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Rising costs for human resources have weakened Vietnam's chief competitive advantage in the software industry.

In the past, cheap labour was seen as the country's chief competitive advantage in making international-standard software, but that advantage is declining.

The pool of employees for the software industry is still rather small, and language skills, particularly in English and Japanese, for writing software are limited.

Vietnam, however, still maintains a balance between expenditures and human resource skills, compared to India and China.

"But this balance could collapse if the country doesn't control inflation," Nguyen Hung Cuong, software development director at Harvey Nash, told Dau tu (Vietnam Investment Review) newspaper.

"Vietnamese-made software for the Japanese market is only 1-2 percent of what China sells to Japan," Cuong added.

The small pool of skilled employees is another problem as no company is able to employ several hundred software programmers in a few months.

"This means that there is no chance for Vietnamese companies to process big software projects," Cuong added.

Although Vietnam is seen as a location that can produce international software, many projects remain on paper because of these limitations that the country faces.

Meanwhile, turnover from the software processing industry in Vietnam was 1 billion USD, while total turnover for the sector was 244 billion USD worldwide last year. It is expected to reach 268 billion USD this year.

Source: VNA