Tech layoff wave spreads to Vietnam

By Nguyen Hang   November 5, 2023 | 03:00 pm PT
Tech layoff wave spreads to Vietnam
A programmer works on computers in an IT office. Photo by Shutterstock/ProStockStudio
Having worked for a large foreign technology corporation in Hanoi for more than five years, data analysis expert Le Thai Ha was shocked to get suddenly fired recently.

"Because the tech market has fluctuated a lot, our corporation officially announced a mass layoff, mostly of senior positions, including mine," she said.

Despite being aware of the difficulties of the market in general, and of the corporation in particular, its decision to cut back was still a big surprise to Ha.

The corporation has already struggled for two or three years, she said, saying that it must have finally been financially exhausted this year.

"This is our corporation’s first unannounced layoff, and so many employees were surprised by the decision," she said.

Ha said with the current global economic situation, many employees in the information technology (IT) field are prepared to get laid off at any time.

Ha is one of many employees that has been affected by the wave of tech layoffs that have begun to hit Vietnam.

Since earlier this year, many IT companies in the country have stopped recruiting or even laid off staff.

According to a recent report by TopDev, the country’s leading IT recruitment platform, nearly 90% of companies plan to recruit less than 50 programmers this year, compared to only 75% last year.

Recruitment budgets for 2023 have also taken a hit, with 79% of companies cutting recruitment costs and only 6% of companies investing more in new hiring processes.

Nguyen Ngoc Duc, a senior expert at Trapets Vietnam, which makes IT products for the Northern European market, said the gloomy Vietnamese IT situation is under the influence of the international market.

Massive tech layoffs have been sweeping the U.S., Europe, Japan, and South Korea following the Covid pandemic and major restructurings at large global companies like Twitter (now X).

Citing data from ChatGPT and Google, German authorities have reported that since the end of 2022, there have been some 380,000 layoffs worldwide, accounting for approximately 1.9% of around 20 million global tech employees.

Currently, Vietnamese IT companies mostly develop technology products and outsource to foreign firms.

Amid the declining market, investment in tech products has decreased, and product development has stagnated, Duc said.

Regarding outsourcing, foreign partners are also facing difficulties, so their demand for overseas orders has decreased, leading to smaller recruitment demands, Duc explained.

Some Vietnamese outsourcing companies have had to reduce their payroll by 90%.

"My company’s partners in Europe are placing orders quite cautiously, and are not ordering as much as before," Duc said.

"That’s why my company recruits less and has higher requirements, only recruiting highly qualified people, not recruiting massively."

Nguyen Thien Nghia, deputy director of the Ministry of Information and Communications’ Department of Information Technology and Communications Industry, blamed the fall in revenues on the global recession, the Russia-Ukraine conflict and supply chain interruption.

The IT sector saw revenues decrease by 9% year-on-year in the first half of this year.

Besides external factors, Duc called laying off IT personnel in Vietnam "a purification of personnel" after a period of hot development.

Because the demand for IT personnel increased sharply while the market boomed a few years ago, many schools raced to quickly train personnel in the field.

Some schools and centers train programmers in just six months, Duc said.

Six months is not enough time to train a high-level programmer to compete in the rapidly developing artificial intelligence (AI) landscape, he said.

"Instantly-trained programmers cannot survive in the current period. Even those who study for four years but do not study hard and enrich their knowledge regularly will be laid off very quickly," he said.

"It is ‘high-tech’ so instantly-trained people cannot do the job."

According to Duc, both employees and businesses need to learn to overcome the current difficult period and meet the increasing requirements of the international market.

"If Vietnam wants to make money from the IT sector, it cannot implement poor-quality outsourcing projects. Because the profits from those projects are very low, and very unstable," he said.

"Companies that implement such projects will not be able to cope with the crisis."

He said Vietnamese IT companies need to pursue international standards, including in coding quality, and focus on the quality and not quantity of projects they get to increase their prestige globally.

Many companies do not focus on pursuing international standards and instead chase profits but ignore product quality, he said.

When the market is hot and full of orders, Duc argued, firms often receive as many orders as possible even though they do not have enough time to produce good quality products.

"That leads to a situation where customers only work with one company for one project, and then when quality is not guaranteed, they have to change partners."

While waiting for businesses to find solutions to better meet the needs of an increasingly harsh market, Ha, despite having more than 10 years of experience, is still struggling to find a new job.

"I had three job offers, but unfortunately, all the three were canceled when I was about to sign the contract," she said.

Truong Loc Binh, who has six years of experience as a programmer, has also struggled to find a new job for three months after being laid off by his company, which focuses on the Australian market.

A number of companies are currently posting premature job vacancies, Binh said.

"Some companies...are just in the process of negotiating [deals] with customers [before landing new projects], but they advertise jobs, receive CVs and do interviews [to attract applicants beforehand]. After that, they do not respond [until] they get the contract from the customer, [then] they contact us again."

"For some of my friends, the interviews started in early January, but the companies didn’t call them until September."

Some companies agree to recruit candidates, but then on the day the is supposed to start, they inform candidates the recruitment has been cancelled, Binh said.

"So now even if I receive an offer, I’m not sure if I’ll have a job or not."

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