Vietnam’s IT industry accelerates regional growth leadership
HANOI, VIETNAM — Vietnam‘s IT software and services industry is rapidly emerging as a regional leader, driven by digital transformation efforts, government initiatives, and a skilled workforce.
According to Ahmad Ridhwan Azizan, partner expert at Roland Berger Southeast Asia, and Truong Bui, partner and general manager at Roland Berger Vietnam, Southeast Asia’s IT market is forecasted to grow at a compound annual growth rate (CAGR) of 9% to $54 billion by 2028.
Vietnam, however, outpaces this average with an expected 17% annual growth from 2023 to 2026, positioning the sector to reach $13 billion by 2026, up from $8 billion in 2023.
Government policies and outsourcing propel expansion
Azizan and Bui said that the Vietnamese government has been instrumental in fostering IT sector growth through initiatives such as the National Digital Transformation Plan and tax incentives for software outsourcing companies.
IT outsourcing and business process outsourcing (BPO) dominate the market, comprising over 60% of IT services revenue in 2023. Vietnam ranked sixth globally on the Global Services Location Index, attracting major clients from Japan, South Korea, and the United States.
Prominent players like FPT Software and CMC spearhead Vietnam’s IT ecosystem alongside mid-sized firms such as NashTech and KMS Technology, which cater to international markets. Global multinationals have also established delivery centers in Vietnam, underscoring its appeal as a global outsourcing hub.
Key advantages strengthening Vietnam’s IT appeal
Vietnam’s competitive edge in the IT industry stems from several factors:
- Skilled workforce: Over one million ICT professionals are proficient in emerging technologies like AI and blockchain.
- Cost efficiency: Competitive labor costs make Vietnam an attractive alternative to other outsourcing destinations.
- Strategic location: Proximity to Asia-Pacific markets enhances its accessibility as a nearshore option.
- Improved capabilities: Advances in English proficiency and soft skills address previous barriers to sector growth.
SaaS market gains momentum among SMEs
Azizan and Bui also revealed that Vietnam’s software market is projected to grow from $1.7 billion in 2023 to $3 billion by 2026, driven by rising adoption of Software-as-a-Service (SaaS) solutions among small- and medium-sized enterprises (SMEs).
SMEs represent nearly 90% of Vietnam’s businesses but remain underpenetrated, with only 20–30% using SaaS solutions compared to 70–80% in developed markets. Mandatory e-invoicing policies are further driving demand for cloud-based accounting and finance tools.
Future outlook: Moving up the value chain
Vietnam’s IT industry is transitioning from cost-effective outsourcing to higher-value services like end-to-end digital transformation solutions. Continued government support and innovation will be crucial for sustained growth.
With its strong fundamentals and strategic investments, Vietnam is poised to solidify its position as a regional technology leader, offering significant opportunities for investors and businesses alike.
