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Why Vietnam to Outsource Software Development?

Table of Contents

Introduction

Local IT workforce and Skills

Economic Outlook and Government Initiatives

Cultural Compatibility and Time Zone 

Billing Rate

Final Thoughts

 

Introduction

Software development outsourcing has long been proven as a powerful strategy to accelerate business success worldwide. According to a study of Deloitte, there are some main reasons for outsourcing the software development part:

why vietnam to outsource software development - benefit chart by Deloitte

The outsourcing services vary from custom software development to mobile application development and dedicated offshore developers, suitable for the diverse demands from enterprises to growing startups and beyond. Almost 80 percent of businesses feel satisfied about their outsourcing decisions. One of the critical questions regarding outsourcing from the very beginning is where the best country to outsource is.

There are some popular places for offshore software development like Asia, Eastern Europe, Latin America, North America… When it comes to Asia outsourcing, India and China take the leading positions for the world’s most dominant outsourcing destination so far. However, among Asian-Pacific countries, we could not forget to mention Vietnam, an emerging powerful IT outsourcing hub. And within the scope of this writing, we’ll take a closer look at the reasons why you should choose Vietnam for your next offshore software development strategy.

According to Tholons Services Globalization Index 2019, Vietnam is ranked #13 in 50 top digital nations all over the world.

why vietnam to outsource software development - Tholon's chart top 50 digital nations screenshot

Despite the young history of IT outsourcing in Vietnam (around 20 years), Vietnam has achieved such a significant ranking in the IT outsourcing industry, becoming the natural extension of global clients due to several intrinsic capacities and transformations.

Local IT Workforce and Skills

Since 2005, a few multinational technology corporations like Intel, Oracle have begun to tap into the tech workforce in Vietnam. And then, other world-leading companies like Microsoft, IBM, Samsung to name a few, have continued to invest in this country.

The Vietnamese government has invested heavily in STEM education, educating Vietnam's local workforce in technology that is more competent and skillful. As a result, the outsourcing industry has also achieved positive growth paces. In 2018, Cornell University consulted Vingroup – a Vietnamese conglomerate focusing on real estate development, retails, and many other services to establish a world-class university in Ha Noi. And in the meantime, American-Vietnamese hybrid Fulbright University also built a campus in Ho Chi Minh City. The more foreign investment and partnership in education, the more engineers graduate and meet the global industry standards. 

 “Vietnam has positioned technology at the center of its growth and development goals...We see our facility and the broader technology ecosystem in Vietnam steadily rising up the value chain.” Sherry Boger, general manager with Intel Vietnam said.

Economic Outlook and Government Initiatives

According to the World Bank, Vietnam is now one of the most vibrant emerging countries in the East Asia region. Extensive market-oriented and outward-looking economic policies have helped Vietnam achieve sustained and inclusive economic growth. This country ranks 48 out of 157 countries on the human capital index (HCI), second in ASEAN just behind Singapore.  

Many foreigners are afraid of the rigidness of the communist political system; however, it’s the solid foundation for this fast-growing economy, stable and secure country. The Vietnamese government is striving to facilitate a modern and business-driven market plan. Foreign investments are encouraged, making it easy for international companies to establish here. 

Cultural Compatibility and Time Zone 

Next to the dynamic economy, the education system strongly focuses on making English the second language at schools and universities. Although you could not find the same level in spoken English in Vietnam like India or the Philippines, many senior engineers are now fluent in English, and up to date to every change in the technology landscape. They can confidently leverage their tech knowledge and experience to discuss any cutting-edge solutions and bring innovative ideas to the table. Besides, lots of Vietnamese expatriates who used to work as engineers in the west return home, they play the facilitator role to overcome cultural and language barriers. 

One more thing, the time zone is one of the most significant advantages when western companies outsource their software development in Vietnam. With a comprehensive plan of workloads, you could tap into a nearly 24-hour cycle of productivity. When the offshore teams accomplish their jobs the night before, the in-house team could move on from that the next day. With the support of Agile Management, which is very familiar with Vietnamese tech companies, you can create the effectiveness of collaborative work. 

Billing Rate

Last but not least, the cost is a foremost consideration between outsourcing and in-house development. Hourly rates for developers in Vietnam are between $20 - $40, depending on the developer’s skillset. Compared to the rate of around $100 hourly rate in developed countries, that’s a considerable cost saving to US and Western European companies. 

Moreover, plenty of companies in Vietnam are now available for future technologies like AI, machine learning, blockchain… As a result, Vietnam is the right destination for businesses looking for cost-effective solutions embedded with cutting-edge technologies.

Final Thoughts

Outsourcing software development is the right choice for those who look for a balance between an excellent service and its fair cost. Whether you run a growing startup or an established enterprise, the global outsourcing industry will help to turn your ideas into a working solution. Taking advantage of the geography, the quality of the talent pool, and the cost-effective rate, you could find Vietnam as an emerging and trusted hotspot for offshore software development.

 

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References:

Deloitte’s 2016 Global Outsourcing Survey, deloitte.com, May 2016.

Tholons Services Globalization Index 2019, tholon.com, 2019. 

The 5 Best Countries To Outsource To In 2019 - Plus, The Top 14 Outsourcing Companies & Data Entry Agencies, DesignRush.com, 2019.

Anna Frazzetto, IT Outsourcing Hotspot: Vietnam, A Small But Mighty Powerhouse, forbes.com, 2018.

Alex Gilbert, Outsourcing Software Development to Vietnam, accelerance.com, 2018.

Matthew Camara, Vietnamese property developer partners with Cornell on new HEI, thepienews.com, 2018.

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