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Expansion into Asean: A new wave of future for Thai IT firms

Kingdom set to be regional hub for software industry

Asean will be fertile ground for the next wave of expansion for Thai information-technology businesses in the next couple years, while the country becomes a regional hub for businesses in neighbouring nations to expand their bases, experts predict.

Nakrop Niamnamtham, managing director of nForce Security Systems AP Co, said Asean would create more opportunity for IT business and industry. Thailand is located in the centre of a region in which developing countries such as Myanmar and Laos are emerging and growing markets. The firm therefore plans to set up branch offices near the borders, such as in Chiang Rai and Khon Kaen provinces, to provide IT services to neighbouring countries as onset of the Asean Economic Community approaches.

"I think that no Thai IT company can avoid [expanding into the region]. The AEC will open opportunities for them to hire professionals from such places as Vietnam, since currently the Thai IT market lacks experts such as programmers and experts in security, networking, and application programming," Nakrop said.

He said the firm was developing plans and negotiating with business partners in order to enter Myanmar. It appointed three system integrators in Laos last year.

Last year more than 10 IT companies from Singapore set up business in Thailand as a hub to expand into developing countries.

Chalermpon Punnotok, the founder and chief executive of CT Asia, said his firm entered the Asean market seven years ago.

It provided call centres for Japanese and Vietnamese companies via business partners. The firm also has two system integrators in Myanmar. CT Asia currently focuses its Asean business on Vietnam and Myanmar, but plans to enter Indonesia and the Philippines via business partners within three years.

"We are at the forefront of business-to-business software development in [Asean] and able to adapt and customise existing software to support each business in each country, focusing on niche markets such as call-centre software and CRM [customer relations management]. We focus on businesses such as banking, insurance, telecom and food delivery," Chalermpon said.

He said Thai software companies had the potential to compete with international software providers such as Avaya and Cisco.

"I think that banking is a high-opportunity market since [Asean] countries have high demand for call-centre solutions, which help them increase their businesses' competitive advantage. The Philippines is a big market for call centres. The country outsources call centres from the US. Moreover, the AEC will encourage international software companies to [enhance] their competitive advantage," he said.

However, to increase their potential outside Thailand, software companies should internationalise their domestic brands. CT Asia has localised call-centre software in the Japanese, Vietnamese and Burmese languages.

Siriwat Vongjarukorn, president at MFEC, said the software firm was preparing to expand into Asean by providing its workforce with professional IT skills to strengthen its domestic presence first.

"We want to prepare ourselves before entering the [Asean] market. We plan to cooperate with world-class partners to enter the AEC [market] in the future, which is a long-term plan. We will ally with business partners to enter the local market in each country to reduce risk and [enhance] the efficiency of the business. Moreover, local partners understand the culture of business and customers in their country."

The firm has already acquired projects in Myanmar and Laos via business partners, Siriwat said.

He said that to build up its IT-professional human resources, MFEC was cooperating with 20 universities in eight provinces in the North of Thailand, aiming to add about 1,000 people to the IT workforce annually. The firm will also work together with international partners to provide and transfer technology to local students and communities.

"We have prepared resources to support the next wave of business and [are ready to compete]. I also believe that Thailand will be a regional IT hub," Siriwat said.

Michael Araneta, head of operations for IDC Research Thailand, said the use of this country as a hub for the AEC was gaining momentum, and was bringing new sources of growth to the information and communications technology market in general.

The firm believes that Myanmar has high potential for growth in the IT and telecom businesses, since the country now has an Internet penetration rate at 0.05 per cent, and mobile phones at 15 per cent.

The government has a policy to move those rates up to 15 and 50 per cent respectively by 2015. Therefore, there is plenty of opportunity for Thai IT and telecom businesses to expand into that new market.


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