June 19, 2019
Where once people thought of Vietnam as a cheap place to get work done, this is no longer true. It has positioned itself as one of the most favourable destinations for outsourcing. Vietnam has one of the fastest-growing economies and a population of more than 90 million. More than 65 per cent of Vietnam’s population is under the age of 35.
The Vietnamese government has a strong commitment to growing its IT industry. A single-party system and political stability, means social stability. Vietnam has policies in place to encourage foreign investment and growth in IT areas. Policies that give tax breaks and grants to tech companies give consistency and reliability to doing business in Vietnam. The political and social instability in India and China means the risks of doing business there are much higher.
Vietnam moved up to the Top 5 in A.T. Kearney Outsourcing Location Report 2019. The 2019 GSLI report reflects the rising impact of automation and security, A.T. Kearney added new evaluation category digital resonance, which has 4 following factors:
- Digital skills of the country’s workforce.
- Legal and cybersecurity, meaning how the legal framework takes digital business models into account
- Corporate activity, defined as the amount of capital invested in start-ups and the number of deals by venture capitals (VC) in 2018.
- Digital outputs including creative products, as well as knowledge and technology outputs.
The report indicates that Vietnam has over 20,000 employees working for Japanese companies in both offshore software development and business process outsourcing. Japanese companies see Vietnam as the offshore outsourcing solution for their shortage of software engineers. Vietnam is seen as an attractive alternative to China thanks to its low costs, a large pool of skilled software engineers and the cultural similarity.
Some of the benefits of outsourcing to Vietnam include:
Rapid growth in Vietnam:
Vietnam’s growth in the BPO industry has been a consistent 20 to 35 percent every year over the last decade. According to Vietnam Software and IT Services Association (VINASA), the industry turned over of $2 billion with 70 percent of the industry revenue coming from Japan.
With more than 50,000 IT graduates a year, the industry is growing rapidly. Students have a strong interest in computer science and have exposure to it at a younger age than people in Western cultures. This provides a large talent pool for international companies to draw from.
Convenient geographic location:
Located in South East Asia, Vietnam is convenient to several time zones. These include Australia, Japan and other major economies such as Europe and the United Kingdom. It is easy to communicate during business hours and Vietnam is only a short flight away from major city centres.
Even countries like America and Canada are using Vietnam for IT outsourcing. Although time zones are completely different, this works in everyone’s favour as the work is completed overnight while America and Canada sleeps.
Established outsourcing providers:
There are many established companies offering IT outsourcing in Vietnam. Whether projects are large or small, Vietnam has a diverse range of IT skills. Outsourcing companies can offer services developing mobile applications and games, as well as embedded software. This diversity means international companies seek out service providers that offer services like:
Strong investment in education:
Vietnam’s IT companies invest millions in developing the talent of the Vietnamese people. Seeing the importance of investing in education, they are partnering with organisations to develop the workforce.
They want to ensure skills remain up-to-date and valuable to foreign organisations seeking workers. And, it is not only higher education foreign companies invest in. Companies with a social conscience and foresight understand that Vietnam’s children are the future and invest in children’s education. By supporting young generations, it builds a strong economic and social future for Vietnam’s people.
The Vietnamese have a strong work ethic. They see the value in having technical and language competencies to improve their skills and lives. Vietnam’s talent pool is growing and soon international companies will compete to secure the best of the best. It is a destination growing in popularity, in particular, for outsourcing IT services.