors, and strengthens the competitiveness of businesses The development of IT industry, especially the software industry has become a key industry in many developing countries because of the increasing application of information technology in business, manufacturing and many other sectors Among them, the software outsourcing stands out as one of the most profitable and fast-growing industry This paper studies the current situation of software outsourcing development, some of the favorable factors that boost this industry as well as the analysis of the software outsourcing activities in FPT Software Once we have figured out the potentials, we can work out some solutions to first maintain and make use of these factors and then to promote the Vietnam software status in the international arena LIST OF ABBREVIATIONS AIC : Advancing Technologies & Investment Consultants Corporation APEC BPO : Asia-Pacific Economic Cooperation CDIT : Business Process Outsourcing CDMA CEIC : C-DIT-Center for Development of Imaging Technology CMC CMG : Code Division Multiple Access CMM CMMI : Computer and Enterprise Investigations Conference COSIS : Computer Manufacturing Corporation, ERP FCG : Computer Measurement Group FPT FSoft : Capability Maturity Model GCS GSE : Capability Maturity Model Integration HCA HSBC : Copernicus Online Service + Information System IBM IEEE :Enterprise Resources Planning IPR : First Consulting Group : Financing and Promoting Technology : FPT Software : Global CyberSoft, Inc : Global System Engineering : Hochiminh Computer Association : Hongkong & Shanghai Commercial Bank : : International Business Machines Corporation : Institute of Electrical and Electronics Engineers : Intellectual Property Rights IT : Information Technology KPO : Knowledge Process Outsourcing Kyu : Japanese levels of proficiency or experience LAN : Local Area Network NASDAQ : National Association of Securities Dealers Automated Quotation System NASSCOM : National Association of Software and Services Companies NEC : Nippon Electric Company NTT : Nippon Telegraph and Telephone OSS : Open Source Software PC : Personal Computer PSD : Pyramid Software Development PSV : Paragon Solutions Vietnam QA : Quality Assurance SMEs : Small and Medium size Enterprises SO : Software Outsourcing SOEs : State Owned Enterprises TMA : Tuong Minh & Associates VASC : Vietnam Association of Software and Communication W3C : The World Wide Web Consortium W-CDMA : Wideband Code Division Multiple Access Wifi : Wireless Fidelity WiMAX : Worldwide Interoperability for Microwave Access WLAN : Wireless Local Area Network LIST OF CHARTS AND TABLES Table 1: Top reasons for outsourcing 9 Table 2.1: Companies and workers in Vietnam Software Industry (2006 -2007) 16 Table 2.2: Structure of the number of companies specified by the number of employees 17 Table 2.3: Kearney ranking for offsite service locations 20 Table 3: Revenue and staff growth from 2000 – 2008 44 INTRODUCTION I Rationale Software outsourcing is the term given to the process of programming and engineering services beyond national boundaries (eDINUS) As the global market today is highly competitive and continuously changing, a company must thus focus on both productivity and at the same time cut down costs Thus, a lot of processes that take up precious resources are being outsourced The three most common motives in executing the software outsourcing activities are cost reduction, competition and the utilization of third-country supplies of resources Nowadays, software outsourcing is becoming a global trend and Vietnam also strongly engaged in this practice Although software industry is now a young industry in Vietnam, it is growing rapidly with impressive turnover and increasing contribution to the country’s prosperity It is the fact that India has long been taking part in these activities, making huge success and currently is the world leading outsourcing site with revenue from offshore software development of up to US$ 50 billion – as much as the Vietnam GDP China is the follower as an attractive hub to the globe and this industry has contributed to Chinese state budget a significant amount of total revenues from software products and services Attracted by such visible benefits, other less- developed countries like Malaysia, Philippines, Russia, etc…are attempting to become others alternatives to India Software manufacturers worldwide are seeking international markets to localize their products to countries with well developed IT support infrastructures, favorable demographics and labor costs, competent technical education, a favorable government regulatory environment supporting While the markets are open to many participants, It raises the question that why Vietnam can not join and get one piece of this profitable cake? Vietnam is now just a 10-year-old player in the game with the bright future ahead to make strides in this area In order to fully grow up, it is important to this country to look into some of the key potentials and strengths to prioritize the development efforts The government and enterprises should be better aware of what advantageous factors they possess, the awaiting opportunities and difficulties as well Only by good preparation and coordination, they can best utilize the available resources and realize the objectives of following in the footsteps of India and become a prominent player in the world software outsourcing II The significance of the study The research attempts to provide a background understanding of the software outsourcing activities and an overall picture of the prevailing software outsourcing market in Vietnam However, much focus is paid to look into the potentials factors driven the future growth of the industry An in depth analysis on the business of FPT Software a leading company in this field will give insights into how software enterprises in Vietnam work and make the activities pay off Then, the paper also figures out the opportunities, difficulties and raises the suggestions to promote the industry development in line with the whole economy III Aims of the study The study is designed with the hope to achieve the following primary aims: To understand about the software outsourcing practice To investigate the current situation of software outsourcing development and analyze some of strengths and a case study of software outsourcing company to have general picture of the whole industry To give recommendations to address some of the key issues and overcome difficulties to better grow and flourish IV Research questions The above aims of the study can be realized by the following research questions i) What is software outsourcing, its advantages and disadvantages? ii) What is current situation of software outsourcing in Vietnam and which potentials it possesses? iii) What is FPT Software and how FPT Software can be successful software company? iv) What are the possible solutions to better boost the growth of this industry in Vietnam? V Scope of the study The study mainly examines the software outsourcing activities in the world, in Asia and in Vietnam but focuses on the FPT Software in particular Then, suggestions will be recommended to overcome these obstacles and gain strong results VI Methodology of the study To achieve the set aims, I have approached to a variety of books and articles regarding on software and software outsourcing Besides, I tried my best to access FPT Software Company get the internal documents and contact developers who are working there to obtain the basic knowledge and concept of software outsourcing process While searching for the materials, I mostly paid attention to the factors that underpin the future development of software industry Based on the thorough analysis, suggestions for better stimulating the growth of the industry are also made In my study, I used a number of business books, various reference books, newspaper, magazines and different sites of Internet as the sources VII Design of the study The study consists of three main parts The introduction represents the rationale, the significance, the aims, research questions, scopes and methodology of the study Chapter one provides theoretical background about the software industry and the software outsourcing activities, the concept, types, advantages and disadvantages, then the software outsourcing development in the world, in India and China Chapter two investigates the development of software outsourcing in Vietnam and focuses on some of the key factors for development, as well as the opportunities and the challenges Chapter three is aimed to learn about the success story of software outsourcing in FPT Software (FSoft) Chapter four offers some possible recommendations to foster the growth of this industry in the next few years The conclusion sums up all the issues addressed and suggests some main points for further research ... one of the most profitable and fast-growing industry This paper studies the current situation of software outsourcing development, some of the favorable factors that boost this industry as well. .. destinations A software company can save about 40% of expenses by outsourcing an application development project overseas The outsourcing activities comprise the installation of a dynamic database-driven... software outsourcing, its advantages and disadvantages? ii) What is current situation of software outsourcing in Vietnam and which potentials it possesses? iii) What is FPT Software and how FPT