October 15, 2014
Vietnam is shifting its export structure from coffee and rice to a more advanced industry: high tech, in particular electronic products. By 2020 the value of high tech products and applications is projected to make up 45 per cent of Vietnam’s GDP.
Vietnam is shifting its export structure from coffee and rice to a more advanced industry: high tech, in particular electronic products. By 2020 the value of high tech products and applications is projected to make up 45 per cent of Vietnam’s GDP. According to the latest Talentnet – Mercer Total Remuneration Survey, 2014 has been a stable year for the high tech industry with salary increases of 10.7 per cent compared to 10.8 per cent in 2013. A lower voluntary turnover rate of 13.7 per cent compared to 15.8 per cent in 2013 also denotes a less chaotic year. With support from the government and the huge potential of the market, handsome growth in predicted for 2015. More than half of the 71 high tech companies participating in the survey plan to expand their headcount next year.
Sectors in summary
A highlight sector is hardware, with new FDI projects coming from Samsung, Microsoft, and others set to make Vietnam a major link in global manufacturing networks. This is a promising sector, given Vietnam’s young, tech-savvy population, contributing to both the technical workforce and tech consumption in the country. Support industries for high tech (such as electronic spare parts production) are to be one of the main focus areas for Vietnam to develop in the future. The sales incentive for the sales force in the hardware sector is among the Top 3 in the market (averaging 2.5-3 monthly salary for annual sales performance); higher than sales-focused industries such as pharmaceuticals and trading.
The rise of the software sector remains strong but could not reach the sharp rate recorded in previous years. Salary increases in this sector are high (at 12 per cent in 2014) compared to other sectors due to competition among key players both in project bidding and resource supply. In terms of revenue, compared to companies producing their own software, outsourcing companies maintain a much higher position, especially companies with upcoming projects from Japanese SMEs.
The IP design sector (semiconductors) is being focused on, with support from the government and the penetration of major players worldwide like Marvell, Microchips, and others. This is expected to “drive innovation and entrepreneurship, and hence fuel economic growth” in Vietnam, according to Radhika Srinivasan, IBM’s program director for technology alliances and licensing, when speaking at the Vietnam Semiconductor Strategy Summit in Ho Chi Minh City in September. The performance bonus for this sector was the highest (averaging 1.5 monthly salary for annual performance) due to its solid growth.
Different pay for different functions
Pay in the high tech industry remains average among all industries. Within the industry, different functions also receive different pay. Big tech consumption in Vietnam guarantees high growth in sales activities. Technical salesmen receive the highest pay compared to other jobs such as developer or designer (at 17 per cent higher than the average pay of the whole industry). Such jobs requiring lower technical skills, such as call centre worker or tester, pay much lower than others.
Table below shows the salary of IT functions compared with the market:
While there are around 40,000 IT-related graduates annually, according to Information and Data on ICT Vietnam 2013 from the Ministry of Information and Communications, there is still a lack of qualified IT-related graduates, resulting in an inadequate supply of software developers for software companies. Companies also report emerging heat in the labour market for hardware developers. However, there is still no specifically-designed course for hardware development. Therefore, most companies must apply on-the-job training schemes for fresh graduates. Sales growth also requires a large supply of technical salesmen to deliver targets.