10 Great Advantages of Software Outsourcing to Vietnam

In recent decades, software outsourcing has become a popular and advantageous strategy for businesses, especially start-up and SMEs (small and medium enterprises), to scale up their tech team with high-qualified IT workers, reduced cost and high ROI (return on investment). From the early 2000s to the present, Vietnam has made many efforts to facilitate the development of information and promote the growth of its IT market. Now, the Vietnam IT industry has expanded internationally and is among one of the top sought-after destinations for software outsourcing, with many advantages compared to other countries regarding the software development market.

So, why should you choose Vietnam to hire your own remote software development team? From our 8-year experience in offshore software development , this article will give you information about Vietnam – an emerging IT outsourcing market and your advantages of choosing this country to outsource your products.

1. Overview of the IT Industry in Vietnam

The Information Technology (IT) Industry has played an important role in the socio-economic development of Vietnam with an accelerating growth rate of 30% annually until 2025.  The report of the Ministry of Information and Communications indicated that 2022 ICT industries’ revenue reached 148 billion USD, growing 8.7% in comparison to that of 2021 and estimated that ICT industries contributed 34,336 billion USD to 2022 Vietnamese GDP. The total foreign market revenue from software solutions and services was approximately 1 billion USD. Some of Vietnam IT Services & Software Outsourcing’s key clients are Japan, the United States, Europe, Korea and Australia.

Along with that, in 2022, the number of registered ICT companies was witnessing an upsurge to 70.000 businesses, exceeding the Government’s 2025 Plan. In which, 60% of outsourcing companies, especially FDI tech companies, have switched from low-value step outsourcing to high-value technology solutions and services. 

“This is a good starting point for Vietnamese software products and solutions to dominate the regional market and go out to the world”

Nguyen Thien Nghia, Ministry of Information and Communications

Besides, not only does the IT industry contribute to economic progress, but it also promotes social development. The software industry has a potential to boost the value of national resources, promote people’s intellect and spirit, speed up the process of industrialisation and modernisation, and help the country to improve its competitiveness.

To promote the IT industry development, the Vietnamese government has incentivised the IT sector with several legal and financial packages. Even though these supports were insufficient, they still served as the foundation for the development of the software industry.

2. Competitiveness of Vietnamese Software Outsourcing Companies

According to a report published in early 2021 by consulting firm Kearney on The Global Services Location Index (GSLI) software outsourcing locations, Vietnam ranked among the Top 6 best locations for IT outsourcing in terms of financial attractiveness, people skills and availability, business environment, and digital resonance.

2.1. Technological infrastructure

2.1.1. Bandwidth costs

Vietnam is one of the most connected in the world, especially for its income level, having the cheapest broadband price per month (US$ 11.27) compared to other rival nations in software outsourcing industry (US: US$ 29.06, China: US$ 12.26, India: US$ 13.58, Thailand: US$ 23.3)

Coupled with the reasonable cost, the speed of internet connection in Vietnam ranked 102th, outweighing its rivals like India (101th) and China (200th), while many other countries in Southeast Asia only ranked at 120th and more.

Additionally, almost every Vietnamese household has a cell phone, far higher than those for Malaysia and the Philippines.

2.1.2. Cutting-edge Technologies

Forbes called Vietnam as “a small but mighty powerhouse” and the World Bank indicated that “Vietnam is in a promising position to become a digital powerhouse”, there must be a reason to improve their cognizance. Vietnamese software outsourcing companies always keep up-to-date with emerging technology, such as Blockchain, Cloud Computing, IoT (Internet of Things), Artificial Intelligence, Machine Learning and other software development technology trends. 

It is not hard to find regular tech conferences and workshops which are held by many tech companies and organisations in Vietnam. These are aimed to focus on new technologies and software development approaches, help developers update on new software tools and methodologies, share knowledge as well as learn new skills.

There are already about 39 cloud computing services vendors in Vietnam, and the country is home to about 27 cloud computing data centres with over 270,000 servers, which have been invested in by 11 local firms. The cloud market in Vietnam has reached the figure of around 3.2 trillion VND ($133 million) and is forecasted to rise to at least $500 million by 2025, after COVID-19 pandemic has pushed its growth by 40% during the last two years.

