FPT Software spearheads Vietnam’s global push

Vietnam is emerging as one of the most attractive offshore locations for software development and IT services. 

A recent Kearney study on global services location ranked Vietnam in the top six, based on an assessment of criteria including skills and availability, business environment and financial attractiveness. 

The country’s breakout success story from its growing IT services supplier community is FPT Software, which has been on PAC’s radar since it secured an eye-catching $100m SAP services deal in the German utilities sector.

FPT Software follows in the tradition of many the leading Indian players by originating as part of a broader conglomerate. Parent group FPT clocked sales of $1.6bn last year from operations that span telecoms, technology and education. The FPT Software division was founded in 1999 and is now one of the key units within FPT, with sales rising by 23% to reach $632.5m in FY 2021.

FPT Software has a headcount of more than 22,000, working across a network of 22 development centers, including seven campuses in its domestic region with a potential capacity for 25,000 employees. The company’s core proposition is business applications services, which accounts for three quarters of its revenue, with clients based across a range of sectors including utilities, manufacturing and financial services.

The company’s European story is an interesting one. It first established a base in the region with the opening of offices in Kosice and Prague in 2004, and acquired RWE IT, the Slovakian captive division of the German utility in 2014. It now has more than 350 employees in Europe providing services including SAP-related development and services, development and testing and project management services. 

FPT Software now has strategic partnerships with blue-chip brands including Airbus, Allianz, Schaeffler and Carlsberg and is halfway through a $100m contract with Innogy SE, a subsidiary of RWE, to provide SAP, IoT and other digital transformation services through to 2024. 

PAC recently heard from TopHat, one of the company’s customers in the UK, and a fast-growing challenger in the housebuilding sector. TopHat has been working with FPT Software to help it develop a platform that provides a single pane of glass view across a highly complex data landscape. This draws on data from design systems (including Autodesk), production and supply chain applications (SAP), as well as sales and site management systems. The client said that its work with FPT Software is helping it to build the efficiency it needs in its operating model to produce modular zero embodied carbon houses at scale.

This is a key point. While rates for some development skills can be 20% lower in Vietnam than they are in the Indian metropolitan hot-spots, FPT Software is not positioning itself as an alternative low-cost maintenance and development shop. Many of its projects see is supporting business critical initiatives that help their clients accelerate their transformation to digital-centric approaches. The company already has its own AI building center to research and develop AI-based products and solutions. 

Global sourcing is now driven as much by the hunt for talent as it is by cost efficiency. Vietnam produces more than 50,000 IT graduates annually, and the FPT Education group has fostered links with the University of Greenwich and the Swinburne University of Technology as it looks to tap into an even wider skills base in next-gen technologies (blockchain, AI, metaverse, etc.).  

FPT Software is aiming to become a $1bn–revenue business within the next couple of years, with further growth in Europe supplemented by the diversification of its delivery centre network in India, the Philippines and Central America. As many businesses reconsider their global sourcing strategies in the light of the changing geo-political landscape and volatile economic backdrop, we will watch the progress of FPT Software and the wider Vietnam software and IT services supplier community with interest.