Software outsourcing services have recently gained global popularity. Companies are employing these services for both cost-savings and time saving as well as a multitude of other benefits.
India and China, have established themselves as leaders in the field. However, the picture of outsourcing services has changed. Several new countries, including Vietnam, are becoming the rising stars in the IT outsourcing market. With strong investment from giant tech companies in the development of a skilled technical workforce, Vietnam is showing to be a promising destination for technology generally and for software outsourcing particularly. Here is why outsourcing to Vietnam will achieve a top position in global software outsourcing in the very near future.
An Overview Of Software Outsourcing
Outsourcing software development is a strategic business move in which a corporation works with an external service provider to handle the technical parts of a project. This strategy demonstrates how cost-effective it is while effectively providing businesses with access to the knowledge and experience of seasoned software developers.
Businesses opt for outsourcing for a number of reasons. The following are some advantages of outsourcing software development:
- Global talent pool access: Outsourcing allows businesses to tap into a global pool of software developers, providing them access to the best talent available.
- Lower prices: Because organizations may avoid the overhead costs of employing and maintaining an in-house team, outsourcing can be a cost-effective option for developing software.
- Shorter time to market: By utilizing the skills of seasoned software developers, outsourcing can assist businesses in shortening their time to market.
- Concentrate on core competencies: By contracting out the technical parts of their software development projects, businesses are able to concentrate on their key strengths.
Why “Vietnam?”
This might be the first question when one mentions Vietnam. The perception of Vietnam for many people might be that of a small, poor country and indeed, it is, however, Vietnam still takes on a remarkable role in the field of technology. These following proofs are taken from the research of trustworthy organizations that prove to us all that Vietnam is a rising star in the global field.
Industry Reviews
When compared to established nations like India and China, Vietnam's outsourcing industry appears to be in its early stages. This, however, will not prevent the fast growth of Vietnam's IT outsourcing industry. The industry is predicted to generate $694.80 million in revenue in 2024, with a compound annual growth rate (CAGR) of 12.23% over the next five years, reaching $1.24 billion in 2029.
- A.T. Kearney-a leading global management consulting firm established in 1926.
In their 2023 Global Services Location Index™ (GSLI) report, which identifies the top 50 locations providing IT, BPO, and voice services; the report shows Vietnam, ranked 7th, continues to shine as a leading Asian outsourcing destination. The presence of major global tech companies solidifies its position as a digital hub, driving the nation's commitment to upskilling its workforce. As highlighted in the GSLI report, Vietnam is recognized among the top 10 countries excelling in IT, BPO, and voice services, further cementing its role in the global outsourcing landscape.
The report of GSLI
- Tholons-a leading full-service Strategic Advisory firm for Global Outsourcing and Investments.
In the latest research report of Tholons Services Globalization IndexTM (TSGI) 2020, Vietnam IT Outsourcing ranked the ninth position in the top 50 digital nations.
The report of TSGI
Comparing to 2019, the position seems to move up and becomes a new entrants to top 10 digital nations. By ranking in the ninth position, Vietnam proved that it is a wise choice for outsourcing software, especially in the "new normal" after the outbreak of pandemic in 2020. And we believed that Vietnam can become a top IT outsourcing country in the near future.
Another research report, Tholons’ report for the top 100 outsourcing destinations- showed that Vietnam ranked eighteen. This was a dominant position and regardless of the top cities for outsourcing, Vietnam would be around the eighth position for the top outsourcing country.
Gartner- a global technology research and advisory firm providing technology-related insights for businesses., Gartner identified the top 10 Locations for Services in APAC, including Vietnam.
Besides that, Forbes has highlighted Vietnam's rise as a favorable outsourcing destination, noting its rapid progress in digital services and competitive developer rates. Companies can cut costs by 30% to 50% on IT jobs compared to India and similar places. Vietnamese coders charge about $20 to $40 an hour, while U.S. developers ask for $100. This cost advantage, combined with Vietnam's skilled workforce, positions the country as an ideal choice for companies seeking cost-effective development solutions.
