Offshore Software Development In Vietnam: A Competitive Concern For Other Outsourcing Destinations.

Software development outsourcing has long been a great way to save money while maintaining high-quality work. Asian countries like India, the Philippines, and China have been on the outsourcing destination list for so long. Still, recently, Vietnam has signed up and been recognized as one of the leading countries in software development. 

The CIO magazine mentioned that by outsourcing software development to Vietnam; businesses could save up to 90 percent of costs compared to software development in the States, and 1/3 to 1/7 times cheaper than in India. Vietnam is being validated as a cost-effective and high-quality offshore development destination in Asia.

Forbes used to refer to Vietnam as “a small but mighty powerhouse,” and it is not a rumor that this country was chosen to become one of the ideal landing places.

A brief history of Global IT & Software Development outsourcing in Vietnam

The IT & Software development outsourcing market in Vietnam is actually still young. Around 2 decades ago, some big multinational tech names like Intel or Oracle started tapping into the growing tech workforce in Vietnam. The government had invested in STEM education to generate a rich in skilled technologists workforce.

Fast forward to today’s landscape, the tech and outsourcing market has grown consistently. Now the country’s tech and outsourcing industries are so booming, making it a competitive concern for India as tech giants like IBM, Samsung, Display, Microsoft continue to invest in Vietnam.

Earlier this year 2021, Intel has invested an additional $475 million in Vietnam making the total investment around 1.5 billion USD. Apple has also started to recruit regional operations, new product managers, operations managers, engineering program engineers, mechanical quality engineers, and many more tech-related positions in Vietnam. This is one good piece of news for the Vietnamese economy.

Software Development In Vietnam: A Competitive Concern For Other Outsourcing Destinations.

What surprises outsiders viewing this small Southeast Asian country is what they find inside Vietnam: a highly adaptive approach to work and technology. Probably 80 percent of foreigners who came to Vietnam in the 90s and have lived here since then will admit to experiencing a rapid change in the Vietnamese economy.

When Vietnam joined the WTO in 2017, it has strived for Western companies to establish a footmark here. Over ten years, here comes a highly adaptive IT workforce in Vietnam.

How Offshore Software Development Outsourcing In Vietnam Can Help Businesses & Startups Save Cost

It is undeniable that cost saving is one of the main reasons why many companies choose to outsource to third-party vendors to help them deploy all or some specific software development projects or to support their companies’ IT infrastructure.

India or China has long been the two most popular offshoring destinations in Asia. However, we would like to introduce you to the new emerging IT outsourcing market in Asia: Vietnam.

The Covid-19 Situation

Without any doubt, COVID19 has been the black swan ever since the Great Recession in 2008. We have now experienced an uncertain business landscape.

The pandemic causes obstacles and challenges for businesses around the world to deal with like market instability, the collapse of the tourism and hospitality industry, the collapse of the price of oil and the energy industry, and so on. Billions of dollars leak away as many businesses and startup companies try to get control of the situation while maintaining their services and products

Again, not only startups but even SMEs and big organizations have to shut down parts of operations and lay off their employees. These actions might expose companies to the risks of losing customers because companies fail the customers’ expectations.

So, how can startups find the appropriate strategy to not only save costs but also maintain the top performance?

One of the strategies you might want to consider is to cut down on expensive inessential headcounts and have a more rational budget to hire an economically viable offshore team to support your business. 

recent study by the University of Michigan Business School and the University of Pennsylvania’s Wharton School has shown that businesses can save up to US$56,000 annually when it comes to offshore software projects compared to onshore software development projects. 

Reasons make Vietnam an ideal IT outsourcing destination

Despite the affordable and reasonable price, Vietnam can contribute much more value and bring many benefits to businesses. Here are some of the reasons making Vietnam a promising software outsourcing pot at this time.

Convenient geographical location and language efficiency 

Vietnam is located in the center of Southeast Asia, holding a strategic potential for foreign companies to invest. With the long coastline, which allows it to access proximity to the international shipping routes, Vietnam is at the perfect strategic location.

Vietnamese people can also learn English relatively fast due to the similar Latin alphabet as English. English is the most favorite foreign language to learn in this country; this results in half of the Vietnamese population can speak English, which eliminates the language barrier, making international collaboration a breeze.

Economic strength

Vietnam is a fast-growing economic country with high and steady GDP growth over the last few years. World Bank stated the GDP rate in Vietnam grows stably around 6.46 percent annually since 2000. This development started after the economic reforms launched in 1986 and the rise hasn’t stopped ever since. 

Up to now, Vietnam’s economy has integrated deeply into the regional and global economies, making it a flourishing skills marketplace, well-suited for outsourcing. 

Economic analysts predicted that if Vietnam’s economic development continually rises at this rate annually, soon it could be compared to what China’s economy experienced 10 years ago — giving Vietnam the next hub for producing goods and services.

The advanced young talent pool

Worldmeters stated that the median age in Vietnam(30.8) is 6.5 years younger compared to China (37.8). It is estimated that 60 percent of the population is under 35/ The workforce is young and large, there is no sign of a decrease. Moreover, the country promotes education and develops IT in general and software technology in particular. 

With support from the government, the IT workforce is focusing on advanced technology skillsets like AI, Cybersecurity, ERP, Big Data, Data Science, Mobile Application Development, etc. Vietnam has gradually reinforced its responsiveness to the technology industry around the world.

A trusted software development partner

Gartner’s Leading Global Locations for Offshore Services stated in 2016 that among many countries with advantages in technology, especially software, in Asia, Vietnam is deemed as an emerging country with many benefits (skillful workforce, world-class projects, product quality, loyalty, geographical location advantages, competitive prices). 

Vietnam ITO Conference has attracted massive attention from enterprises from many countries like Singapore, Japan, USA, Korea, etc. The workforce also has lower turnover than most places when it comes to outsourcing sectors. 

Criteria for choosing a Vietnam Software Outsourcing Vendor

Now we hope that we have successfully convinced you to think of Vietnam when it comes to outsourcing and offshoring. But how to choose the best vendor among so many? Here are the criteria that you might want to consider:

  • Clarify your business goals and the ultimate purpose you want to achieve during this pandemic time
  • Decide on your offshoring destination (the IT market in HCMC is slightly more mature than in HN)
  • Explore the options and narrow down the list of your potential candidates
  • Choose vendors with previous similar experience in your industry
  • Conduct research to know what IT solutions your business needs to overcome this time.
  • Negotiate a win-win contract with the vendor you have selected.

At TP&P Technology

We are proud to be one of the top software outsourcing companies in Vietnam. We have a skillful team with extensive knowledge and experience and are ready to partner with you. 

Not only do we provide software development services, but we also offer IT consulting services for those who need it. Talk to one of our experts to find out what we can help you with your upcoming project.