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Vietnam is quickly becoming one of the world's premier outsourcing destinations. Why is that? Read here to learn more.

Whether due to lockdown, changing company policy, or needing specialized skill sets, many companies find themselves looking for outside help, especially from abroad. Among them is the Southeast Asian nation of Vietnam, famed for its banh mi, pho, and ao dai. However, these reasons are not why businesses go to Vietnam for IT or software expertise. In addition to long-established India and China, many companies are making Vietnam their +1 partner. So what makes Vietnam an attractive outsourcing destination? 

Here are Five reasons why Vietnam is a reliable, cost-effective, and high-value IT-outsourcing destination.

 

Large Pool of Skilled Engineers

Vietnam is home to many of the world's most skilled developers. In a 2020 TopDev report, Vietnam had approximately 400,000 IT engineers in 2019, with a further 50,000 IT students graduating annually. This number is composed of a core of high-quality individuals. According to a 2022 Robert Walters Report: "Vietnamese talent are the least uncomfortable in leaving their current roles in [Southeast Asia], reflecting their confidence in securing job opportunities within their sector". They feel justified in this because Vietnamese engineers and developers are incredibly skilled, despite Vietnam's current status as a developing nation. Evidence for this is in the 2022 Coursera Global Skills Report, where Vietnam ranked high in terms of both Technology and Data Science skills. This is despite falling in rank from 2020, when it was ranked #2(!) in all of APAC, behind only New Zealand! The 2016 Hackerrank article "Which Country Would Win in the Programming Olympics?" further corroborates Vietnam's strength. Ranking 23rd overall (among 50 countries), Vietnamese engineers were found to have a particular talent in Artificial Intelligence and Data Structures. Therefore, it is easy to conclude that Vietnamese engineers are not only numerous but also of high quality.

 

Digital Environment

Much of Vietnam's digital competency can be tied to the government focusing much of its effort on digitizing the nation and developing a "Vietnam 4.0". To achieve this, the government has set goals such as having digital economy contribute to 20% of Vietnam's GDP, and having Vietnam among the top 50 countries in IT and the 35 leading countries in innovation by 2025. For these ends, the Vietnamese government has supported the development of several software parks, to accelerate and strengthen Vietnam's competencies in the technologies required. Foreign companies are taking notice, with companies such as Intel, LG, and Microsoft having long established themselves here. Investment is increasing further; for example, Apple is shifting production of the Macbook and technologically sophisticated Apple Watch to the northern Mien Bac region. Similarly, Samsung is moving into Thai Nguyen to build its semiconductor parts, after already constructing an R&D center in 2020. As a result, Vietnam's digital landscape is rapidly growing. In 2010, the total revenue of the ICT industry was only $7.6 billion, yet by 2016 had reached a value of $67.7 billion! Such growth is a testament to the Vietnamese government's vision of turning the nation into a digital giant, able to stand apart from many of its more established neighbors. With several of Vietnam's 240 universities planning on becoming more digital, it's clear that a well-developed tech ecosystem is something Vietnam will continue to work toward in the future.

 

High Value at Low Cost

When outsourcing, cost-effectiveness is a key motivator. This is another area where Vietnam shows strength. Using Glassdoor’s average salaries as a comparable metric, a Java Developer in Vietnam can expect to earn roughly 41,000,000 VND per month (~ $1,730). By contrast, one in Japan can expect 500,000 JPY (~ $3,480), another in Singapore can expect 10,597 SGD (~ $7,510), a third in Australia around 8,750 AUD (~ $5,850), and a fourth in the United States about $8,250. Even compared to other popular outsourcing destinations, Vietnam demonstrates value. Using the same metric as before: A Java developer in the Philippines expects 130,000 PHP (~ $2,260). One in Ukraine would expect 83,500 UAH (~ $2,270). A different one in Thailand would expect 80,600 THB (~ $2,200). A fourth developer based in Brazil can expect 12,740 BRR (~ $2,460). One may ask, however: What sort of conditions might allow for this? A business environment, when factoring in all costs, with the third lowest operating costs in all of Asia (behind only Cambodia and Myanmar). With value like this, it's easy to see why Vietnam continues to attract so much interest.

 

Risk-Free Investment

Vietnam is a very stable investment for any company looking in from the outside. Many factors are responsible for this. One of these is that Vietnam consistently ranks among the safest countries in the world. Terrorism, civil unrest, and armed conflict, which businesses avoid for fear of losing their investments, are unheard of in Vietnam. It's likely to remain this way for the foreseeable future due to the government's focus on maintaining a neutral foreign policy. Another may be due to simple historical and geographic circumstance. As the United States and China increasingly decouple economically, many businesses settle on simply moving next door, Vietnamese labor being so close. This attractiveness is further reinforced by China and Vietnam sharing many cultural values, making it incredibly easy for businesses to adapt. These and many other factors are why Vietnam's growth is consistently among the highest in the world; the Worldbank predicts that Vietnamese GDP growth will hit 7.5% by the end of 2022. Reasons like this are why Vietnam consistently ranks high on lists of countries worth investing in, such as when it ranked 8th in the 2019 Top 20 Countries for Investment. With such a reputation, how can businesses not take at least some interest in the nation?

 

Globalized Culture

Vietnam is uniquely well-suited to the era of globalization. Due to the pandemic locking down much of Vietnamese life, many companies simply accelerated their work-from-home policies. This proved effective when more than 7 out of 11 Vietnamese professionals noted a similar or even increased level of productivity while at home. Moreover, the country is well-connected to the rest of the world, with over 73% of Vietnamese using the internet. They're not speaking in just Vietnamese, however. Though Vietnam's English Proficiency Ranking in 2022 fell from previous years, Vietnam still consistently outperforms Asian peers such as Thailand, Japan, and Indonesia. Perhaps this is because the Vietnamese language shares much in common with English. Latin characters, an S-O-V structure, and analytic typology are all similarities Vietnamese shares with English. Supporting Vietnamese strength in English is a silver lining from a dark moment in the country's history: the scattering of the Boat People. Fleeing tragedy and war, many Vietnamese established themselves in countries such as the US, Australia, or the UK, raising their children to have native accents, indistinguishable from locals. Indeed, the Vietnamese diaspora is one of the world's largest, with more than 5.3 million Vietnamese living abroad. Able to act as bridges between nations, these people often return home, further improving Vietnam's exposure to the outside world. Thus, with a population well-adapted to globalization, Vietnam is a very inviting country for anyone who might be unsure of its global capacity. 

 

Conclusion

Vietnam stands out among the world's nations. In a world where expertise in IT is increasingly valuable, Vietnam stands out as the primary partner for many. The reasons are clear: Vietnam has a large skilled experts pool, an environment fit for the digitally-minded, excellent cost to value, safe investment opportunities, and a culture well-suited for the 21st century. It's no wonder that, within only a few decades, it's become such a burgeoning hub for IT development. How this will look in ten years cannot be said for sure. However, what is certain is that in the current year, for those looking for a reliable offshore partner, the Vietnamese are hard to top.

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IMT Solutions is a leading Vietnamese software provider, with 14+ years in the outsourcing industry. Harnessing Vietnam's great potential for digital growth, we have helped hundreds of customers of make great value and profit. No matter the industry, and no matter the tech, we can build you the software solution of your dreams.

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