Key strengths in Vietnam IT industry include:
- A large IT workforce: 560,000 skilled engineers who know many programming languages such as JavaScript, Java, Golang, PHP, C#/.Net, Python, Swift, and Objective-C.
- In-demand IT Roles: Full-stack development, back-end development, and front-end development. Besides that, know-how in Android and iOS, business analysis, project management, and quality assurance/testing.
- Specific services: Full range of services in eCommerce, Fintech, software outsourcing, business process outsourcing (BPO), Car, Food Ordering, and more.
A Thriving Digital Environment
Several factors have kicked Vietnam's IT outsourcing to a higher level. These include faster digitalization as more companies use enterprise apps, and remote work becoming the new normal. This trend has been a big win for industries like telecoms, finance, e-commerce, and manufacturing. More and more companies are outsourcing their IT support, infrastructure management, and business app operations to Vietnam to cut costs and boost productivity.
The global shortage of tech talent also puts Vietnam in a strong position as an IT outsourcing partner. As businesses around the world zero in on their core operations, Vietnam-skilled developers can step in to fill crucial IT roles. This allows companies to stay nimble and keep costs down.
But, is it worth investing in Vietnam? If yes, where to find the top IT companies? Is there any challenge when outsourcing vietnam?
What Are The Advantages Of Outsourcing To Vietnam?
In the global IT community, Vietnam has emerged as a significant market for software outsourcing in recent years. It has proven to be a potential location for enterprises wanting to outsource their software projects due to its low outsourcing costs, highly trained IT workforce, and top tech expertise. Let us evaluate the primary benefits of outsourcing to Vietnam.
1. Population
The population of Vietnam is over 100 million people and remains on the 15th among the top 20 largest countries by population and on the 8th among Asian countries. The average age of the population in Vietnam is under 32. This is a young country, which assures that a great number of people are joining the workforce. The young generation is the well-educated generation, specializing in technology. Each year, there are thousands of students graduating in information technology. This ensures a great pool of talented, young, dynamic, and skillful software engineers.
2. Technology
Vietnam software developers are equipped with expertise in popular and trending programming languages like Javascript, Java, PHP, Go, and Python, enabling them to handle complex global projects. Besides that, Vietnam has recently become a tech hub for anyone concerned with technology, such as the Internet of Things (IoT), Big Data, Artificial Intelligence (AI), Machine Learning, Blockchain, Cloud Computer, etc. This is not only an opportunity for software developers to adapt and upgrade their technical skills but it also presents a challenge where they can, study, and work-hard; in order to keep up with the latest technology and provide the best services for clients.
3. New land for investors
Many giant tech companies such as Intel, IBM, Cisco, Sony, and Apple have chosen Vietnam as new land for their investment. An example of this is when they decided to move Nokia manufacturing from China to Vietnam. Many Japanese companies have chosen to invest in the Vietnamese software industry for countless benefits, especially in terms of IT Outsourcing (ITO) and Business Process Outsourcing (BPO). These investments give Vietnam software developers the opportunity to not only grow strong in technical skills but to also gain the international experience needed to provide professional services to clients.
4. Strong investment in IT education
Vietnam is a promising destination for those seeking technology advancement and hiring IT outsourcing company. In order to respond to the need for human resources, notably software engineers, Vietnam education is investing in building a firm foundation on STEM (science, technology, engineering, and math skills). This foundation has united educators, organizations, and software companies to support the development of Vietnam’s Tech Talented.
Universities are investing in academic courses and majors related to information technology. Learning centers that specialize in the IT field are open for all people. Many IT companies cooperate with educative organizations to develop training facilities to help improve software developers in their technical skills. Famous universities also invest in Vietnam which assures provision not only in quality but also in quantity to the Vietnam software market and even the global market. The dream is that Vietnam becomes the next Silicon Valley in the Southeast Asia area and ultimately in the Asia area.
