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Growing Local Cybersecurity Capabilities in Vietnam

03-Dec-2020   Mr. Nam Nguyen, Designation: Chief Strategy and Marketing Officer, Viettel Cyber Security   Author: Pankhuri Jain and Akshit Goel

Vietnam’s Information Security space is undergoing rapid changes recently. The government recently passed through a new Cybersecurity Law centered towards Data Localization and Oversight. Apart from this, the government has made considerable moves to develop the local cybersecurity infrastructure in the country by encouraging local companies to develop their own cybersecurity products, rather than depending on imported solutions.
Viettel Cyber Security is one such domestic company, having developed its own cybersecurity solutions courtesy its team of 200+ cybersecurity experts. In an interview with Mr. Nam Nguyen, Chief Strategy and Marketing Officer at Viettel Cyber Security, we understand the current trends in the country’s cybersecurity ecosystem, role of government in the industry’s growth and how Viettel Cyber Security is positioned in the market.

Q. The Vietnamese government recently passed a new Cybersecurity Law in the country. Apart from this, the government has been quite active influencing the cybersecurity space. What has been the impact of the law and other initiatives taken with respect to the information security environment in the country?

The new Cybersecurity Law released last year is more focussed on the content and social media aspect. Vietnamese government is also focussing on national security which is growing very fast. As per the government regulations, governments should spend at least 10% of their IT budget on Cybersecurity and that solution has to be sourced from local companies such as Bkav, Viettel Cyber Security, CMC Cyber Security, etc. Government is focusing on the growth of the domestic players and hence international players will find it difficult to sell their products in Vietnamese market in the near future.

Q. Given the growth in cutting-edge technologies such as IoT, Blockchain, 5G networks, Multi-Cloud Environment and with Cisco investing in similar technologies, how do you feel these technologies will impact cyber security environment in Vietnam?

With the growth in the IT sector and increasing demand for IT services because of new governmental projects such as e-gov, Smart City projects and Education system, demand for cyber-security services is also increasing. New technologies such as IoT, cloud computing, 5G network need technology advancement to be incorporated in the cyber security market but they are also acting as causes of the increment of cyber risks. It will take some time to incorporate new technologies in the system but not too long.

Q.How do you feel the Cyber Security landscape in Vietnam is positioned with respect to other Asian countries?

Vietnam is more similar to Indonesia, Philippines and Malaysia rather than to Thailand and Singapore with respect to the development of cybersecurity and political landscape in the country.

Q. Which end-user industries do cybersecurity companies majorly serve? What are the preferences of each end-user industry segment for cyber security solutions? What are the pain-points faced by these end-users?

The BFSI industry is the major end-user. Apart from this, government is also another major end-user. Viettel Cyber Security provides them with end-to-end security solutions, which include SOAR, SIEM, EDR, Network Security, WAF and Threat Intelligence, apart from professional services such as penetration testing etc. and managed security services as well.

The major problem faced by the end-users is that they don’t have much knowledge about the security operation, incident response; hence they still prefer traditional products such as antivirus and firewall, IPS, Email Security as they only know about these products. The other pain-point is that they do not have much experience, hence when they are under cyber-attack then also they don’t invest in incident response.

Q. Regarding the market size for Cyber Security in Vietnam, it was gathered that the overall Market Size as of 2019 is about USD 67 million and growing at a rate of 20-22% on YoY basis. Do you feel this estimate is correct?

The overall market size is about 70 million USD and the growth rate is approximately 15-18%. Out of the total revenue, revenue from the global product is 65-70% and remaining from the local product and services. Government prefers to buy more products and services from local companies so as to encourage the local products and increase their share.

If we talk about the market share of the sub-sectors, Standalone Products have the highest market share of 85% in which traditional products (such as antivirus, firewall, end-point security, network security) have the share of 50% and remaining is capture by products such as SIEM etc. Professional Services such as pen-test, audit, consulting service, malware cleaner and threat hunting have 10% market share and remaining is held by Managed Services.

Q. Can you give a background of Viettel Cyber Security, its operations, history, products offered? How does the company emerge as one of the leading domestic names in the industry? How much market share does the company hold?

Viettel Cyber Security was established as an independent company two years ago. Before that the company functioned as an internal security center under the Viettel Group. The Group is under the control of the Ministry of Defense. We provide mainly three service solutions- Managed Security Services, Standalone Products and Professional Services. Our USP is that we have a high number of security experts, leverage Big Data from biggest ISP in Vietnam and have an in-house development of all our products. Out of the total market share of 66-67 million USD, Viettel Cyber Security has the market share of about 15% which is the highest among the domestic players.

Q. We recently identified that Viettel made a pivot in its Business Model. What was the reason behind the shift in business model?

Two years ago, the business model was Direct Sales model but now we have shifted to Vendor Model in which we sell products to the Distributor who sells the products to Reseller and they further sell to the customers. The reason behind the shift was to build better relations with the customers. The Vendor model enables us to do so. Another reason was to compete with the competitors in providing better products. It helped us in expanding our market reach. Now we provide services directly to the customers.

Q. Which are the major clients and partners that Viettel Cyber Security has?

Currently Viettel has three distributors, namely Nam Truong Son (NTS), IDC Group and Innet. The major clients of the company are Vietcom Bank, Military Bank, VP Bank, Sea Bank, Vietnam Airlines, Vietnam Electricity (EVN) and some other governmental departments.

Q. Given the heavy regulatory environment in the country with respect to Information Security, what challenges do you feel Cyber Security companies face in the country?

The main challenge is that customers in Vietnam prefer global products and services rather than local ones. Also there are further challenges because of new government regulations coming up. Then there is also an issue of the lack of quality security experts in the country.

Q. What has been the impact of COVID-19 on the Cyber Security industry in the country? What are the opportunities that can be tapped by companies in the market?

The impact is that the customer budget has reduced and also the competition with the global companies has increased. For an international company to enter the market it must find at least one distributor so as to connect to customers and it must launch appropriate products which have a scope for growth in the market. For domestic companies, the challenge is to get license from the government to sell their products and services.

Q. What are the regulations for the entry of new firms in the market?

There is no such regulation as of now. But next year government might ask the Vietnamese companies to take the cyber security services from the domestic players.

Q. What are the expected future trends in the market? What are Viettel Cyber Security’s plans for the future? Does the company have any exciting new offerings or growth plans coming up?

The changing trend is the migration of data to cloud. Also data privacy and IoT is expected to grow in future. All this creates a scope for new demand for information security services. Viettel is currently offering various independent products in its range, so we are planning to come up with an integrated product portfolio and merge the products to offer a consolidated product offering.

For any queries or feedback, reach out at namit@kenresearch.com

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