The rapid adoption of cloud services in recent years is aiding digital transformation in Vietnam. As demand for agility, productivity, and storage efficiency grows across all sectors, they push organizations in the country to transform their IT infrastructure, thereby opening up a broad range of opportunities for foreign firms.
Many Vietnamese firms are migrating to cloud computing to become more competitive. This increasing demand for cloud services in all business fields has fostered the expansion of both domestic and foreign cloud service providers in Vietnam. According to the Ministry of Information and Communication (MIC), Vietnam now has at least 27 data centers owned by 11 domestic firms.
However, although in recent years there has been a sharp increase in cloud adoption globally, Vietnam has been slow in implementing software-as-a-service (SaaS) solutions and making a full move to ‘the cloud’. Research shows that only 5 to 7 percent of Vietnamese enterprises have transitioned to a SaaS-first business model. In this light, understanding the challenges cloud computing faces may help foreign firms make more informed investments in Vietnam’s cloud services market.
Vietnam cloud services market in numbers
According to Vice President of Google, Stephanie Davis, Vietnam has the fastest-growing digital economy in Southeast Asia. Furthermore, the cloud computing market in recent years recorded a CAGR of nearly 30 percent in Vietnam, according to the MIC. This, together with the robust development of IT infrastructure software and data centers, shows that Vietnam’s ICT industry is making headway in accelerating its digital transformation agenda and developing the cloud computing market.
In 2020, Vietnam’s cloud service market reached US$196 million and is anticipated to have a CAGR of 18.8 percent up to 2026, according to Research and Markets. Data center construction has also increased dramatically in 2022, with several Vietnam data center industry heavyweights having built new units, including CMC Corporation, Viettel IDC, and VNG Cloud. These developments contain over 270,000 rack servers.
With regard to the cloud readiness of Vietnamese enterprises, an EY survey found that 84 percent of the respondents said their organization has a cloud migration strategy. One of the biggest driving factors for these firms to adopt cloud technology is to improve their operational performance.
In addition, domestic firms and multinational corporations are making headway in incorporating cloud technology into their business operations. Twenty-eight percent of the surveyed business leaders said they are designing a cloud migration deployment plan and 38 percent stated that their organizations are in the process of implementing a cloud strategy.
In this context, the cloud adoption journey of firms operating in Vietnam represents significant revenue growth potential for cloud service providers in the coming years.
