Business Performance Analysis
IT services for foreign markets
With a significant milestone of reaching 01 billion USD in revenue from IT services for foreign markets, the Company is transcending the realm of small and medium-sized IT service firms globally to embark on a new journey – aiming to achieve 05 billion USD by 2030. Starting from 2024, the Corporation remains committed to deep investment, focusing on the development of high-value technologies and ventures in rapidly growing sectors such as automotive software, healthcare, finance, banking, insurance, and energy. We are determined to elevate our standards and surpass expectations to become a world-class company.
In 2023, FPT witnessed a historic milestone as revenue from IT services for foreign markets surpassed the 1 billion USD milestone, reaching 24,288 billion VND, marking a 28.4% increase. Profit before tax also grew substantially, reaching 3,782 billion VND, up 27.1% compared to the previous year. Revenue continued to experience robust development across all four markets. The Japanese market witnessed the highest growth rate, up 52.2% in terms of Japanese Yen. FPT finds itself in a promising position in this major market as Japan is aggressively pursuing digital transformation efforts, vigorously integrating supply chains to develop and operate IT systems in order to keep up with Western countries., particularly in the wake of the COVID-19 pandemic. Moreover, FPT, along with Vietnamese businesses overall, is progressively gaining leverage in the Japanese market because of the trend of transitioning from IT service providers in other countries to Vietnam. Capitalizing on this opportunity, combined with FPT's technological prowess and resources, revenue from the Japanese market is anticipated to sustain a high growth rate of over 30% per year, with the aim of reaching 01 billion USD by 2027. This market remains pivotal for the Corporation's strategic focus. Moving on to the Asia-Pacific market, FPT experienced a significant 37.7% increase in revenue, propelled by heightened demand for digital transformation from multinational corporations based in this region. Despite facing challenges such as geopolitical conflicts and economic instability, the US and European markets still saw revenue growth of 8.6% and 21.9%, respectively, compared to 2022. FPT achieved this growth by making efforts to maintain relationships with existing customer bases, optimize operational capacity in challenging economic conditions, and secure new contracts. FPT remains prepared to anticipate economic recovery in the near future.
Transitioning from its project implementation model of getting job assignments, FPT has undergone a significant "transformation." Now, it serves as a consultant in executing digital transformation projects leveraging cutting-edge technology, with project scales reaching dozens, even hundreds of millions of dollars. This evolution has marked FPT's official entry into the league of global billion-dollar IT service providers. FPT aims to elevate itself further within this group, targeting the next milestone of 5 billion USD in IT service revenue from foreign markets by 2030.
Advancing decisively to higher echelons in the technology value chain, solidifying its global stature.
In recent years, FPT's IT services for foreign markets have shifted significantly toward higher stages in the technology value chain, with nearly 50% of total foreign revenue now derived from digital transformation services. This represents an increase of nearly sixfold over the past five years. In 2023, revenue from Digital Transformation Services continued its robust growth trajectory, maintaining a compound annual growth rate of over 40%, reaching 10,425 billion VND. Within this segment, 40% was attributed to Cloud technology, while other technologies such as AI and data analysis accounted for 12%, and RPA & Lowcode contributed 10%. With global expenditure on digital transformation projected to remain robust, expected to reach 3,900 billion USD by 2027, and bolstered by its young IT workforce adept at swiftly embracing new technology trends, FPT anticipates revenue from Digital transformation services will continue to sustain a high growth rate. This segment is set to act as a primary growth driver for the Corporation.
In tandem with elevating itself in the technology value chain, FPT has been actively fostering the recruitment of engineers and experts possessing extensive technological expertise and diverse experience across various fields. This strategic initiative aims to address the rising demand for IT services characterized by increasingly intricate quality standards. Drawing upon over two decades of global market experience, the Corporation has cultivated profound capabilities to capitalize on opportunities within specialized sectors poised for significant future growth, including automotive software, banking and finance, insurance, energy, and healthcare…
Out of the 01 billion USD IT service revenue from foreign markets, 21% was generated from the automotive software and manufacturing sector, while 11% came from the Finance, Banking, and Insurance sector, and another 11% from the Energy sector. Notably, revenue from the automotive software and manufacturing sector consistently grew at a rate exceeding 30%, underscoring FPT's growing reputation in this domain. In the realm of automotive software – a strategic focus area for FPT in the foreseeable future – the Corporation was recognized as a Major Contender globally, alongside industry giants such as Infosys, NTT Data, and Cognizant... (as per a report by Everest Group). By the end of 2023, FPT established FPT Automotive company in Texas, USA, aiming to capture a market expected to reach 116.6 billion USD by 2032. Presently, FPT boasts a team of nearly 4,000 employees dedicated to this technology segment, serving 150 major customers consisting of global car manufacturers and spare parts manufacturers.
