Vietnam Software Outsourcing: A Promising Destination for Outsourcing Software Development Projects(Article updated: 6th Nov 2021)
In recent years, Vietnam has become an emerging market for software development outsourcing in the global tech community. Competitive outsourcing costs combined with a highly skilled IT workforce and top tech talents make Vietnam an attractive choice for companies that are looking to outsource their software and mobile application development projects.
In addition, prominent US tech companies such as Intel, IBM, and Microsoft etc. have been actively and continually investing in Vietnam. Many tech companies from other developed countries such as Japan or Australia have already set up offices and hiring software developers to work on their projects in Vietnam in the past few years. The trend is becoming more and more popular.
Despite the pandemic, earlier this year of 2021, per Reuter, Intel has invested an additional $475 million in Vietnam to improve technologies and accelerate the production of its 5G products and core processors, 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.
In this article, we will focus on the current state of the Vietnam IT industry as well as identifying the main benefits of outsourcing IT projects to Vietnam, in order to help you make an informed decision choosing your ideal outsourcing vendor.
THE BENEFITS OF OUTSOURCING SOFTWARE DEVELOPMENT PROJECTS TO VIETNAM
Vietnam joins the Global IT Workforce
Today, Vietnam is developing at a lightning speed, and this has resulted in a surge of innovative experts in different industries, among which IT professionals really stood out. In 2017, Vietnam has jumped five places to rank sixth in the Global Software Outsourcing industry according to the Global Services Location Index (GSLI) released by management consulting firm A.T. Kearney - and has subsequently moving up jumping to the fifth place in the same A.T.Kearney's 2019 Global Services Location Index.
While Vietnam software developers have achieved great results and are getting recognized around the world for their high-quality work and creative ideas, the economy in Vietnam is still at the developing stage and playing catch up with other developed countries. This particularly makes hiring software developers in Vietnam extremely beneficial: On-shore tech companies receive high-quality IT works at a price that is much lower than the average rates in their own countries.
And reasonable rates are not the only noticeable benefit that entices companies to outsource their business to Vietnam. Here are other reasons to outsource to Vietnamese software companies:
- Young, dynamic and well-educated workforce
Many developed countries have been suffering from the problem of tech talent shortage for quite a while now. By contrast, Vietnam is now going in the opposite direction — the number of talented IT developers has been constantly growing. Tech corporations can benefit from these tendencies — by choosing skilled software developers from the vast tech talent pool in Vietnam and cooperate with them through the extended team model.
- High-Quality Technical Education
The quality of technical education at as well as self-studying and research is getting higher and higher at Vietnamese universities day by day. Education is one of the main reasons Vietnamese tech workers rank among the best software developers in the world.
- Convenient Travel Location
The time difference between Vietnam and other Asian countries is one to a few hours on average, which is practically negligible for efficient daily communication. Moreover, traveling within Asia is very convenient, as you can reach most Asian tech hubs within a couple of hours from Ho Chi Minh City.
There are also direct connecting flights with major European and US cities available throughout the day. Although travel time takes obviously longer, a maximum time difference of below 24 hours still makes it possible to set up efficient cooperation with the help of daily sync-ups and flexible working hours.
- Cutting-edge technologies
Vietnamese tech workers always keep up-to-date with the newest technology for instance Blockchain, Internet of Things (IoT), Machine Learning, Cloud Computing etc. and are not afraid of new challenges. Furthermore, Vietnamese developers possess strong technical skills as well as hands-on experience working with complicated large scale IT projects that are being used by millions of people worldwide.
- English Proficiency
According to EF Education, Vietnam ranks 29th on EF Education First’s English Proficiency Index overall, ranking at 5th place among Asian countries. Educational institutions in Vietnam have also been implementing teaching English as a second language on campus (rather than just a foreign language). This will definitely help increase student mobility and international workforce collaborations.
English skills among Vietnamese IT professionals are usually higher than the country’s average. This, and many other factors, undeniably makes Vietnam one of the leading IT outsourcing destinations worldwide.
- Affordable and reliable
The shortage of talent is a common reason for firms to boost their onshore labor costs. Consequently, many companies often outsource to Southeast Asian countries to reduce the cost. Vietnam is in the spotlight when it comes to cost reduction since the average salary in Vietnam is lower than others, has a dependable and reliable workforce.
