Why offshoring software development to Vietnam?
This article provides a business case for considering Vietnam as an offshore outsourcing destination. By outlining rational facts, we hope to bring you insights of taking Vietnam in your consideration for an offshore development center.
1. Cost attractiveness
The most obvious cost-effective advantages of offshoring in Vietnam are the low labor costs as they are 90% less expensive than labor costs in the United States and 30-50% cheaper than that of developed countries. Vietnam has a large population of workers with high IT skills, these workers can be hired at a much lower rate than in India, China, and the Philippines. Vietnam’s labor cost for outsourcing IT functions and business processes are 30% less than those in India as an example. IT professionals Vietnam also have much lower turnover and much higher stability than do those of most other countries in the region.
2. Development rates
Vietnam is predicted to be the fastest growing Asia Pacific market over the next 10 years. (Forbes)
Vietnam is one of 6 primary locations of Global Delivery Country Destinations in Asia Pacific, 2016
Vietnam barely had any IT companies 15 years ago, but now there are close to 14,000 IT businesses spanning hardware, software, and digital content. Vietnam government has been implementing numerous strategies and policies to boost the telecoms infrastructure, IT human resources and incentives mechanisms to attract investment. In recent years, the government has connected Vietnam IT zones, gathered the capacity of all resources to attract investment and created a solid backbone to develop IT sector.
3. Investor-friendly environment
Vietnam’s government is strongly committed to growing its tech industry. Policies to promote the industry include special enterprise zones, tax breaks and grants for tech companies. They also include infrastructure investments like new software parks and improved ICT connectivity. These make Vietnam in the top 10 countries for expats to live and work in, therefore working and collaborating with Vietnam companies for outsourcing software should be taken into consideration.
These are not temporary policies. As a one-party state with firm political leadership, Vietnam’s leaders are able to make strong, long-term decisions. Political stability also means social stability. While some IT hubs have unpredictable government policies and occasional social upheaval, Vietnam offers consistency and reliability.
4. A large talent pool for its software industry
Vietnam is in top 10 countries with most engineering graduates – research of World Economic Forum in 2015 on 128 countries (Forbes)
What further sets Vietnam aside as your first choice offshoring destination is the level of technical talent. The abundance of highly-educated software engineers in Vietnam means lower prices and a deep pool of rich talent for companies needing to outsource software works. With more than 100,000 software developers and 75,000 digital content specialists currently in the IT workforce, Vietnam provides a deep talent pool for international tech companies. And with over 40,000 new graduates from IT-related programs each year, the IT workforce is growing rapidly. In short, the country is crawling with tech talent. In fact, many countries and companies work directly with Vietnamese universities to build programs to provide the kind of staff needed to work with foreign companies working within Vietnam.
5. The efficiency of Foreign Languages
English is commonly spoken, with Vietnam ranked #7 out of 21 Asian countries for English proficiency
Unlike many other Asian languages, Vietnamese uses a Latin alphabet, just as English does, which makes it relatively easy for Vietnamese speakers to learn English. In addition, English is the most popular second language in Vietnam as it is a compulsory subject in schools, and the majority of Vietnamese college graduates have high proficiency in English. All of this serves to make Vietnam’s technology workers surprisingly competent communicating in English.
6. Who has outsourced to Vietnam?
The significant improvements to infrastructure, steady economic growth, and a young and dynamic workforce have helped the country to become an attractive destination for technology and software outsourcing. Many tech giants have already caught on to this shift, such as Intel, Samsung, Nokia, Bosch, and Panasonic, to name a few.
When a smaller business outsources to India or China, they are quite often like a small fish in a big pool. When you only need five to 10 people to do a project, you just will not get the attention you need but in Vietnam, they have the flexibility to meet the needs of SMEs.
7. Bonus with Vietnam Sightseeings
This gives you some ideas of Vietnam and you can find the full list over here.
Vietnam is a nation on the rise, with a national sense of competitiveness uncommon in the West. If all the major IT companies that are the gold standard in technical competency are setting up house in Vietnam, this says a lot about the technical talent Vietnam is offering.