2.2. Skills and availability of IT labour force with lower turnover rate

Human capital is a fundamental foundation of all projects, especially in software development, because, unlike other service and manufacturing contexts, these activities are almost reliant on qualified human resources.

Vietnam, having a population of over 97 million people, assures a great number of people joining the workforce. In present times, over a half of Vietnamese IT employees are in their 20s. Notably, many coders have started their careers early before the age of 20. This information presents a growth in human capital of software development in Vietnam for many emerging markets (Fintech, Business Analysis, Edtech, etc.) Senior developers who have more than 5-year experience account for about 30% of IT human resources, while ones who have less than 3-year experience make up the majority with 52.1%. 

Looking at the initial basis for the growing supply of IT workforce, in 2022, 71% of Vietnamese IT employees graduated from colleges and universities with the number of 57.000 IT graduates. Besides, Vietnamese students, along with the Chinese, have always been among the top academic performers in STEM (science, technology, engineering and mathematics).

software outsourcing

Moreover, the Vietnamese IT-related turnover rate is lower than other software outsourcing destinations (less than 5% compared to other countries like India…). It means that the Vietnam-based software developers tend to stay with their companies longer. So, there would be no fear of job hopping or high employee bounce when outsourcing your products in Vietnam.

2.3. Affordable Labour Cost

Labour cost is also a critical factor in Vietnamese competitive advantage in terms of economic perspective. 

According to the Vietnam IT Market Report 2022 of TopDev, the average rate for hiring a skilled senior developer from Vietnam would only cost about $35 per hour. Development outsourcing in Vietnam is nearly 90% less expensive than hiring US workers, in comparison to China, the savings would be 50% and 30%, according to CIO Magazine. According to a survey by Stack Overflow (2020), Vietnam only ranks 7th bottom-up in terms of median salaries for developers (Figure 5). This is a definite competitive advantage of Vietnamese offshore outsourcing companies, since the number of businesses in the software industry prioritising cost reduction has increased dramatically, especially in the face of the pandemic-induced global recession, according to Deloitte survey (2020).

Not only will businesses save money, but they will also receive cutting-edge software technology. 

2.4. Language Proficiency

When it comes to software outsourcing, language is a common barrier. Effective communication is considered as an important factor of determining whether a firm will choose to outsource its projects with the offshore software development team or not. 

On the EF Education First English Proficiency Index, Vietnam developers are placed 65th overall and 13th in Asia. Compulsory foreign language requirement for graduation from universities in Vietnam has increased from A2 to B1, even to B2. Many IT companies in Vietnam also have shifted their English skills requirements of software developers from “nice-to-have” to “must-have”, which enhance a lot in communication while foreign companies working with them. 

Besides, Korean and Japanese are also other famous languages that are required to have. For instance, the number of software developers in Japanese-market outsourcing firms who can speak the language fluently is around 20-50% of the total employees (according to VINASA, 2020).

2.5. A Lot Of Reliable Software Outsourcing Service Vendors

Take a glance at the number of software outsourcing companies in Vietnam that have been working with international enterprises from different IT-related industries, this is a large figure. They have an impressive record of building excellent products for big clients in multiple areas, which allows them to be trusted IT outsourcing companies with innovative software solutions and IT staff augmentation. Many IT behemoths such as Intel, LG, Samsung, IBM, Sony, Cisco, Bayer, etc. have outsourced some of their operations in Vietnam: full-cycle services, online applications, mobile or web-based enterprise solutions, and more information technology services.

There are many tech company-review websites, such as Tech Reviewer, TechTIQ Solutions, The Vietnam Software Association, Goodfirms, and Clutch, from them, you can find a list of the top software outsourcing companies in Vietnam with detailed evaluations, ratings, and scores based on multiple trusted sources. 

It is not easy to identify which software outsourcing company suits you best. Before hiring an outsourcing company, make a shortlist of potential partners, take deep research on their portfolios, case studies and contact them to ask for more information. These activities could help you choose the best-fitted technology partner for your businesses. 