5. Competitive cost
Vietnam is well-known as a cost-effective destination for software outsourcing. Hiring best companies can save 90% of the cost operation compared to outsourcing in the US. Comparing to China the saving would be 50%, and 30% if compared to India. Investing in the Vietnam software market is a wise financial decision. You will not only save your money but you will also hire quality software developers.
A big plus of outsourcing to Vietnam is how well the money exchange works out. The Vietnam Dong (VND) gives you good value compared to big-name currencies. It means you can save money on worker costs for outsourced projects.
Vietnamese Dong vs. Big-Name Currencies (updated on Nov 7, 2024):
- 1 USD = 25,472 VND
- 1 Euro = 27,210 VND
- 1 GBP = 32,729 VND
6. Strong Work Ethic and Willingness to Learn
When hiring developers, most business leaders agree that having a strong learning mindset is just as important as possessing the right skills and knowledge. This is especially crucial when working with development teams—where communication, adaptability, and continuous improvement form the foundation of a successful and long-term partnership. Hence, if you're seeking these qualities in your outsourcing efforts, Vietnam stands out as an ideal destination.
7. Collaborative and Team-Oriented
A successful outsourcing project requires seamless communication between your in-house teams and software development partners, therefore teamwork is a crucial quality for every outsourcing service provider. Vietnamese professionals are doing well in this area, well-known for their strong team spirit and cooperative approach to achieving shared goals.
This collaborative mindset has enabled them to deliver high-quality project outcomes, ensuring efficient communication and execution across borders.
By outsourcing to Vietnam, you not only gain access to a workforce with a strong work ethic but also a team-oriented culture that fosters smooth project management and long-term success.
The Challenges Faced in the Vietnam
1.Language
While English is commonly used as the working language in Vietnam IT industry, it is not the native language. Therefore, it can sometimes lead to communication barriers. In fact, according to the 2021, English Proficiency Index from Education First (EF), Vietnam ranked 66th globally, which is considered "moderate" proficiency. This can create challenges for businesses that rely on fluent English communication for complex discussions, particularly in fields like software development where precision is key.
66th is not too low but it is not too high. The main problem of Vietnamese people is pronunciation and confidence in communication. This is quite a challenge if a client is communicating English. However, we believe the investment in education, especially in English will boost the English proficiency of Vietnamese, and shortly, Vietnam can be on top of the English-speaking countries. Why you also should believe it?
- English is a compulsory subject for students in Vietnam.
- It is a required standard for graduate students.
- Many applications websites and courses are built only for Vietnamese people.
- Language training centers are open for students.
- Bilingual programs are available at many universities, schools, and training centers.
With these and with strong investment in education, English communication would not be a big problem for those who want to outsource to Vietnam. Along with technical skills, software development companies have a high requirement for English skills from their developers. These companies also have a program for training and developing English skills for their software engineers. For instance, S3Corp. has implemented several activities to improve English proficiency among employees like English clubs and the Annual Toiec Test, resulting in 89% of their employees being able to communicate effectively in English. This can ensure that you can hire a software company with confidence and without fear of miscommunication.
Aside from that, as English proficiency improves across industries, these barriers are becoming less of an issue, especially among more senior employees and those in client-facing roles, such as business development executives, project managers, technical consultants, or those who have experience working with international partners.
2. Difference Time-zone
If a company is located in the US or UK and wants to hire a outsourcing company, it would create a challenge due to different time-zones.
Vietnam operates on GMT+7, which places it 11 hours ahead of the United States and 7 hours ahead of the United Kingdom. While this time difference can be advantageous for businesses that want to offer around-the-clock services, it can pose challenges for real-time collaboration, particularly in fields like software development, DevOps, and agile methodologies, where frequent communication is crucial.
For companies relying on agile or DevOps models, where real-time feedback and quick project adjustments are essential, the timezone gap can slow progress and complicate coordination.
However, this challenge is not unique to Vietnam and is a common issue in software outsourcing, especially when working across continents. To mitigate these issues, many businesses adopt a project-based approach that minimizes the need for constant real-time interaction. Alternatively, establishing clear communication schedules can help streamline collaboration, even with the time difference.