The average costs of a fresh developer in Vietnam are around 7,200 to 12,400 USD annually, which is 10 - 50 percent cheaper than its neighboring countries like Indonesia and Singapore (17,581 - 24,658 and 38,000 - 84,500 respectively) and 5 percent lower than the Philippines (8,300 - 12,426).
As Vietnam movies from low-tech manufacturing to a service-oriented economy, the IT market is increasingly growing. This factor leads Vietnam to be a dream destination for any businesses that want to save cost at the moment.
How to Choose the Right Software Outsourcing Company in Vietnam?
With the increasing availability of software outsourcing companies in Vietnam, choosing the right one could be quite a challenge for your business. Before finalizing on the potential outsourcing vendors in Vietnam, it’s important that you have a clear understanding of your software development goals, success metrics, and growth targets. Some of the basic factors that need to be considered:
- Sufficient/Fluent English and communication skills
- Domain knowledge and industry experience
- Developers’ expertise in the required technologies
- Quality standards
- QA and testing
- Pricing model and software development methodology (e.g. Agile)
All in all, it’s also preferable to seek out a company that already has a proven software development process in place, together with transparency, and offers flexibility in terms of changes for your project.
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 Ho Chi Minh City is slightly more mature than in Ha Noi)
- 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.
How to Effectively Manage an Offshore Outsourcing Team in Vietnam?
Even though the software developers in Vietnam are highly skilled at what they do, effectively managing an offshore team could be entirely a different matter. To effectively manage a remote team in Vietnam or any other offshore reason, here are some of the tips that you can follow:
- Communication: established frequent communication with the development team in Vietnam to keep track of project progress and provide feedback as well as any changes if necessary. Video conferencing tools such as Skype and/or Zoom can be used to communicate face to face.
- On-site visits: conducting on-site visit in Vietnam will allow you to get to know the team better, which makes collaboration and team building more fruitful.
- Use project management tools: such as JIRA, Trello, or other similar collaboration tools for easier tasks and progress tracking.
- Feedback: providing feedback helps move the project forward efficiently, at the same time guiding the developers on the right track.
- Encourage the team: when hiring offshore Vietnam software developers, you should try to treat them as if they are a part of your in-house team. Also, try to encourage and listen to their feedback on the development which could be helpful in improving your product.
THE RISE OF DEMAND FOR EMERGING TECHNOLOGIES OUTSOURCING PROVIDERS
At the rapid rate in which technology develops, the demand for IT specialists who are well-versed in advanced and emerging technologies (e.g. Blockchain, Machine Learning, and Data Science, etc.) will continue to rise. Even companies who already have their own in-house team of software developers can benefit from outsourcing, especially when it comes to projects which require the beforehand mentioned innovative technologies.
Based on a report by Statista, the global market for outsourced services has grown steadily and strongly from $45.6 billion USD in 2000 to $85.6 billion in 2018. Additionally, according to a report by marketreportsworld, it is forecasted that the IT Outsourcing market continues to grow at a CAGR of 4.42% during the period 2019-2022. Such figures indicate that software outsourcing continues to be a strong force in the coming years.
Even though the shortage of IT talents has made it difficult for companies to hire qualified software engineers in the US, however, skilled developers are available in other regions such as Eastern Europe, Asia, and in particular Vietnam.
The Covid-19 Situation & How Outsourcing To Vietnam Can Help
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 startup companies try to get control of the situation while maintaining their services and products.
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.
One of the strategies business owners might want to consider is to cut down on expensive inessential headcounts and have a more rational budget to hire and/or outsource to an economically viable offshore team to support your business.
A 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.
From the recruiter’s perspective, having access to a wide talent pool will save time, money, and efforts. Businesses will have more candidates with the right skills meeting their expectations. As a result, talent acquisitions have a higher chance of getting suitable talents for the roles in both short and long term planning.
Why TP&P Technology?
As mentioned above, when it comes to choosing a vendor and hiring candidates, there are many factors a company need to carefully consider before making the final decision, including the specific business requirements, the technologies, the desired skills of developers, the operation cost etc.
Our team is here and ready to provide you with top software engineering talents in Ho Chi Minh City, the Silicon Valley of Vietnam.
TP&P’s management group is among the most accomplished in the industry, who are former co-founders of leading IT corporates in Viet Nam. With our deep experience in many tech fields and a team of highly skilled software developers on board, we possess the expertise needed to turn your idea into reality and provide you with 24/7 support during the process, ensuring the highest quality at a very affordable cost.
For more information, get in touch with us today.