INTRODUCTION Rationale the research Nowadays, IT outsourcing service plays more and more important roles in global economy. Global IT outsourcing market is growing very fast in the recent years with growth rate about 50% and expected rate in next few years at 70%. In Vietnam, the economic booming and dramatic growth of international trade bring very high demands for IT outsourcing industry. This demand leads to open many IT outsourcing companies and increase competitiveness in this industry. Being in Vietnam for more than 13 years, FPT Software - the leading IT outsourcing company, has been attaining many excellent achievements and certificated partnerships with famous corporate in the world. Now FPT Software has 2600 staff, with branches in Japanese, Singapore, France, Malaysia, Australia and America. Revenue in 2008 is 42 millions USD contributed significantly from Japanese, Asia pacific and EU market. With characteristics of team-based structure, Fsoft has divided into development centers responsible for some accounts or some markets. Each center is composed of divisions of some accounts or one market. For specific project, Fsoft divides teams into small teams with 5-7 members. One small team has one leader. One big team has one manager So on average, those leaders and managers (hereinafter we called key person) in Fsoft make up 26 percents of total staff. They are core persons and are one of the most key success factors for the project as well as for development of Fsoft. According to HRM system in Fsoft, turnover rate for key person is extremely high, at 19%. It means that five key persons join into company; one key person is going out. The high turnover rate can cause some problems such as unstable structure, de-motivation for remaining staff, low productivity, costing in term of training and nurturing the potential key person. CHE – Performance appraisal system in Fsoft was built in 2000. After ten years, CHE and HRM are facing with following problems: Talent goes, bad fires and middle remains Middle remaining works with low productivity & de-motivated Projects maybe fails therefore company might be lost of customer, profit… -Company goes in not cost-effective way (training cost for project manager is very high) This situation requires Fsoft to review performance appraisal system for necessary adjustments to solve those problems. That is purpose to choose this topic for my thesis. Research objectives The study has three objectives: Review the fundamental background of performance management and performance appraisal system that are applicable the practical business. Evaluate current performance appraisal system based on theories and data from primary survey. Propose recommendations for Fsoft to build performance appraisal system for key person. Research questions This research will answer the following questions: 1.What are existing performance appraisal systems in Fsoft? 2.What are the competencies and feedback of key persons toward the existing system? 3.What is the most suitable performance appraisal system for key person? Research methodology Secondary data includes statistic information about key person as turnover rate, productivities, existing performance appraisal system and some papers of performance appraisal system. Primary data is the survey (both current employees and people left companies). This questionnaire of survey is designed based on research problem and theoretical basic. Scope of research The research only focuses on building separate performance appraisal system for key person in Fsoft from year 2000 (when CHE was built) up to now with assumptions: Clear job analysis and description, clear communicating job analysis and description, not relating to company strategies and very good company culture. Based on theoretical base of performance appraisal and with collected secondary survey and primary data, the study will propose performance appraisal system for key person and then identify some next moves in applying this rating system into Fsoft. The thesis content Introduction Chapter I: Literature review The first chapter illustrates the fundamental background of the study like key concepts, characteristics and basic elements of PAS. Chapter II: FPT Software at glance This chapter introduces Fsoft in some aspects such as history, strategy, structure and highlighted figure to help readers understand the overview context of the study. Chapter III: Current performance appraisal system in Fsoft The third chapter describes the existing rating system in Fsoft in all aspects mentioned in literature review chapter. Chapter IV: Research methodology The fourth chapter focuses on primary data to investigate feedback, expectation of key persons about the new performance appraisal system as well as their competencies toward new system. Chapter V: Findings and recommendations The last chapter encloses with findings of the study and recommendations for HR department and top management to build a separate performance appraisal system for key person. Conclusion