>>> Readmore: Top 13 Outstanding Software Outsourcing Company in Vietnam

2.6. Government Intervention

Governments can play a facilitating role in economic fundamentals of the software industry. The Vietnamese Government has made many efforts to become a worldwide software development destination and create strong technology capabilities through appropriate policies and regulations to promote enterprises’ growth. Some of them can be mentioned here:

  • The first national policy for the software industry called Resolution No. 49/CP (announced in 1993), focusing on the promotion of the national educational system for IT.
  • Promulgation No.07/2000/NQ-CP, following the previous Resolution, prioritised the development of talent training and the creation of a good investment environment related to tax exemption.
  • Directive 16/CT-TTg is the main guiding document for technological modernisation of the software industry, which is believed to be supported through: new digital infrastructure and networks, development of Vietnamese ICT industry, innovation ecosystem, research infrastructure institutions, promotion of tech start-ups, tech skills, etc.

It is also witnessed that Vietnam has given IT businesses a lot of advantages, such as low import tariffs on IT items, a set of taxes (exemption from corporate income tax, zero percent VAR, free export taxes…). The regulatory framework is further bolstered by free trade agreements (FTA), as well as bilateral agreements with many big countries in technology like Japan, Korea, the US…

2.7. Political stability and fast economic growth rate

Vietnam is regarded as “one of the more politically stable countries in Southeast Asia” by the United Kingdom government. According to Deloitte 2020, Vietnam has become a desirable investment destination across a wide range of industries, including manufacturing, real estate, energy, retail, and construction, as well as arts, tourism, entertainment, and other services. Similarly, the Global Peace Index 2020 classified Vietnam as the 12th safest country in the Asia-Pacific region. In fact, Vietnam is a very stable country, which makes it an ideal location for outsourcing.

According to the General Statistics Office of Vietnam, the country’s GDP in 2022 increased sharply at 8.02% compared to the previous year, the highest increase in years in the period 2011-2022. Vietnam’s GDP has proven as a desirable place for international investment in terms of areas, particularly outsourcing software development, thanks to sustained growth over the years and the pandemic’s resilience.

2.8. Continuous improvement for IT educational system

Information Technology and Software Engineering are among the most popular majors and are enrolled by many university students in Vietnam. Besides, many software companies offer an internship program for 3rd and 4th-year university students so that they can have real practice in software development. 

From the Government’s aim of shifting their attention to quality rather than quantity to the IT industry, this means that a government – business collaboration in learning will be strengthened.

Many foreign education institutions also offer extensive training courses to software developers in Vietnam, who are looking to enhance their skills in various advanced technologies such as Data Science, AI/Machine Learning, Big Data, System Architecture, Cloud, and DevOps, etc.

3. Tips to Hire the Right Remote Software Developers from Vietnam

This paragraph below will give you some basic guidelines on how to hire the right offshore development teams

  • Set your goal and budget for your project first
  • Choose the most suitable type of software developers you want to hire (mobile developers
  • Create a job description with specific requirements
  • Use supporting tools like Google, IT sites. Platforms such as Clutch, UpCity, GoodFirms, Top Developers, Techreviewer etc. perform analysis based on customer’s feedback to create useful industry rank lists, you can also use them as well
  • Always check companies’ portfolios, case studies and experience before picking any of them

Conclusion

As far as the Vietnamese software industry will expand, it can be concluded that Vietnam is among the sought-after destinations of software outsourcing in the world. There is no doubt that the Vietnamese software industry has many competitive advantages such as socio-economic stability, government support, large number of highly skilled IT workforce, reasonable price and cutting-edge technology. You have come to know why Vietnamese developers are a perfect choice for your IT project and company. They have all the characteristics which you should be looking for in your (remote) IT staff.

AgileTech is an excellent choice if you want to work with a trustworthy partner who knows how to create a popular mobile app with a high return on investment, as one of top software outsourcing companies in Vietnam with detailed evaluations, ratings, and scores based on our portfolios of work and clients, as well as reviews from Tech ReviewerTechTIQ SolutionsThe Vietnam Software AssociationGoodfirms, and Clutch. We have experience developing mobile apps and a professional team that will be delighted to assist you in bringing your idea to life.

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