An Insight into the Technology world.
Analysis and Insight from Savvycom Team.

We live in the globalization age when nothing is constrained to a single nation. Many businesses have people working on the same product, the same project in multiple places worldwide, especially during lockdown due to Covid-19. IT & Software Development Companies can easily accomplish this since it is unnecessary for all programmers working on the same project to be located in the same area. They can easily update the code and share their progress via the internet.

Heading into 2021 with numerous countries still on lockdown, the Vietnam IT Outsourcing market has taken advantage of the situation to become one of the industry’s leaders today.

1. Why Would Business Choose To Outsource?

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Provide access to skill not available in-house 46%
Saves money 36%
Free up resources to focus on core business 35%
Adds scale to my IT organization 33%
Improve flexibility in use of resources 29%
Improve ability to innovate 10%

Top reasons why companies outsource information technology (IT) services worldwide in 2018. Provided by Statista

Compared to onsite jobs, those new to outsourcing will be worried that overseas companies cannot deliver high-quality work, collaborate with onsite teams, or reach defined milestones and objectives with the same aptitude and excellence. In addition, language barriers, difficulty establishing and maintaining communication, and other issues can make outsourcing seem too risky.

However, many outsourcing firms concentrate not only on providing low-cost solutions to their customers but also on ensuring that these solutions are of the highest standard, adhere to strict specifications, deliver utmost commitment, and meet all deadlines.

LEARN MORE: Insourcing vs Outsourcing Software Development: Which Is Better?

2. Why Would Business Choose Vietnam for IT Outsourcing?

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Asia, Eastern Europe, Latin America, and North America are common destinations for offshore software production. In terms of Asia outsourcing, India and China, to many, still hold the top two spots as the world’s most dominant outsourcing destinations. However, among Asian-Pacific countries, Vietnam, an emerging powerful IT outsourcing and offshore development center, is getting noticed day by day.

Despite Vietnam’s relatively short history of IT outsourcing (roughly 20 years), the country has risen to prominence in the sector, becoming the natural extension of global clients due to many inherent capabilities and transformations. According to the 2019 Tholons Services Globalization Index, Vietnam is ranked 13th among the world’s top 50 digital nations.

2.1. Young Population & Education Level

Junior 42%
Middle 33%
Senior 17%
Lead 8%

Vietnam Level of Qualification

The primary benefit of outsourcing to Vietnam is the country’s youthful population. In Vietnam, approximately 70% of the population is under 35, and roughly 45 percent is between 15 and 35. This advantage in terms of age suggests that about half of the population is ready to work.

According to TopDev’s report, Vietnam has about 400.000 IT Enginners and over 50.000 graduated IT Students from over 153 IT Institutions per year.

  • Vietnam ranks 29th in terms of Skillvalue Worldwide in Developer Skills Chart Of Skill Value Report in 2018.
  • Top 06 worldwide in Developer Skills Charts Of Topcoder Report in 2016.
  • Rank 23rd worldwide in Developer Skills Charts of Hackerrank’s Report in 2016.

Soon, Vietnam will be the destination for many significant technology corporations in the world. For example, apple’s supply chain Vice President Rory Sexton said Apple is ready to meet up and find opportunities for future cooperation with Vietnam ICT enterprises wishing to join Apple’s supply chain. Besides Samsung – one of the foreign capital corporations that help accelerate Vietnam’s economy, the participation of Apple in the future probably will continue to strengthen Vietnam’s wave of foreign investment in 2020. Notably, in 2020, Samsung said they would invest an additional $300 million in R&D in Hanoi and needs 4,000 more IT employees in the near future.

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2.2. IT Specialized Schools

Passion for technology, programming & computer 78%
Attractive salary 63%
Good logic & computer background 54%
Prospective career development 42%

Why Would Vietnamese Students Choose To Follow IT Career

Companies looking to outsource software development want graduates with a specialization in information and communication technology. In the field of information and technology, there are over 250 colleges and universities that offer courses. In addition, 187 technical schools deliver courses in Information and Technology.

Thus, students can learn about subjects that will aid them in pursuing a career in software development. As a result, as more businesses outsource to Vietnam, more students will choose to pursue a career as a software developer.

Most candidates choose to follow the programming industry because of their interest and passion for it. What makes them feel most satisfied is that they can be trained and have the opportunity to develop their skills. Career path and salary are also two key factors fulfilling candidates’ satisfaction.

2.3. Low Development Cost

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According to MarketsInsider, Vietnam is ranked 5th in the “Best countries to outsource to in the World in 2019” list. Depending on the developer’s skillset, hourly rates for Vietnam developers range from $20 to $40. Compared to the $100 hourly rate in developed countries, this represents significant cost savings for US and Western European businesses.

Furthermore, many Vietnamese IT & Solution Providers are now open to potential innovations such as AI, machine learning, and blockchain… As a result, Vietnam is the ideal location for companies seeking cost-effective solutions that are also technologically advanced.

LEARN MORE: IT Outsourcing Costs: Is Outsourcing Really Cost Effective?

2.4. Vietnam’s Stability During Covid-19

Vietnam is by far one of the best countries in the world to handle the Covid-19 situations thanks to the swift actions taken by the Vietnamese Government. As a result, heading into 2021, most Vietnamese Tech Companies don’t have to resort to work from home anymore, which significantly boosts work enthusiasm and communication.

Additionally, Vietnam does not have any instability politically for more than 30 years with the same party in power. The country still retains steady economic growth even during Covid-19 (2.9%).

2.5. Big Investors

According to the World Bank, Vietnam is now one of the most thriving emerging economies in East Asia. Vietnam has achieved sustainable and inclusive economic growth thanks to comprehensive market-oriented and outward-looking economic policies. On the human capital index (HCI), this country ranks 48th out of 157 countries, second only to Singapore in ASEAN.

Many foreigners fear the communist political system’s rigidity, but it is the firm foundation for this fast-growing economy, as well as a stable and safe nation. The Vietnamese government is working to make the economy more modern and business-friendly. Foreign investment is welcomed, making it simple for foreign businesses to set up shops in the country.

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3. How To Choose The Right Vietnam IT Outsourcing Provider?

With the growing number of software outsourcing companies in Vietnam, finding the right one for your company could be difficult. Therefore, it’s essential to have a clear picture of your software development priorities, performance indicators, and growth expectations before deciding on potential outsourcing vendors in Vietnam. Some of the most important factors to remember are:

  • Sufficient/Fluent English and communication skills
  • Knowledge and industry experience
  • Developers’ expertise in the required technologies
  • Quality standards
  • QA and testing
  • Pricing model and software development methodology (e.g. Agile)

Overall, it’s preferable to work with a firm that already has an established software development framework in place and clarity and flexibility in terms of project changes.

4. Final Thought

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IT Outsourcing is the best option for those who want to balance high-quality service and a reasonable price. If you’re a startup or a well-established business, the global outsourcing industry will help you transform your ideas into reality. You could find Vietnam as an emerging and trusted hotspot for offshore software growth, taking advantage of the geography, the nature of the talent pool, and the cost-effective rate.

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