Vietnamese IT player eyes SMBs in Singapore foray

SINGAPORE--Vietnam's leading IT services provider FPT Information System (FPT IS) is zooming in on small and midsize businesses (SMBs) that lack internal IT expertise to grow its business in the city-state's "mature" market, according to a senior company executive.

FPT IS Chairman Do Cao Bao said the company had set up a small back office in Singapore in 2008 to learn more about the business environment here and to network with companies to promote brand awareness. All business deals that were brokered then were channeled back to its base in Vietnam, he noted.

Three years on, FPT IS has recognized that it cannot replicate its business model in Vietnam, which is focused on providing IT services to large enterprises and government agencies, in Singapore as the "market is small and the competition from established vendors is strong", the executive said in an interview with ZDNet Asia on Thursday.

Instead, it will target local SMBs lacking in internal IT expertise and provide them the necessary resources to scale their businesses, Bao said. He added that from interactions with customers, the top two services these companies are looking for from FPT IS are enterprise resource planning (ERP) and IT outsourcing for infrastructure services.

"By catering to the SMBs' IT needs, we allow them to free up their limited resources and concentrate on growing their core competencies," added Tran Tuan Phong, managing director of FPT IS Singapore, who was also present at the interview.

"We see abundant growth opportunities in catering to these companies' ERP, BPO (business process outsourcing) and infocommunications infrastructure needs."

SMBs aside, FPT IS will also be leveraging its existing relationships with partners such as Microsoft, Hewlett-Packard (HP), Oracle and SAP to service bigger customers in Singapore, noted Phong. He pointed out that one of its more recent local projects--contracted to the company by HP--was to help the Singapore Exchange migrate its e-mail system.

So rather than competing head-on with established vendors, the director said the relationship will be mutually beneficial as these global IT giants tap FPT IS to introduce their products and services into the Vietnamese market, too.

Wading into "transparent" markets
The Vietnamese IT provider is investing US$500,000 into the Singapore office and will have an initial staff strength of 12. This, Bao pointed out, is the "right" level of investment in order to expand quickly from its established base markets such as Vietnam, Laos and Cambodia as it did not arouse "too many questions" from the Vietnamese government.

Elaborating, the chairman said the economy in Vietnam is "not very stable" with a very high inflation rate, which meant the company had to "expand cautiously". An investment of US$1 million in Singapore would have resulted in a six-month delay in setting up its office here due to governmental scrutiny, he noted.

Asked if the language and cultural barrier will hinder its globalization plans, Bao said this challenge is "almost eliminated" as staff are being trained to converse in English and Japanese. He added that the ability to speak Japanese is important as the market is the company's biggest revenue contributor outside Vietnam. Japan contributes 20 percent of the company's revenue while Vietnam generates about 55 percent to 60 percent, the executive revealed.

Additionally, the company sees the Singapore office as a launch pad to grow its regional business. It decided to set up shop here to learn how to do business in "transparent" markets, which is characterized as having strong legal and intellectual property systems, as it is different to the way business is conducted in "non-transparent" markets where FPT IS is used to operating in, Phong explained.

With that in mind, FPT IS Singapore can expect to see investments quadruple to US$2 million in the next three to five years, he added.

In terms of technology, the Singapore-based managing director said cloud computing is an area that it is currently being equipped in. This is done through IT projects the company is working on in conjunction with cloud computing vendors such as Microsoft and Salesforce.com, he said.

"We will be focusing on private cloud deployments and datacenter management as well as providing implementation and support for Salesforce products on the customer-facing end of the spectrum," Phong stated.