$1 bln in software exports and FPT's desire to conquer 'unlimited market'

FPT is known mainly as an outsourcing partner for companies around the world. Is this still correct, or does FPT have a new status?

Outsourcing was the first stage of FPT Software's "Go Global" mission. It was also the starting point for Tata TCS, Infosys, Wipro, and HCL of India. I and many Vietnamese software experts from the first generation (1984-1990) used to make software products for export to Germany, France, and the U.S. FPT IS also made software products for customers in the fields of banking, telecommunications, securities, and aviation, achieving certain successes. Our Core Banking and Billing and Customer Care products for telecommunications were very successful, completely dominating the markets of Vietnam, Laos and Cambodia.

But reality proves that only the U.S. and China, two superpowers with extremely large market shares, could successfully produce software that is widely used globally. Even European powers - Japan, South Korea, Australia, and Canada - rarely succeed in doing so.

Tata TCS, Infosys, Wipro, and HCL of India started with outsourcing. Outsourcing is a process of gradually accumulating technology, professional qualifications and experts. When they had accumulated enough, they moved to lump-sum contracts, supplied high-end consultancy services, and made software products.

Following this path, Tata TCS, Infosys, Wipro and HCL have now become the world's top software companies, only inferior to the two heavyweights Microsoft and Oracle.

Tata TCS's market capitalization is even larger than that of the giant IBM, a symbol of American technology for a hundred of years; larger than that of SAP, the No. 1 software company in Germany and Europe (the capitalization of TCS in January 2023 was $146.66 billion, IBM $127.61 billion, SAP $124.88 billion), while the figure for Infosys was 2.5 times larger than HP and Dell of the U.S. (the capitalization of Infosys in January 2023 was $75.83 billion, HCL $34.01 billion, Wipro $26.15 billion, HP $26.85 billion, and Dell $29.31 billion).

FPT Software is following their direction and is now on the right track. We have made-by-FPT products; we have entered the chip manufacturing segment; we offer consulting services, enterprise resource planning (ERP) services; we have many industry domains; we have acquired lump-sum contracts worth up to $100 million, even $150 million. This means FPT is no longer merely an outsourcing company.

FPT's software export revenue last year was $800 million. What percentage of this came from FPT-branded software like FPT Akabot, rather than outsourcing for companies like Intel and Microsoft?

The non-outsourcing part of FPT Software currently includes the following segments: products made by FPT (the Aka line of 16 products and medical IoT chips); high-end consulting services (Intellinet US company), digital transformation consulting services, enterprise resource planning (ERP) services (FPT Slovakia, Germany, Czech and Japan); lump-sum contracts, and specialized industry contracts involving aviation, automobiles, finance-banking, communication-entertainment, healthcare, logistics, energy-utilities, manufacturing, and retail.

Akabot alone has 3,000 customers in 20 countries and territories, including the U.S, Japan, Germany, UK, Spain, South Korea, Taiwan and Singapore. Among customers using Akabot are world famous names like Panasonic, Mizuho (Japan), HSBC (UK), ABB (Sweden), ThinkPower (U.S.) and Schaeffler (Germany). Some customers pay up to $6.5 million in software royalties, $1 million per year.

FPT aims to reap $1 billion in software export revenue this year. To illustrate how big this number is, you once said $1 billion is equivalent to 23,500 VinFast VF8 units sold in the U.S. at $42,500 per unit. What is the basis for FPT to set this goal?

This is a serious business plan proposed by FPT Software and approved by FPT Corporation's leadership after many rounds of meetings and serious discussions. It is based on the opportunities that FPT Software has in the U.S., Japan, Europe, Asia, Latin America as well as its internal capacity and resources.

The most visible basis is that in 2022, the total value of contracts FPT Software signed reached $1 billion. This means the plan of $1 billion in 2023 sales is only equal to the total value of contracts signed in 2022.

The second basis is FPT Software's average growth rate of 26% over the last three years, including two years of the pandemic. The sales plan is based on 26% growth, equal to the rate posted from 2020-2022.

What factors helped FPT achieve average software revenue growth rate of 26% as the world wrestled with the pandemic for more than two years, made a brief recovery phase, and then fell into economic downturn?

FPT Software has a relatively sound internal resources, including consulting capacity, large-contract making capacity, technologies and professional qualifications. Therefore, our company is trusted by American and Japanese customers and we have been awarded large contracts worth over $100 million, even $150 million.

Second, FPT Software is continuously expanding its markets. In Japan, FPT Software is present in 14 cities, in the US 10 cities, Australia two cities, and in 26 countries on four continents, from North America, Europe, Asia, Australia to Latin America.

The third is the "fighting" spirit of FPT Software's staff, who are not afraid of challenges or suffering, just as long as there are opportunities, even in remote places like the Okinawa archipelago and Japan's northernmost island of Hokkaido.

Fourth, FPT Software has adopted the right strategy, accessing the latest, "hottest" technologies that customers have the most urgent demand for, including digital transformation, artificial intelligence (AI), big data, and robotics.

In traditional fields, there is still a gap between FPT and software companies in other countries, but in new technology, the gap in qualifications has narrowed.

How do you evaluate the role of FPT Software in FPT Corporation, looking at its profit contribution and prospects?

Among all FPT members, FPT Software has the highest growth rate. It has a global market of eight billion people. We call it "an unlimited market", meaning the global market is so big that FPT Software and Vietnam would be unable to take it over. Therefore, the role of FPT Software in FPT as a whole will become more and more important.

