Is Vietnam the next source for CIO inspiration?

For CIOs seeking new sources of innovation and support in a rapidly globalizing commercial scene, regions that used to be too remote are now going toe to toe with the more established dominant players.

The days when the US, Europe, and other countries like India, Japan, and Israel were the only countries of choice are fading. What we see today are cities, conurbations, countries, and regions everywhere bidding to make their own Silicon Valley-style hubs, manufacturing nexuses, services operations centers, and development factories. And one example that has vaulting tech ambitions is Vietnam.

The serpent-shaped, Southeast Asian nation of over 100 million people is going all out to put its name on the digital map. It recently promised tax breaks and other sweeteners including foreign work permits to companies that would build semiconductor plants there in a move that may help unlock the US-China chip war. Vietnam already plays host to Intel’s largest plant for silicon test and assembly, while other giants are looking to join or expand. Recently, for example, Samsung committed to broaden its Vietnamese investments by over $1 billion per year, while Apple CEO Tim Cook pledged to increase spending on the already-core Vietnamese link in its supply chain for electronics manufacturing.

Underlining Vietnam’s rise, Jose Fernandez, the US Under Secretary of State for Economic Growth, Energy and the Environment, met Vietnamese Prime Minister Pham Minh Chinh in Hanoi in January as a reaffirmation of the US’s partnership with Vietnam on semiconductors, as well as plans for workforce development projects. Further expansion into joint science and tech-related endeavors are also on the table.

Vietnam’s chip charge will be backed by plans to train 50,000 engineers by 2030. “There are many countries around the world who would love to have [Vietnam’s] ability to do assembly, testing and packaging,” Fernandez said. “[It has] the potential to become a powerhouse.”

All in all, the country’s appeal is clearly growing amid tense US relations with China.

Integral to success

Underpinning all this is massive investment made in education from FPT Corporation, the company that’s become synonymous with Vietnamese advances in its tech sector. FPT, or Financing and Promoting Technology, is a concise summary of what the state-backed organization is attempting to achieve for itself and the wider national economy.

As the dominant IT service company in Vietnam with over 48,000 staff and almost $2.2 billion in annual revenue, FPT spreads its interests across telecoms, datacenter hosting, software development and, increasingly, AI. Its presence is hard to miss when travelling through the country, and the company even presides over universities that feed into the national plan to become a digital leader.

Linus Lai, chief analyst of IDC in the ANZ region, applauds Vietnam’s progress, fuelled by FPT’s software development capabilities, and its advances in LLMs and gen AI.

“It seems FPT has a high concentration of PhDs, led by chief AI officer Nguyen Xuan Phong,” he says. “FPT claims to be the number-one AI center in Vietnam, staffed by 1,000 AI professionals. They’ve also recently reached an agreement with Nvidia and have the largest Nvidia cluster in Southeast Asia with up to 400 teraflops of performance.”

The story of Vietnam this century is one of rapid progress on the back of a determined attempt to modernize since joining the World Trade Organization in 2008. Electronics exports have boomed and one next wave may be R&D and a rising relevance in higher-margin IT services. 

“Where the Philippines largely majors in BPO, due to their mastery of the English language and close links to American interests, Vietnam has been open to external IT services trade with Japan, US, Europe, and its close neighbors,” adds Lai. “Based on its trajectory, we see similarities between Japan and Vietnam in its science and engineering capabilities. It’s beginning to differentiate itself on the global scale based on its openness in its business culture, and willingness to invest in research and development.”

Punching above its weight

Some make another Vietnamese comparison with India. Just as India saw enormous growth as an IT outsourcing and development factory in the 1990s on the back of ERP, BPO, and Y2K remedial work, the explosive rise of AI and attendant demand for developers could also help to accelerate Vietnamese progress.

“I was informed that FPT has submitted 39 research papers in the AI space, and careers have been put on hold in pursuit of post-graduate qualifications,” says Lai. “This is impressive and important because Vietnam believes it holds a place in innovation, not just offshored services. Perhaps this is the most telling difference between growing Asian economies in their competitive standing.”

FPT’s Phong is in agreement, saying Vietnam has the right profile for success and a matching appetite for work.

“We have a young, adaptive, eager workforce,” he says. “When I came to FPT, there was no research in Vietnam that was recognized internationally. It was only big companies like Google and Microsoft. I thought about how we could have that for Vietnam. And today we have research papers published internationally and we see changes everywhere.”

That change is especially evident with AI as an accelerator in the same way that Y2K was for Indian offshoring.

“Technology advances fast, and that’s an opportunity,” he says. “To advance quickly, you need the world to be changing, and it is. We see AI as a great tool in many ways, for example to lower the language barrier in collaboration between human and human.”

Another ambition based on riding a gathering wave lies in FPT Automotive, launched last year with the aim of generating $1 billion annually by 2030 on the back of designing software-defined vehicles.

FPT founder and CEO Truong Gia Binh says he views a broader opportunity than mere private enterprise, to build a brand for the country as a whole as the hub for a new Asian economic zone that’s industrious, fast, and keen to serve. “Now when I make a business trip, I don’t sell FPT, I sell Vietnam,” he says. “We never sleep on an opportunity.”

Part of his overarching strategy lies in M&A with ambitious plans to acquire more businesses from the US, Europe, and Asia. Such expansive plans are pursued in order to make Vietnam a more visible global player.

Realizing potential

Manuel Geitz at Forrester Research is also impressed with Vietnam’s progress and potential, but adds it needs to foster a more supportive ecosystem.

“The only way forward is to expand globally and have a global delivery model that works internationally,” he says. “If I had a magic wand, I’d create a lot of infrastructure for Vietnam to be ready. But AI is definitely an accelerator and it already has strong links with Japan. And the people I met are very bright and super-keen — you feel that energy and change.”

Of course, Vietnam is just one example of countries eager to take its share of huge investments in technology and automation that continue to run global organizational transformation. Neighbors such as Taiwan and the Philippines are already established while others like Malaysia, Thailand, and Cambodia are also advancing. With geopolitics in a febrile state, smart CIOs will be examining new options for talent, manufacturing, logistics, and sourcing.