By Allan Maurer
Special to Triangle Tech Journal

RALEIGH - In a decade, Michael Le says, Vietnam will rival India as an outsourced software coding hotspot.

Le and his wife KT, both Vietnamese expatriates, pursued careers with IBM after attending college in the United States. Although he worked with IBM for eleven years, he had his own ideas.

But Le says he followed an entrepreneurial path because “I’m not that comfortable in a corporate setting where decisions aren’t made very quickly.” Le says, “I went out and started a company called LKSP Technologies in 1997 and two years later sold it for eight figures to RCM Technology in New Jersey. Le funded several start-ups thereafter and says, “I played a lot of golf.”

But the entrepreneurial bug bit him again. First, he founded another company called Mobile Reach, (www.mobilereach.com).

But he wanted to pursue his idea of using low cost Vietnamese programmers, so Michael, as chief executive, and KT as chief financial officer, founded International IT Services in Raleigh a year ago. So far, Le says, it is self-funded along with angel and friends and family investments. Investors include board member Richard Holcomb of Haht.

Outsourcing Hot Now

International IT Services wants to sell outsourced coding services to U.S. software companies. Le says outsourcing is hot right now for several reasons.

The U.S. Department of Commerce estimates that the U.S. will come up 1.4 million programmers short this year. Business Week magazine recently estimated that up to 50 percent of U.S. software will be coded outsourced by 2005. Not only that, the sluggish economy and droopy software sales have IT companies looking for ways to cut costs or gain competitive advantages.

Software companies looking to save money on coding the applications they develop often outsource the job to outsourced programmers in India, Russia, Ireland, Australia, Finland and Eastern Europe. India alone saw outsourced software income rise from $110 million a decade ago to $6.3 billion in 2001.

Since cost savings are one of the main reasons to outsource, Vietnam should be competitive, Le says. Its labor costs are similar to India’s a decade ago, and 10 percent that of U.S. development costs. Also, The Vietnamese government is setting ambitious goals of training 50,000 software engineers and attaining $500 million in software exports by 2005.

In a white paper, Le’s International IT Services outlines both the strengths and weaknesses of doing business in Vietnam. The white paper quotes Alex Pierson, a VP at Nortel, which has done business in Vietnam since the early 1990s. Pierson urges caution and knowing the pros and cons of doing business there, but says the price makes it worth a look. Cheap labor is the draw in Vietnam, Le says, programmers work for $300 to $500 a month.

Plenty of American companies, including most of the IT giants, are already doing business there. Microsoft, Fujitsu, Oracle, Noika, Compaq, Ericsson and Digital have established Vietnamese offices. Sony, Bayer, Cisco, IBM, Nortel have outsourced software development to Vietnam.

Le’s idea is that his and his wife KT’s knowledge of Vietnam, its language and culture being available through a U.S.-based company will help overcome trust issues. He hopes that makes the low cost coding available in Vietnam more attractive to smaller companies as well as larger ones. “You have to know what we call the IT circle,” Le says.

International IT Services has seven people in Raleigh and just over 30 on staff in Vietnam, doing mostly Web design in a three-story house right now, Le says. “We absorbed a company that was doing Web site development, but another third are programmers working on in-house and outsourced projects. The economy didn’t help but its coming back. We’re seeing people spending on tech in the first quarter.”

He says the fledgling company hopes to partner with an existing IT consulting and development firm. “We would leverage their sales force and they would leverage our programmers,” says Le.

People are Making Money

They can go to their customer and say ‘We cut costs,’ but International IT Services will still make money, Le says. International IT Services promotes rapid application development (RAD), a process in which successive prototypes are quickly produced, with a first one coming in as little as two weeks, says Le.

The war America fought in Vietnam is barely a memory to the 75 percent of Vietnam’s population that is under 35 years old. Holcomb has called Vietnam “the most capitalist place I know,” despite its communist government. “There are a lot of restrictions on what people can do,” Holcomb said. “But there are few restrictions on commerce, and people are making money every way they can.”

Le says International IT Services isn’t looking for venture funding. “I always prefer revenue to capital investment. We would welcome ‘smart money,’ where individuals or a corporation brings work to International IT Services. If they’re just bringing money, we’ll handle it on our own.”

TTJ

Reference Link(s):

http://www.triangletechjournal.com/news/article.html?item_id=33