I think that FPT Software will account for 60% of FPT's profit soon. A very important point is that the products, latest technologies, and specialized operations that FPT Software has deployed for American, European, and Japanese customers are becoming valuable products that can be deployed for Vietnamese organizations and businesses, helping them operate and do business more efficiently, more cost-effectively, and with higher international competitiveness.

Software exports brought India $200 billion in 2022, equivalent to 49% of Vietnam's GDP. What support policies or changes should the government make to turn Vietnam into a software export "giant", looking at lessons from India?

The biggest difficulties for Vietnamese software exporters are human resources, national brands and procedures related to visas and work permits for experts of foreign customers, as well as for foreigners to come to work in Vietnam.

Currently, we are lacking in both quantity and quality in terms of IT and software students. The lack of human resources is so serious that Vietnamese software enterprises are constantly "fishing" for employees from each other, leading to a very high rate of employees moving to other software companies. Many software companies have a job hopping rate of up to 25-30% a year.

Normally, it takes six months to train a software employee in expertise, processes and company culture. If employees switch to other companies, then the time and cost for training replacements will be very high.

Regarding the quality of human resources, in addition to expertise, soft skills, foreign languages (English, Japanese) and teamwork, presentation and communication skills do not receive enough focus at many Vietnamese universities. If the Ministry of Education and Training and universities pay more attention to training these skills, the national competitiveness of Vietnam's software sector will improve.

We need a strategy to build a national brand in software and IT to turn Vietnam into a global software and IT powerhouse. There are things that Vietnamese software and IT businesses cannot do alone, so the government and the Ministry of Information and Communications must step in.

The U.S, Europe and China now consider chip manufacturing a strategic industry to help ensure national security. Many firms around the world can design chips, but chip production is a difficult stage in terms of technology and investment costs. Does FPT Semiconductor, a unit of FPT Software, plan to manufacture chips instead of just designing and transferring the designs to a factory in South Korea for production and packaging?

In the chip industry, there are three areas: design, manufacturing and trade. In terms of design and trade, many countries can do it, but 80% of production currently comes from Taiwan and South Korea. The U.S., mainland China, Japan, Israel and European countries make up a very small proportion, with the U.S. accounting for 7%, China 6%, and all the remaining countries only 7% of the global market. That's not to mention the production of high-tech chips is still made by Taiwan and South Korea.

FPT Software has just entered the chip market, initially designing and trading IoT chips for healthcare, then expanding IoT chips for other industries. FPT aims to succeed in the field of chip design and trade, enter the chip manufacturing sector, participate in two stages of the chip production chain, be recognized by global manufacturers first, and then think about bigger goals.

In my opinion, we need to be patient, we should not skip any stages or underestimate chip design and trade. Trade is especially important because only by selling a lot of chips, whether it's 7nm or 14nm chips, we can receive a lot of feedback from customers, thereby perfecting and optimizing the design.

Only when we sell a lot of chips, we can have money to invest in chip production lines when the conditions are ripe, we can easily negotiate with partners on technology transfer and supply of chip production lines.

Has the design and commercialization of medical IoT chips had the positive outcomes you expected since the establishment of FPT Semiconductor in September last year?

I can't announce the details of chip commercialization at this time, I can only say that FPT Semiconductor is implementing things as planned. The design and production of the first sample chip has been completed and handed over to customers for checks and assessments.

I personally keep a few dozen medical IoT chips in my office. FPT is starting to sell medical IoT chips to a second country. So far, our plan to sell 25 million chips globally remains unchanged.

Most of FPT's revenue and profit comes from foreign customers. You once wrote: "The most successful Vietnamese businesses and entrepreneurs share the same formula: technology and governance learnt from the West, but the culture is very Vietnamese." How has the factor of “a very Vietnamese company” been applied at FPT?

The clearest view of FPT is the culture. FPT is imbued with Vietnamese culture. FPT people always uphold teamwork; help each other in difficult times; share joys and sorrows; treat each other sincerely; are wholehearted with friends, customers, partners, not abandoning friends, partners, colleagues in difficult times; and respect love and gratitude even more than talent.

FPT people must love the Vietnamese nation, must have the desire to glorify the Vietnamese nation and the Vietnamese people in the international arena, must have the desire to use Vietnamese wisdom to conquer the world.

In business, FPT applies lessons from the People's War learnt from our ancestors, mobilizing all resources when necessary and always recognizing the participation and contributions of all members in the common success. FPT chairman Truong Gia Binh's lecture on the war is used to teach FPT officials at all levels and for MBA courses at FPT University.

When FPT staff travel overseas on business, they must learn the culture, customs, practices, laws and beliefs of that country, and behave in line with that country's culture. That means they behave in line with Japanese people's culture when in Japan, and the same if they are in South Korea, the U.S., India or Bangladesh. Our ancestors had a saying, equivalent to "When in Rome, do as the Romans do."

From the definition of "a very Vietnamese company", what do you think is "a successful Vietnamese enterprise"?

Personally, I think that a successful Vietnamese business is the one that always brings great benefits to its customers, makes great contributions to society and the national economy, creates many jobs, creates many talents for the country, and helps its employees succeed both in their careers and in economic terms.

If you can export products and services to earn foreign currency for the country and honor the Vietnamese nation in the international arena, it would be even better.