Asserting its global stature, FPT has been intensifying its footprint in key countries worldwide through the establishment of new offices in Japan, Korea, Indonesia, India, America, and Mexico... Additionally, FPT has concentrated on deep investment in service providers in neighboring countries across the US, Latin America, and Europe to broaden its customer base in these regions, thus enabling the swift capture of emerging opportunities on a global scale. In 2023, FPT executed 04 M&A and investment deals with renowned technology companies in the US and France, including Intertec International, Cardinal Peak, AOSIS, and Landing AI. These strategic moves have bolstered FPT's production resources, ensuring uninterrupted service supply while enhancing technological capabilities in emerging areas such as SAP, Data, Cloud, IoT, AI, embedded software, and smart solutions. FPT remains committed to prioritizing strategic M&A deals in the forthcoming years to bolster its global consulting capacity, recruiting experts in priority specialized fields, and enhance high-value technological capabilities. These initiatives will enable the Corporation to undertake large-scale projects worth hundreds of millions of dollars, deliver comprehensive solution services, and attain a global standard of excellence.
The vigorous endeavors to ascend to higher stages in the value chain and scale up business operations have proven effective, as evidenced by the notable enhancement in labor productivity of IT engineers (highlighted by the average revenue per employee), which surged to 925.7 million VND per person per year in 2023, thereby narrowing the gap with other prominent entities in the industry.
Human capital is a crucial factor in achieving the Corporation's development objectives. As of the end of 2023, the average number of employees serving the foreign IT market reached 25,213 individuals. Particularly in Japan – a highly competitive labor market, FPT continued to demonstrate its prowess in talent attraction, with 2,900 employees currently engaged across 16 offices and development centers in this market. In pursuit of fostering top-tier human capital on a global scale, FPT committed itself to cultivating a multicultural and multi-ethnic work environment wherein every individual is esteemed and empowered to nurture their personal talents and incorporate their identities. Presently, FPT boasts a workforce comprising 2,925 foreign experts from 73 diverse nationalities. Throughout the year, FPT received consistent recognition at prestigious global workplace awards, including being listed among the Top 100 Best Places to Work in Japan and the Best Place to Work for Women in Japan. Additionally, FPT was honored among the Top 100 best places to work in Texas, USA, and one of the top companies with the best work environments in Singapore and Vietnam. Because of favorable remuneration policies and a cohesive corporate culture, FPT experienced a notable decrease in turnover rate, reaching its lowest level in over a decade at 10.3% and marking a substantial decline of 680 basis points compared to 2022. This reduction in turnover rate has helped alleviate recruitment pressures, optimize personnel costs, and create opportunities for increasing profit margins for IT Services for foreign markets.
Average number of employees in the IT Services segment for foreign markets
Criteria | 2022 | 2023 | +/- |
|---|---|---|---|
| Average total employees | 22,089 | 25,213 | 14.1% |
| Average total production personnel | 20,527 | 23,434 | 14.2% |
| Revenue per capita (million VND) | 854 | 925.7 950 (excluding exchange rate effects) | 8.4% 11.2% (excluding exchange rate effects) |
Asserting its pioneering stance in emerging technologies and securing major clientele
FPT's prowess in cutting-edge technology domains serves as a strategic advantage, positioning the Corporation competitively against counterparts in the industry from India and China. This advantage enables FPT to secure substantial contracts and customers, handling turnovers in the hundreds of millions of USD and being the main contractor in large-scale projects. The Corporation's adeptness in swiftly acquiring new skills, meeting stringent technological requirements, and assembling a team of skilled and committed employees are climactic factors in winning over major clients. In 2023, the average value of each contract from a customer surged nearly tenfold compared to five years prior, marking a significant milestone as FPT's customer portfolio now includes clients with cumulative sales exceeding 200 million USD. Remarkably, 80% of the 01 billion USD revenue from IT services for foreign markets was derived from the "million-dollar" customer group, underscoring a strategic shift toward catering to large customer segments within the Fortune Global 500 clientele. This reaffirms the efficacy of FPT's "whale hunting" strategy.
Number of customers by sales
| Criteria | 2022 | 2023 |
|---|---|---|
Number of customers with > 20 million USD in sales volume | 2 | 2 |
Number of customers with > 10 million USD in sales volume | 11 | 14 |
Number of customers with > 05 million USD in sales volume | 23 | 37 |
Number of customers with > 01 million USD in sales volume | 162 | 205 |
Unit: Customer