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Japan-Vietnam venture finds better apps are built across borders

Barefoot engineers in Hanoi help Framgia grow into platform for startup support

Framgia President and CEO Taihei Kobayashi, pictured at the company's office in Hanoi, relocated to the Vietnamese capital himself to "gain a broader perspective."

TOKYO -- Japanese contract app developer Framgia is a magnet for programming talent in Vietnam. The startup receives more than 1,000 job applications every month, but only a few dozen candidates make the cut, becoming part of a unique division of labor spanning the two countries.

"The engineers in this office are very talented," said Framgia President and CEO Taihei Kobayashi, speaking at the company's base inside the tallest building in Vietnam -- the 350-meter Keangnam Hanoi Landmark Tower.

Assembling a comparable team in Japan, he said, would be impossible.

The office occupies one floor, where 800 software engineers toil at computers. Most walk around barefoot, since no shoes are allowed inside, creating a relaxed vibe. Their average age is 28.

Since the 2000s, Japan's IT sector has pursued offshore software development, which involves outsourcing some tasks to partners in Vietnam and the Philippines, where labor costs are lower.

Kobayashi, convinced that "a shortage of engineers would persist around the world," set up Framgia in Hanoi in 2013. Its main business is to assist with app development for Japanese companies. Last year, the company also stepped into venture investing, and it has been building up its targets in Southeast Asia.

Its current sales come to slightly less than 2 billion yen ($18 million) -- up fivefold over the past three years. And it has become a place where Vietnam's best and brightest software engineers are eager to ply their trade.

Framgia, which features employees in its in-house magazine, draws on talent emerging from the prestigious Hanoi University of Science and Technology.

Many of the 1,000-plus applications Framgia receives each month are from graduates of Hanoi University of Science and Technology, the country's top school for the sciences. After rigorous screening, Framgia hires a few dozen and puts them to work designing apps for operating systems like Google's Android and Apple's iOS, as well as servers. It hires equal numbers for each role.

What distinguishes the company from its industry peers is that it forms a special team for each commissioned project.

The members, which can number up to around 10, are fixed. Their tasks include actual product delivery because, as Kobayashi put it, "Granting responsibilities and authority to members would prompt them to think outside the box and make the best of the ideas."

Keeping the teams consistent helps deepen trust with clients and gets the two sides in sync. This can allow the team in Vietnam to suggest more improvements, resulting in a better app.

One client is JapanTaxi, which commissioned Framgia to develop an app for a cab service geared to children.

"After working with the engineers, I've come to think that they are my own team," said Kenji Teshima, manager of JapanTaxi, which is part of the Nihon Kotsu Group.

In the initial stage of the project, Teshima traveled to Hanoi every other week to assess the four engineers' skills and monitor the progress. Back in Japan, he would discuss details with the Vietnamese team in daily morning video conferences.

It took a month or two for the Hanoi team to understand the essence of the project. After that, Teshima said, the day-to-day confirmation work gradually fell off.

Six months into the endeavor, the engineers "began thinking on their own and making improvement proposals to us," he said.

The budget for the app was held to a third of what it would have been, had JapanTaxi outsourced the development in Japan.

"Although there are some communication problems, the engineers' programming skills are better than Japanese engineers of the same generation," Teshima said. Even after the app for kids, he continues to use Framgia to advance the development of other apps and in-house systems.

Only around 50 of Framgia's 1,200 employees work at the main office in Tokyo. The company employs more than 1,000 in Vietnam -- in Hanoi and the central city of Danang. It also has offices in the Philippines and Bangladesh.

Kobayashi himself moved his home base to Hanoi. "I can gain a broader perspective in Vietnam than in Tokyo," he said.

Framgia has broadened its scope, too, investing in nascent startups. Initial public offerings by some of its app development clients -- companies like Money Forward, Uzabase and Hobonichi -- spurred it into action.

Kobayashi saw the exponential growth of smartphone-based app companies and figured that "the synergistic effects of contract app development and investment should be big."

Framgia has already financed a dozen ventures, including ones from Japan, Vietnam, Thailand and Bangladesh. One might say it is living up to its name, which derives from "From Asia."

The moniker reflects the company's will to step beyond the seemingly closed environment in Japan and into more vibrant Asian markets, becoming a true global player. By the end of 2018, Framgia plans to create a roughly 1 billion yen venture capital fund.

Kobayashi said the aim "is to become a platform for startup assistance including app development, financing and helping businesses get listed."

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