Another way is that you can prepare the tasks in the afternoon before you leave the office and send it to the development team. While you are in bed, developers are working on it and they can give you the completed-tasks the following morning.
However, in general, this would not be a great challenge. Many companies will provide a number of key personel who will work with you during your day time/their night time.
Three Famous Cities For IT Outsourcing
As mentioned above, Vietnam technology has a large pool of talented developers and it is a good place to develop and boost your business for the best business outcomes. The following three famous cities will provide the top software development companies as they play a big role in Vietnam's economy generally and IT outsourcing particularly. They are Ha Noi, Da Nang, and Ho Chi Minh city. These three cities are in different parts of Vietnam.
- Ha Noi
Ha Noi city is the capital of Vietnam and it is in the north of Vietnam. The famous university in Hanoi is Hanoi University of Science and Technology. The average graduated software developers each year is around 10,000.
- Da Nang
Da Nang city is in the middle between Ha Noi and Ho Chi Minh city. This place is a developing city with many services, especially tourism. The Da Nang University of Technology is a famous university and plays a significant role in this area, notably providing a great number of software developers each year.
- Ho Chi Minh
Ho Chi Minh city is in the south of Vietnam and plays a significant role in the economy of Vietnam. This is the most attractive place not only for investors where they can find the top companies but also for software developers where they can live and build their career path. Some famous universities which provide the high-quality software engineers for most software company in Ho Chi Minh are Ho Chi Minh City University of Science, Ho Chi Minh City University of Technology, University of Information Technology; in which, the Ho Chi Minh City University of Science listed in top three universities that have best coders in the world
Read More: VIETNAM AS A BIG ATTRACTIVE DESTINATION IN THE FIELD OF OUTSOURCING
Key Elements for Successful Outsourcing to Vietnam
Defining Precise Requirements and Scope
The cornerstone of a outsourcing project is having specific requirements and a clearly defined project scope. This necessitates the creation of a comprehensive project plan, outlining objectives, deliverables, timelines, and budget. Both the client and the outsourcing partner should effectively communicate and agree upon this plan to avoid misunderstandings in later stages of development
Choosing the Right Partner
Critical to the success of any outsourcing project is the careful selection of the outsourcing partner. In the case of choosing a outsourcing partner, certain factors should be considered:
- Technical Proficiency: Evaluate the partner's technical capabilities and experience in handling projects similar, focusing on proficiency in programming languages, tools, and technologies.
- Cultural Alignment: Examine the partner's company culture and values. Shared work ethic, communication style, and problem-solving approach foster a productive working relationship.
- Communication Ability: Effective communication is a priority; assess the partner's English proficiency and ability to communicate clearly.
- Client Feedback: Review client testimonials and feedback to understand the partner's track record, delivery capabilities, and client satisfaction levels.
- Proofs of Concept: Consider engaging in proofs of concept to evaluate the partner's skills and compatibility before committing to larger-scale projects.
Questions to Ask Potential Outsourcing Partners
- Language Proficiency: Will there be any language barriers? How will these be managed?
- Technical Expertise: Do the developers possess the required skills and experience in your industry?
- Quality Assurance: How does the company ensure adherence to quality standards and testing protocols?
- Pricing Models: What are their pricing structures, and do they align with your budget?
- Source Code Security: What measures are in place to protect intellectual property?
- Reference Checks: Has the company been vetted for similar projects successfully?
For a refined search, consider using a specialized outsourcing directory rather than a broad internet search. Prioritize quality and avoid vendors offering suspiciously low rates, as these might compromise solution quality.
Effective Communication and Collaboration
Maintaining transparent communication channels with a outsourcing partner is critical for project success. Clear communication protocols, including preferred methods and frequency, should be established. Regular project meetings facilitate progress discussion, challenge resolution, and informed decision-making. Encouraging open communication and feedback from both parties fosters collaboration and a shared sense of ownership.
