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Skill Gap to Remove: Case study on Vietnam

Publish On : 13/10/2015

By Shara Tibken 

-- I was late to the 5:30 p.m. class, and the air-conditioned room was packed when I arrived. I slipped off my sandals, customary when visiting Vietnamese homes and businesses, and joined two dozen men crammed into rows of workstations in the sparse, white-walled space.

This small room is a 10-minute walk from the Reunification Palace, where South Vietnam’s president lived and worked during what’s known here as the American War. It’s best recognized as the place where a North Vietnamese tank crashed through the compound’s gates in the Fall of Saigon in 1975.But the image projected on the classroom’s wall isn’t a scene of war. It’s a lesson on coding. The mostly 2 0 - s o m e t h i n g students are all here for one reason: to learn to develop apps for the iPhone and iPad using Apple’s new Swift programming language

“What you learn in school isn’t for the real world,” instructor Pham Khoa told me over banh xeo (Vietnamese pancakes) and noodle soup after the class. The reason? Classes here focus more on the theoretical than on the practical. That’s why the 28-year-old selftaught programmer now teaches others to write applications for Apple’s iOS, Google’s Android.and Microsoft’s Windows operating systems -- skills they couldn’t easily learn elsewhere.

That need to educate oneself is part of a broader shift as the country -- best known to Americans for the controversial war during the ‘60s and ‘70s -- is working to become one of the world’s leading technology manufacturers. There’s just one problem: Even after they graduate, students need additional training to do more than assemble devices, say more than a dozen manufacturers and startups I met with in Vietnam as part of Road Trip 2015. Many require months, if not years, of supervision.

“The training program in universities in Vietnam is not suitable for working after graduation,” said Pham Dong Phong, plant director of LG’s factory in Haiphong, a port city in northeastern Vietnam. “After university, just having general knowledge to make  it in an actual job is really difficult.”

To help close the knowledge gap, a number of global tech giants, including Samsung and LG, have launched their own programs to educate their Vietnamese workers. Their readiness to invest illustrates the country’s appeal.

Vietnam has a stable -- albeit conservative Communist -- government that’s willing to give tax breaks to foreign companies. It also boasts a cheap labor force, particularly compared with China, where wages have risen with the
country’s improved economy. A tech worker in Vietnam typically makes about a third as much as a Chinese employee (in 2013, a factory worker in Hanoi made $145 a month versus $466 a month in Beijing, though wages have risen since then).The Vietnamese population is also younger -- the median age of 29 is eight years younger than the US and China -- and speaks English as xthe country’s de facto second language. And while skills don’t yet meet the need for high-tech work, education standards have rapidly risen.Vietnam’s 15-yearolds had higher scores in reading, math and science than their counterparts in many developed countries, including the US and United Kingdom, thanks to the government’s investment in education.When it comes to manufacturing in Vietnam, business is booming. Intel, the world’s biggest chipmaker, opened a $1 billion factory in Ho Chi Minh City in 2010, and US-based contract manufacturer Jabil builds the majority of its customers’ retail point-of-sale terminals in the same city. Microsoft’s Nokia handset business shifted its manufacturing to the capital of Hanoi from China, Apple LCD supplier Wintek runs operations in Vietnam, and LG makes everything from mobile devices to televisions in Haiphong.And last year, consumer electronics giant Samsung assembled nearly a third of its smartphones here.
Technology manufacturing has helped boost Vietnam’s economy. The country’s gross domestic product in the first half of 2015 grew 6.3 percent from the same period in 2014, according to Vietnam’s General Statistics Office. That growth was powered by $14.7 billion of worth of “telephone and spare parts” exports. That sector (largely mobile phones) accounts for about 19 percent of Vietnam’s total exports, topping every other category.

The Samsung effect

The country can thank Samsung for the boost.In 2012, about two years after Samsung openedits first mobile device factory in the northern part of the country, Vietnam started exporting more than it imported for the first time
in 20 years. After Samsung flipped the switch on its second phone factory in the north last year, 17 percent of Vietnam’s total 2014 exports came from Samsung.


