Vietnam Software Market Outlook to 2028

Vietnam Software Market Overview

• The Vietnam software market is valued at USD 1.5 billion, based on a five-year historical analysis. This market is driven by the rapid digitalization efforts led by the Vietnamese government, which are promoting digital transformation in both the public and private sectors. The surge in demand for cloud-based solutions and the rise of e-commerce, fintech, and smart city projects are additional driving forces. As businesses modernize, the demand for software solutions such as enterprise resource planning (ERP) and customer relationship management (CRM) is increasing.
• Hanoi and Ho Chi Minh City dominate the software market in Vietnam due to their concentration of tech-savvy enterprises and a thriving startup ecosystem. Both cities benefit from strong IT infrastructure, a highly skilled workforce, and government initiatives promoting digital innovation. Additionally, foreign direct investments (FDIs) in these areas have led to the establishment of numerous multinational companies, making these cities critical hubs for software development and implementation.
• Vietnams 2022 Cybersecurity Law mandates that all companies handling Vietnamese users data must store this data locally. The law, enforced by the Ministry of Public Security, applies to foreign companies like Google and Facebook as well as local firms. As of 2023, over 500 businesses had complied with the law, building data centers within the country to handle sensitive data securely. These stringent requirements are pushing companies to invest more in local software infrastructure, increasing demand for data management and storage solutions.

Vietnam Software Market Segmentation

By Deployment Type: The Vietnam software market is segmented by deployment type into cloud-based software and on-premise software. Cloud-based software dominates this segment due to its scalability, cost-efficiency, and the increasing adoption of cloud technologies by both small and large enterprises. With more companies seeking flexible and remote-friendly solutions, cloud services like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are leading this transformation. The growing demand for seamless collaboration and data security has made cloud-based deployments the preferred choice for enterprises.

By End-User Industry: The Vietnam software market is segmented by end-user industry into BFSI, healthcare, retail & e-commerce, government & public sector, and IT & telecommunications. The BFSI sector holds a dominant share in this segmentation due to the growing fintech ecosystem and the adoption of digital banking services. The increased focus on cybersecurity, coupled with the need for efficient financial management software, drives demand in this sector. Additionally, the governments push towards financial inclusion and cashless transactions further enhances the use of software solutions in this industry.

Vietnam Software Market Competitive Landscape

The Vietnam software market is dominated by a mix of local and international players, each contributing to the growing ecosystem. Leading companies are investing heavily in research and development (R&D) to introduce innovative solutions that meet the specific demands of the Vietnamese market. Additionally, partnerships between Vietnamese firms and global tech giants are helping to enhance service offerings and accelerate digital transformation.

Vietnam Software Market Analysis

Growth Drivers

• Digital Transformation Initiatives: Vietnam's digital transformation has accelerated significantly, driven by the government's "National Digital Transformation Programme." By 2022, over 61,000 businesses had integrated digital technology into their operations, according to the Ministry of Information and Communications. The country is aiming to digitally transform 100,000 businesses by the end of 2025. Digital transformation initiatives have spurred demand for software services, especially in cloud computing, AI, and data analytics, fostering rapid growth in the software market. This is backed by robust GDP growth of 7.02% in 2023, facilitating investments into digital infrastructure.
• Government Support for IT Infrastructure (Government Regulations): The Vietnamese government has made significant investments in IT infrastructure to foster software industry growth. In 2023, $750 million was allocated to improving IT infrastructure and enhancing connectivity under the Ministry of Information and Communications. Regulatory frameworks such as Decision No. 749/QD-TTg aim to digitize the economy and integrate software solutions in all sectors by 2025. Additionally, Vietnam's internet penetration reached 75.6% in 2023, further supporting the demand for IT and software solutions. The government's focus on enhancing digital infrastructure continues to bolster the software market's growth trajectory.
• Growing Demand for Cloud-Based Solutions: Cloud adoption in Vietnam is surging, driven by an increased focus on digital transformation. As of 2023, over 65% of large enterprises have adopted cloud-based solutions, according to Vietnam's Ministry of Information and Communications. The demand for Software-as-a-Service (SaaS) and cloud storage is increasing, especially in sectors like finance, healthcare, and e-commerce. This shift is driven by Vietnam's growing internet infrastructure and robust data center investments, which increased by 30% in 2023. The rapid cloud adoption is aligned with the country's economic growth and digital aspirations.

Challenges

• Data Privacy and Cybersecurity Concerns: Vietnams growing software industry faces challenges regarding data privacy and cybersecurity. The Ministry of Public Security reported over 12,000 cyberattacks in 2023, with several targeting local businesses. Data breaches have raised concerns over the protection of sensitive consumer information, especially in sectors like finance and e-commerce. The National Assemblys cybersecurity law, which came into effect in 2022, aims to mitigate these threats, but many businesses still struggle with compliance, increasing operational risks. This has slowed software adoption in sectors dealing with high volumes of sensitive data, affecting overall market growth.
• High Competition from Foreign Players: Vietnams software market is heavily influenced by competition from foreign players, especially from global IT giants. Companies like Microsoft, Oracle, and SAP dominate the enterprise software market, leaving limited space for domestic players. The General Statistics Office of Vietnam reported that over 60% of enterprise software used by large businesses in 2023 was developed by foreign companies. This competitive landscape makes it difficult for local software developers to scale, as they struggle to compete on price, expertise, and reputation, creating barriers for smaller companies to penetrate the market.

Vietnam Software Market Future Outlook

Over the next five years, the Vietnam software market is expected to grow significantly, driven by continuous government support for digital transformation initiatives, increasing investments in IT infrastructure, and the rise of Industry 4.0 applications. As businesses continue to prioritize cloud adoption, AI, and cybersecurity solutions, the software sector will witness a rapid increase in demand from sectors such as healthcare, BFSI, and e-commerce. The push for smart city development will further boost software usage, with Vietnams urban areas increasingly integrating software solutions into daily operations and services.

Market Opportunities

• Growing Focus on Automation Solutions: Automation technologies are gaining traction across Vietnams software market, with enterprises investing heavily in process automation tools. The Ministry of Planning and Investment reported that investments in automation software reached $150 million in 2023, particularly in sectors like manufacturing, logistics, and banking. These solutions help businesses enhance operational efficiency and reduce labor costs, driving software demand. Local and international software firms are leveraging this trend by offering specialized automation tools tailored to specific industries.
• Shift Towards Hybrid Work Environments: The COVID-19 pandemic has driven a permanent shift towards hybrid work models in Vietnam, influencing software adoption. By 2023, 60% of Vietnamese enterprises had adopted hybrid work solutions, according to the Ministry of Labour, Invalids, and Social Affairs. This shift has accelerated demand for collaboration tools, virtual private networks (VPNs), and cybersecurity solutions to ensure secure remote work environments. The hybrid work trend is expected to continue, offering growth opportunities for software vendors providing solutions that cater to the unique needs of a distributed workforce.