Since the COVID-19 pandemic, outsourcing has become even more crucial for companies of all sizes. It’s helped businesses stay agile and operational, even under tough circumstances. One of the biggest benefits? Companies can tap into global talent, working with third-party providers anywhere in the world.
Asia has long been a popular outsourcing destination, with countries like the Philippines and India leading the way. But recently, Vietnam has emerged as a strong contender in the outsourcing space, attracting more and more companies looking for reliable, high-quality services at competitive rates.
So, why choose Vietnam? What makes it a top choice for outsourcing, and what kinds of services can businesses expect? We’ll dive into all these questions in this article to give you a clear picture of why Vietnam should be on your radar for outsourcing.
Outsourcing to Vietnam: The Next Global Outsourcing Hub
When businesses think of IT outsourcing, India often comes to mind first. And while India remains a powerhouse, Vietnam has quickly become a compelling alternative.
Back in 2010, Gartner listed Vietnam among the top 30 countries for IT offshoring. Fast forward a few years, and Vietnam now consistently ranks among the top five. The country has carved out a solid reputation in the Information and Communication Technology (ICT) sector, with Ho Chi Minh City recognized as one of the top outsourcing cities in the Asia-Pacific region by Tholons from 2009 to 2016.
Vietnam’s outsourcing industry is growing fast, with a nearly 10% annual growth rate over the past five years. In 2019, the sector generated $110 billion, contributing around 14% to the national GDP. Vietnam’s strengths go beyond IT services—businesses can also find skilled professionals in areas like finance, accounting, HR, and other shared services.
A PwC report highlighted Vietnam’s growing BPO (Business Process Outsourcing) industry as a major draw for foreign investors. While Vietnam may still be newer to outsourcing compared to the Philippines, its BPO sector is rapidly expanding, supported by a pro-business government, a stable economy, and strong economic reforms.
Vietnam is quickly establishing itself as an attractive outsourcing destination, offering cost-effective, high-quality services that are backed by skilled talent and robust government support.
Outsourcing to Vietnam: Resilience Amidst the COVID-19 Pandemic
Vietnam has shown remarkable resilience in handling the COVID-19 pandemic, making it one of the safest destinations for outsourcing in Asia. As of June 2021, Vietnam was among the largest countries with no recorded COVID-19 deaths, a testament to its effective government response and strong community resilience.
The country’s proactive approach to crisis management isn’t new; Vietnam successfully navigated previous health crises like the SARS outbreak in 2003 and H1N1 in 2009, along with natural challenges like seasonal typhoons. Thanks to these experiences, Vietnamese outsourcing companies have solid Business Continuity Plans (BCPs) in place, keeping operations stable and uninterrupted. Their strategic planning has made Vietnam’s BPO sector a reliable partner for businesses worldwide, even during a global crisis.
Vietnam is also experiencing rapid growth in its middle class, supported by infrastructure investments and a business-friendly environment. This strong economic transformation has further reinforced Vietnam’s position as a top outsourcing destination.
Five Key Advantages of Outsourcing to Vietnam
Choosing Vietnam for outsourcing offers several strategic benefits for global businesses:
Strong English Proficiency
English is widely taught and used in Vietnamese schools and universities, making it the second most common language. This familiarity with English ensures smooth communication, which is essential for outsourcing partnerships.
Business-Friendly Environment
Vietnam has policies that welcome foreign investments. As a member of the World Trade Organization since 2006, Vietnam has aligned its business environment with global standards, making it attractive and accessible to international companies.
Stable and Fast-Growing Economy
Vietnam boasts one of Asia’s fastest-growing economies. Recognized by The New York Times in 2006 for its rapid GDP growth, the country continues to thrive with a stable economy that supports business scalability.
Skilled Workforce
With a literacy rate of around 95.4% (as of 2020), Vietnam has one of the highest adult literacy rates in the Asia-Pacific. The labor force is not only skilled but also adaptable, making it a valuable resource for various outsourcing needs.
Cost-Effective Solutions
Vietnam offers significant cost advantages, with outsourcing services that are highly affordable compared to many Western countries. Companies in the U.S. can save up to 90% on labor costs by offshoring to Vietnam. This cost-effectiveness has made Vietnam one of the top five global destinations for outsourcing, according to MarketInsider’s 2019 ranking.
Outsourcing to Vietnam: A Rising Star in IT Services
In recent years, Vietnam has emerged as a promising hub for IT outsourcing in the Asia-Pacific region. While giants like India and China have traditionally led the way in software development outsourcing, Vietnam is steadily gaining attention as a competitive choice for IT offshoring.
One reason for this growth is the large pool of tech talent. Vietnam graduates around 50,000 IT students every year, adding to a workforce of over 400,000 IT professionals. This young, skilled population makes Vietnam an appealing option for international companies looking for flexible, tech-savvy talent that’s ready to get to work.
Vietnam’s tech infrastructure is also expanding rapidly, making it easier and more affordable for companies to establish remote teams here. The average hourly rate for developers in Vietnam ranges from $20 to $40—significantly lower than rates in countries like the US, where developers can charge up to $100 per hour. Companies like Intel, Samsung, LG, and Microsoft have already set up shop in Vietnam, recognizing the potential for quality, cost-effective IT services.
Why Outsource IT to Vietnam?
If you’re considering outsourcing IT functions, here are some reasons Vietnam is a smart choice:
Skilled Workforce and High Education Standards
Vietnam’s education system is strong, with over 280,000 college graduates each year. The country has more than 250 universities and 187 technical schools offering IT courses, which means IT graduates come equipped with solid technical skills.
Robust Data Protection
Vietnam’s legal framework includes data protection laws that ensure sensitive information remains secure. This commitment to data security builds trust with foreign companies and makes Vietnam an ideal outsourcing partner for projects involving sensitive data.
Young, Dynamic Workforce
With around 70% of the population under 35, Vietnam has a youthful and eager workforce. About 45% of the population is in the prime working ages of 15 to 35. This abundance of young talent is ideal not only for IT but for the entire BPO sector.
Strong Foreign Investment Support
Vietnam has favorable policies that encourage foreign direct investment, which has attracted global companies like Canon, IBM, and Fujitsu. These policies make it easy for international businesses to set up operations and expand their IT teams in Vietnam.
Hardworking, Innovative Talent
Vietnamese professionals are known for their strong work ethic, resourcefulness, and innovative spirit. This drive to succeed has made Vietnam’s tech workforce highly valuable, especially for companies seeking adaptable, hardworking teams.
What Makes Outsourcing to Vietnam Appealing
Vietnam stands out as an appealing destination for software development outsourcing due to its cost-efficiency, stable economy, strong infrastructure, skilled workforce, and government support.
The country has also gained recognition for its successful handling of the COVID-19 pandemic, further boosting its attractiveness as a destination for outsourcing. As a result, more international companies are turning to Vietnam for BPO services, especially in the IT sector.
When compared to other Southeast Asian countries, outsourcing to Vietnam is generally more affordable. This cost advantage is one reason why many businesses that once outsourced manufacturing to China are now shifting their production to Vietnam.
In the case of outsourcing software development from the US, companies can save up to 90% on costs by choosing Vietnam. Additionally, compared to outsourcing to India, Vietnam offers overall cost savings of over 33%.