Cultural Sensitivity
Acknowledging cultural differences is crucial, as they can impact project dynamics and communication. Adapting communication styles to be mindful of cultural nuances, using polite language, and respecting Vietnamese cultural values and traditions are essential. Investing in cultural training for the team enhances understanding, builds trust, and strengthens the working relationship.
Project Management
Effective project management is essential for overseeing progress, tracking milestones, and managing risks. Implementing a structured methodology, such as Agile or Waterfall, is recommended. Utilizing project management tools streamlines collaboration, progress tracking, and deliverable management. Clear roles and responsibilities ensure accountability, with a designated project manager overseeing the entire project, aligning with goals, and managing communication between the client and the outsourcing team.
S3Corp: Your Vietnam-based Software Partner
S3Corp., founded in 2007, has become a leading software development company in Vietnam, earning global trust for its quality and professionalism. With 16+ years of experience, it has executed 450+ projects across various domains like security, finance, health, and more, showcasing its expertise.
Partnered with industry leaders like Microsoft, Sitecore, Magento, Umbraco Sitecore, GrowVC, Startup Commons, Amazon, S3Corp. offers innovative software solutions using cutting-edge technologies to meet client needs.
Key Services
1. Product Development: From concept to full lifecycle software development, including web and mobile app development, UX/UI design, and desktop apps.
2. Verification and Quality Assurance: Thorough processes ensure high-quality, functional software.
3. IT Management and DevOps: Streamlining operations and optimizing resources.
4. R&D: Continuously developing innovative IT products for emerging markets.
Why S3Corp?
- Proven Excellence: Over 450+ successful projects globally in various industries
- Quality Delivery: Commitment to delivering exceptional solutions on time and within budget.
- Collaborative Solutions: Tailored solutions addressing unique business needs.
- Skilled Team: Certified engineers with international experience in various technologies.
- Focus on Knowledge: Continuous learning programs to stay updated with tech advancements.
- Security: Stringent policies safeguard intellectual property and client data.
- Long-term Partnerships: Flexible methodologies and collaboration for project success.
- Scalability: Modern IT infrastructure supporting growth and scalability.
Embarking Success in Software Development with S3Corp.
S3Corp. is dedicated to guiding companies to accomplish their goals in software development. Our commitment is to provide our clients with innovative and top-notch software solutions that help them succeed.
If you are considering to build your project and want to look for a leading software development company, contact us now to get free consultancies from our expert team. We are eager to delve into your project specifics and provide a customized solution crafted to meet your distinct needs.
People are witnessing a different Vietnam, the Vietnam of today.
Even though there are still has many challenges, Vietnam is striving day by day to become a leading country in the field of technology. The advantages mentioned above can assure you that Vietnam is becoming a promising destination for those seeking software development services. It will also ensure you that investing in Vietnam would be a wise decision.
The decision to outsource software development is a strategic move that propels businesses toward their objectives, fostering a competitive edge. Vietnam emerges as a compelling destination, offering a rich pool of skilled talent, cost-effectiveness, and cultural alignment. Collaborating with a seasoned and reputable outsourcing partner like S3Corp. empowers businesses to unlock Vietnam's potential and attain software development excellence.
Frequently Asked Questions (FAQ)
What are the key advantages of outsourcing to Vietnam?
Vietnam offers several compelling advantages for software outsourcing, including access to a global talent pool, cost-effectiveness, a thriving tech industry, cultural compatibility, and time zone compatibility.
What are the different outsourcing models available for software development projects in Vietnam?
Companies can choose from various outsourcing models in Vietnam, including project outsourcing, staff augmentation, and dedicated teams, each catering to different project requirements.
What are some challenges when outsourcing to Vietnam?
Challenges include communication and cultural differences, project management complexities, quality assurance, and the need for intellectual property protection.
What tips can ensure successful outsourcing to Vietnam?
Tips include choosing the right outsourcing partner, establishing clear expectations and goals, promoting effective communication, adopting agile development practices, and embracing cultural sensitivity.