Samsung remains serious about its investment here. Over the past seven years, the South Korean electronics maker has earmarked nearly $9 billion for facilities in Vietnam. That doesn’t include the billions spent by other Samsung divisions and suppliers, such as a recent approval by the Vietnamese government for a $1 billion smartphone and tablet display factory in Bac Ninh province.

Already, Southeast Asia -- Vietnam in particular -- has eclipsed China in terms of total Samsung workers, and the region even overtook Korea last year as the largest employee base. Samsung employs about 110,000 workers in Vietnam, with the vast majority in its two smartphone factories in the Bac Ninh and Thai Nguyen provinces outside Hanoi. When the company’s new $1.4 billion consumer electronics factory opens in Ho Chi Minh City in the first half of 2016, Samsung will add about 5,000 more employees to its payroll.

“Vietnam is now a growing country, so we have opportunities not only for business but also for workforce,” Nguyen Van Dao, vice president of corporate marketing for Samsung’s Vietnam operations, told me in the company’s office in the Bitexco Financial Tower -- Ho Chi Minh City’s tallest skyscraper.

When hiring tens of thousands of workers in a developing country, it’s difficult to find employees with extensive  in high-tech.

Samsung assumes it will have to train all its workers, Dao said, and the company selects new hires based on their background and basic

“Education in Vietnam is mostly based on theory and a lack of the practical,” he said. “We still need a lot of practical skills and soft skills to work not only in the factory but the sales office and others.”

Samsung struck agreements with universities so its workers can take free courses at night right in the factories. They’re able to study English and Korean, as well as accounting and electronic engineering.The company is also digitizing books and sponsoring 50 “Smart Libraries” in major cities and rural parts of the country. Samsung is working with the Vietnamesegovernment to digitize textbooks, advanced reference manuals and other books, which are then made available through an Android app called Classbook. Users must have a Samsung phone run the app.

Years of Training

Samsung isn’t the only company addressing the education gap. LG, which in March opened a 800,000-square meter facility in Haiphong, tends to hire workers first, and deal with training and education later.

“For now, we just do on-the-job training,” said Phong, the plant director. “But now we’re discussing, thinking about the next three years, how to get experienced operators and managers.”

In Vietnamese village, tech rewires old traditions Vietnam’s third-largest city, Haiphong is a vital port gateway about three hours east of Hanoi by car. LG has 1,000 employees there and intends to double the workforce over the next year. While there are plenty of young, able workers in Vietnam, LG has had trouble hiring experienced employees for more intensive tasks such as supervising assembly line workers or conducting R&D, Phong said.

And it’s the R&D operations, for areas such as software and automobile infotainment, that LG is now focused
on in Vietnam. Along with making the Vietnamese government happy, doing R&D inside the country makes it
easier to troubleshoot manufacturing problems, as well as develop products for the local market.

On average, LG has to train R&Dcentric employees for three years before they can work on their own projects, Phong said. About 30 percent of the white-collar staff members overseeing factory line workers and handling tasks like quality and assurance testing can work independently after four months. The rest need close supervision for a year. About 90 percent of line workers, the people actually putting together TVs and phones, work alone after a month.

To deal with these long on-the-job training times, LG sponsors scholarships and internships. It’s also considered partnering with universities on specialty training.

Jabil operates a factory at the opposite end of the country in Ho Chi Minh City, building products for customers such as Ingenico and Sierra Wireless in the Saigon Hi-Tech Park. Jabil likes to refer to itself as the biggest $18 billion (in sales) company no one’s ever heard of.

The industrial park feels more like Silicon Valley than any other part of Vietnam I’ve visited -- but there’s no way to forget you’re in the midst of a developing country. The road in front of Jabil’s facility was dirt up to about a month before I arrived. Soil-filled ditches still surround the factory.

For US-based Jabil, the biggest problem with candidates is their poor English language skills. And what many students learn “is a bit outdated for what we need,” said Patrick Tan, operations manager of Jabil’s Vietnam facility. “It’s kind of difficult to get people right out of the university and be able to plug into the work at the factory,” he said. “It’s so much different from other countries.”

Jabil runs a year-long training program for new employees who show potential for advancement. At the end of the program, the participants present a report on what they’ve learned and where they’d like to work in Jabil if they continue at the company. They’re then plugged into roles requiring greater expertise.

