HANOI: High literacy, a large emigre community with technical expertise and costs half those of India are drawing a growing list of multinationals to outsource software development to Vietnam, according to a new study of the communist state’s fast growing IT sector.

Strong support from the communist authorities, including both tax breaks and fast-track licensing, has also been a factor in organizations from tech titan IBM to the US state of Oklahoma beating a track to a country, the report published by accountancy firm Andersen showed.

“The fact that Vietnam is starting to attract public sector work from the United States demonstrates Vietnam’s emerging IT industry is finally getting global recognition,” said Dan Stern, director of Ho Chi Minh City-based Research Vietnam, which carried out the study.

“Our research findings revealed numerous multinational customers such as IBM, Nortel Networks, Cisco, Sony and Fuji, are already outsourcing product development to Vietnam.”

By next year IT turnover is expected to be worth some 690 million dollars to Vietnam, with software growing at twice the rate of the sector as a whole.

By 2005 the communist authorities expect the country’s earnings from the industry to reach 500 million dollars.

For all of the firms surveyed, the possibility of getting high quality work at low cost was the leading factor in the decision to outsource here.

“If you can acquire the same or better technology and IT solutions at 50 per cent of normal cost, the bottom becomes a reality,” said William Baker, director of Pacific Ventures, who acted for the US state of Oklahoma in its outsourcing of the development of a trade web site here.

“The combination of high-quality work and lower costs makes Vietnam a very attractive place for IT outsourcing right now.”

Average charge out rates for team leaders and developers of 15 and 11 dollars an hour were respectively 50 and 60 per cent less than in India, the survey found.

Poor infrastructure and the tight grip the communist authorities maintain over the flow of information remain the principal disincentives to IT investment here, the study found.—AFP