Top 5 reasons why outsourcing to Vietnam is a smart move
Why is outsourcing to Vietnam a smart move?
Outsourcing to Vietnam is a smart move because the country offers low costs, strong English skills, a large young talent pool, and a stable, business-friendly economy.
- Vietnam ranks among the top global hubs for IT and software work.
- Firms can save a large share of labor costs versus the US.
- The workforce is young, skilled, and highly motivated.
Outsourcing to Vietnam has become one of the smartest moves for growing firms. So more companies now look beyond the usual hubs. One great thing about outsourcing is simple. Firms can hire skilled providers from anywhere in the world.
When it comes to offshore work, Asia leads the way. For example, the Philippines and India come up first for many leaders. However, more countries now shine in the business process outsourcing (BPO) sector. As a result, many global companies now turn to Vietnam.
But what makes Vietnam such a strong choice? What draws foreign firms to move work there? Which software services can you find in the country? So let us walk you through all of that.
Outsourcing to Vietnam: the next global outsourcing hotspot
When you think of IT outsourcing, India often comes to mind first. So it stays a clear leader for many business owners. However, India is still among the top IT outsourcing powerhouses, and many firms now also pick Vietnam.
Vietnam has long ranked among the top 30 countries for IT offshoring roles. In fact, it later climbed into the top tier for the same report. So it has held a strong spot ever since.
Vietnam keeps building a name in the Information and Communication Technology (ICT) sector. For years, Tholons named Ho Chi Minh City as one of the top outsourcing cities in the Asia-Pacific.
The sector has posted a year-on-year growth of about 9.8% over recent years. So this industry adds a large share to the country’s GDP. As a result, outsourcing to Vietnam is now a clear trend.
Besides IT roles, the country holds a deep pool of skilled staff. For example, popular roles include finance and accounting, payroll, human resources, and shared services. A PwC report published in 2017 also said the BPO industry draws many foreign investors.
Compared to the Philippines, Vietnam is still a newer player in the outsourcing industry. However, its BPO sector rests on the country’s:
- Strong government support system
- Stable economy
- Business-centered economic reforms
Outsourcing to Vietnam: a resilient outsourcing sector
Vietnam is known for strong planning during hard times. So its outsourcing firms keep clear business continuity plans. As a result, the country stays a reliable base for global partners.
This nation has faced many tests over the years. For example, it rose above the SARS outbreak and other health scares. In addition, it deals with frequent typhoons. Still, the BPO industry keeps running with little disruption.
Their habit of planning ahead drives this success. Because of this, service quality stays steady through tough events. Vietnam is also named as the fastest-growing middle class. So its growth rests on a strong business setting and steady investment in roads and schools.
5 significant advantages of outsourcing to Vietnam
The outsourcing industry in Vietnam helps firms grow. So global companies can reach new markets fast. In addition, they work with seasoned experts across many fields. As a result, outsourcing to Vietnam brings the following gains:
1. Language and communication
English is the second most used language in Vietnam. So schools and universities teach in English too. As a result, many Vietnamese workers speak English well.
2. Good business environment
Vietnam keeps a business-friendly policy, especially for foreign investors. For example, it joined the World Trade Organization as the 150th member. So its open stance helps global firms settle in with ease.
3. Stable economy
Vietnam has one of the most stable economies in Asia. So growth stays fast and steady. In fact, the New York Times once ranked it as the second country in Asia with the fastest GDP growth.
4. Skills and workforce
Vietnam’s literacy rate as of 2020 sits near 95%, according to Statista. So it holds one of the highest adult literacy rates in the region. As a result, the country offers a wide pool of skilled, hardworking staff.
5. Cost-effective outsourcing
Vietnam is a popular pick in Southeast Asia for low-cost services. So US firms can save a large share on labor costs. In fact, savings often reach up to 90% when offshoring to Vietnam. As a result, it ranks among the best countries to outsource to worldwide.
Vietnam also keeps a steady political and social culture. Because of this, it stays a friendly base for offshoring.