Other companies have taken more drastic measures beyond instituting their own training courses. In 2006, FPT Group, a Vietnamese information technology and telecommunications conglomerate, started FPT University, its own
private university in Hanoi. In a letter to potential students, university rector Dam Quang Minh called the school “Inside Corporate University,” and the school said its mission is “to provide a global competitive advantage for students, thus expanding our nation’s intellectual horizon.”

Getting Up to Speed

One of the biggest US companies to move into Vietnam is Intel. The Santa Clara, California, chipmaker, which opened an assembly and test factory in Ho Chi Minh City in 2010, quickly ran into the same problems as its tech brethren.

Intel turned to Arizona State University to figure out how to get engineering students up to speed. They decided the best thing to do was train Vietnamese professors from eight universities on more modern ways to teach engineering. Together they formed the Higher Engineering Education Alliance Program, or HEEAP, which is also funded by the US Agency of International Development, or USAID.

Others -- including Siemens, Danaher and Pearson -- have since joined in. “The concept is very simple, but to make it happen is not easy,” said Le Van Khoi, the director of HEEAP in Vietnam. HEEAP is showing results. Since its 2010

launch, HEEAP has trained 291 Vietnamese lecturers -- including 71 women -- in its sixweek summer programs, along with hundreds of other professors in workshops offered throughout the year.

Nguyen Ba Hai, who holds a Ph.D. in the field cof biorobotics, is director of the digital learning center at the Ho Chi Minh City University of Technology and Education. He took part in the program in 2012 and says it’s dramatically changed the way he teaches.

“In Vietnam, the educational system is very not flexible,” Hai said. “If we want to change something, it takes a long time. .... But really for me, I changed everything.”

After the HEEAP training, the Ho Chi Minh City University of Technology and Education started offering introductory engineering courses, including Mechanical Engineering 101, which didn’t previously exist in Vietnam. Students now
spend more time learning how to define and solve problems. They’re also required to have a lab credit and create a hands-on final project. Last year, the school launched a digital learning center -- which Hai leads -- to better integrate online learning with in-person classes.HEEAP now is seeking new funding to help schools add labs, said Jeffrey Goss, ASU viceprovost and director of the university’s program in Vietnam. That includes four “advanced maker spaces” throughout the country, which build on the popular global do-it-yourself movement that encourages tinkerers, engineers and kids to invent and build whatever they think up.“The hope is that when students graduate,
they’re not just prepared to go work for a company, but also have more of a maker’s mindset,” Goss said.

The government has been open to suggestions about how to educate future workers, according to the companies I talked to. Most are growing their operations despite the skills gap. Samsung is planning a $3 billion expansion to the Thai Nguyen mobile facility it opened last year, and Jabil last week signed an agreement with the management board of the Saigon Hi-Tech Park to more than double its workforce of 2,600 over the next five years,
as well as build another factory in 2017.

The skills gap has also opened up an opportunity for education startups. Topica, which teaches English online and partners with universities to offer courses a la University of Phoenix, now has about 1,400 instructors teaching more than 20,000 students over the Internet. Silicon Valley-based venture capital firms Formation 8 and Learn Capital recently funded Rockit Online, a site that teaches English, math and science to Vietnamese students and is looking to add other skills-focused courses. Most Rockit users are Vietnamese college students or working professionals. 

“There’s a big flaw in our education model that’s not being fixed fast enough to keep up with the needs of the economy,” Rockit CEO Dao Thu Hien, a former AP reporter and staffer in New York Mayor Michael Bloomberg’s administration, said in the company’s Hanoi offices. “That leaves opportunities for companies like us to come in and help students.”

Back in his classroom in Ho Chi Minh City, the students peppered me for nearly an hour with questions about Apple and Samsung and what the tech industry is like in the US. They told me why they were spending their precious free
time -- two hours a day, three days a week, for a month -- learning to make iPhone and iPad apps.

Trinh Minh, who at 54 is the oldest person in the class, signed up for the $183 course to expand his knowledge beyond his normal IT career. He also decided to enroll his 15-year-old son, Trinh An, in the class to give his son an edge in the tech world after he finishes school. “I want to learn more and more,” Minh said through an interpreter. “And I want to be the mirror for my son to follow.”

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