Outsourcing to Vietnam: IT services as an emerging outsourcing sector
Over recent years, Vietnam has grown into a key IT hub in the Asia-Pacific. So it now draws steady notice for software work. India and China still hold the top two spots in Asia. Still, Vietnam keeps climbing fast among its peers.
The country trains a large tech workforce each year. It reports over 400,000 IT engineering graduates and 50,000 IT students from 153 IT institutions every year. Today Vietnam has more than 560,000 IT professionals. In addition, tens of thousands of new graduates enter the market yearly. So its youthful workforce is ready to work anytime.
IT outsourcing to Vietnam is now a clear trend. This growth comes from better tech setup and strong talent. Compared to India, firms often pay 30% to 50% less for operations in Vietnam. So the savings add up fast.
Vietnam developer rates now range from about $25 to $60 per hour. Meanwhile, developed markets like the US often charge $100 or more. As a result, the gap makes Vietnam very appealing.
Many well-known firms already run IT work in the country. For example, Intel, Samsung, LG, and Microsoft all operate there. In fact, if you need a reliable partner for IT and software, you can look to Saigon Technology. So the country keeps gaining ground in software development, application development, and related IT roles.
Why foreign companies should outsource their IT functions to Vietnam
Global clients should weigh Vietnam for IT work for these reasons:
Higher level of education
Vietnam trains a huge number of graduates each year. For example, there are over 280,000 Vietnamese college or university graduates every year. So the country keeps a high literacy rate across its people.
A great data protection law
Vietnam appeals to IT clients thanks to a strong legal base. So its data protection law helps guard sensitive files. As a result, foreign firms feel more secure. In addition, Vietnam welcomes foreign direct investment (FDI) with friendly policies. Because of this, it stands out as a smart base for IT work.
An abundance of younger population
Vietnam has a very young population. In fact, about 70% of the population is under 35. So a large group sits between 15 and 35 years old. As a result, the talent pool suits both IT and the wider BPO sector.
A good number of IT-specialized institutions
Vietnam runs many IT-focused schools. So its graduates are well trained in tech. For example, more than 250 universities and colleges offer IT courses. In addition, 187 technical schools also teach IT skills.
Global corporate investors
Big global investors keep moving work to Vietnam. For example, Canon, IBM, and Fujitsu already expand IT roles there. So the trend keeps growing each year.
Hard-working labor force
Like the Philippines, Vietnamese workers are known to work hard. So the young workforce stays driven and creative. As a result, these traits help Vietnam compete with other countries.
What makes outsourcing to Vietnam appealing
Vietnam appeals as a software base for clear reasons. So it offers low costs, a stable economy, and strong infrastructure. In addition, it brings a skilled talent pool and steady government support.
The country also earns praise for its steady, well-run response to crises. As a result, more overseas firms plan to buy BPO and IT services there. Compared to nearby countries, outsourcing to Vietnam costs less. Because of this, some firms have moved production from China to Vietnam.
The savings look strong on software too. For example, US firms can save up to 90% on some software costs. In addition, Vietnam runs over 33% cheaper than India on overall costs. So the value is clear.
Frequently asked questions
Is outsourcing to Vietnam cheaper than India?
Yes, in many cases it is. For example, Vietnam can run over 33% cheaper than India on overall costs. So it appeals to firms that watch their budget.
What services can you outsource to Vietnam?
Vietnam covers a wide range of work. So common picks include IT and software, finance, payroll, and HR. In addition, many firms use it for shared services.
Do Vietnamese workers speak English well?
Many do speak English well. English is the second most used language there. So schools and universities teach in it too.
How much do Vietnam developers charge?
Rates now range from about $25 to $60 per hour. Meanwhile, US developers often charge $100 or more. As a result, the savings can be large.
Is Vietnam a stable place to outsource?
Yes, it stays stable and steady. So its economy, politics, and social culture support long-term work. In addition, firms keep strong continuity plans.
Key takeaways
- Outsourcing to Vietnam blends low cost, strong skills, and a stable economy.
- The country ranks among the world’s top IT and software hubs.
- Vietnam has more than 560,000 IT professionals and a young workforce.
- Developer rates run about $25 to $60 per hour, well below US rates.
- Friendly policies and steady growth make it a smart long-term base.
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