On the hunt for a skilled IT workforce at cost-effective rates? Let us point you in the right direction. Here, we’ll discuss software development outsourcing to Vietnam, as the destination has proved to be promising over the past few years.
In choppy waters of global tech development, for many businesses outsourcing is no longer an option, but increasingly, the way to stay competitive and boost revenue in the long run.
Yet, choosing the right IT outsourcing country often depends on a whole range of factors specific to a business’s operations and can be complex, even for experienced leaders. There are many things business owners should consider when looking for the most suitable outsourcing destination, including infrastructure, available skills and quality of services rendered, business environment, political and social risks, etc.
In this regard, for many companies seeking to outsource their software development needs, Vietnam is not far from perfect.
As a popular IT outsourcing destination, the country offers plenty of advantages, such as a favorable business climate, an affordable labor market, and political stability, amongst others.
The nation’s Vietnam IT outsourcing market is forecasted to achieve US$698.90m in revenue for the year 2024, with an anticipated compound annual growth rate (CAGR) of 16.38% through to 2028, culminating in a projected market volume of US$1,282.00m.
The country is ranked 7th in Kerney’s 2023 Global Service Location Index. This index evaluates a nation’s software outsourcing capabilities using criteria like financial attractiveness, business environment & digital resonance, skills & availability, etc.
Top 10 countries in the 2023 GSLI
Source: The 2023 Kearney Global Services Location Index
No wonder that such tech heavyweights like Intel, IBM, Microsoft, Samsung, Canon, LG and other giants have been continuing to pour investment capital in Vietnam for more than a decade now.
Another big name, Apple, also expresses a strong interest in starting business operations there. The company began to recruit plenty of tech-related vacancies such as country manager in Vietnam, hardware technician, and other positions for supply chain management and operation, business development and sale.
Nonetheless, for businesses that still doubt whether it is safe to outsource their IT processes to Vietnam, we’ll provide a comprehensive list of benefits the destination can offer.
IT outsourcing in Vietnam: Opportunities
1. Cost Savings
For businesses looking to outsource software development, Vietnam represents one of the most cost-effective choices available today.
The numbers are there — in 2024, the average salary for a software developer in Vietnam is 15,800,000 VND (approx $640 USD), far lower compared with the average salary of their colleagues from other popular IT outsourcing locations such as China (approx $4,000 USD) or Malaysia ( $1,040 USD).
Developers salary by years of experience
Source: 2023 Vietnam IT Market Report by TopDev
2. Consistent Economic Stability
For businesses, economic stability always means a lot. First of all, it means that there’s a conducive environment to carry out operations with a degree of certainty and predictability.
Vietnam is renowned for its consistent high growth and resilience amid global economic and geopolitical challenges throughout the years.
AMRO predicts that Vietnam’s economy is projected to grow by 6 percent in 2024.
Foreign direct investment is expected to remain a significant driving factor of economic expansion. Impressively, in 2023, foreign investment inflows into Vietnam surged by 32% to reach almost US$36.62 billion.
Vietnam: Growth rate of real gross domestic product (GDP) from 2019 to 2029
Source: Statista
3. Political Stability
Vietnam’s political stability serves as a crucial asset in attracting foreign direct investment and bolstering investor trust.
For the last decade, the country has consistently ranked in the top half among nearly 200 countries on the Political Stability Index, as stated by the World Bank.
Unlike neighboring India, Thailand, and the Philippines, which experience occasional regional conflicts, social unrest, and uprisings, Vietnam stands out as a pillar of stability.
4. Abundant Labor Supply, Tech-Enabled Workforce
With more than 70,000 digital tech firms, Vietnam is a sizable player in the global IT outsourcing market.
The country ranks in the top 10 countries which produce the most engineers (UNESCO).
As per TopDev 2023 Vietnam IT Market Report, among Vietnam’s top fastest-growing IT jobs are data scientists, cloud architects, cybersecurity specialists, and AI and DevOps engineers.
Vietnamese developers prove their tech supremacy by securing their position in Pentalog’s Top 10 countries with the best developers in the world.
The best javascript developers and freelancers
Source: 2022 Pentalog Report
Notably, the average age of the Vietnamese IT workforce is relatively young, with around 40 to 45% below the age of 35. This often means greater employee adaptability and lower salary expectations.
5. Beneficial Geographic Location
Vietnam provides an auspicious business environment for investors and entrepreneurs due to its beneficial geographic location. Situated at the crossroads of Northeast and Southeast Asia, the country is neighboring the world’s most fast-growing economies like China, Japan, Korea, and India.
Additionally, Vietnam is in close proximity — less than a two-hour flight away — to key business hubs such as Singapore, Bangkok (Thailand), and Kuala Lumpur (Malaysia). This ensures seamless connectivity and business opportunities.
6. Language Advantage
Successful communication is hard work even when everyone speaks the language fluently. Things get even worse when a language barrier comes into play. Misunderstandings and confusion may become a serious obstacle killing team productivity.
Fortunately, mocking Asian employees for their limited English skills is a thing of the past.
So far, Vietnam is in the top 10 regions in Asia that ranked the highest in terms of English proficiency.
Top 3 Cities in Vietnam for Software Outsourcing Services
Vietnam boasts a well-earned reputation for a high-quality business environment and exceptional information technology services.
With this, as the current competitive landscape stands today in the country in terms of providing IT outsourcing and consulting services, several local cities are emerging as winners. Here they are, listed for you in a handy quick guide.
1. Ho Chi Minh City
A key economic hub located in the heart of the southern region of Vietnam is hailed as the top choice for businesses in search of reliable engineering vendors.
Economy-wise, the city shows immense growth potential in such industries as IT and Electronics and Mechanical and Automation.
Ho Chi Minh City secured the second spot among 63 provinces and cities nationwide in the 2022 Digital Transformation Index (DTI).
Moreover, HCMC has set its sights on achieving a smart status by 2030 through advancements in e-government, e-enterprises, and digitalization across society.
2. Hanoi
Along with Ho Chi Minh City, Hanoi, the capital city of Vietnam, stands out as the region with the highest concentration of businesses in Vietnam. The city is home to around 1,000 startup and innovation businesses, making up 26.3% of the country’s estimated 3,800 enterprises.
In its development strategy for 2021-2025 and direction towards 2030, the Hanoi City People’s Committee has identified science, technology, and innovation as one of its 10 key pillars.
Moreover, moving forward, by 2024, the capital city aims to have 12 science and technology researchers and software engineers per 10,000 people, increasing to 14 per 10,000 people by 2030.
3. Da Nang City
Da Nang has become a sought-after investment location for both local and global investors, coming in third after Hanoi and Ho Chi Minh City. Often referred to as the most livable city in the country, Da Nang seamlessly combines the serenity of a beach town and rapid modernization.
There are four key factors fueling Danang’s healthy business environment: low cost of living, abundance of labor, strong infrastructure, and good regional connectivity.
The wealth of engineers trained by local universities and technology centers has underpinned the success of Da Nang’s software outsourcing industry.
As reported by the Da Nang Department of Information and Communications, by December 2023, the city accommodated 2.3 digital technology enterprises per 1, 000 inhabitants, which is three times greater than the national average. The city’s IT industry workforce amounted to approximately 47,500 individuals.
Elinext – Top Software Outsourcing Company Based in Ho Chi Minh City, Vietnam
Elinext is a full-cycle software development company with delivery centers in Vietnam, Poland, Georgia, Kazakhstan, and Uzbekistan and representative offices in the USA, France, Germany, Ireland, Singapore and Hong Kong.
Founded in 1997, Elinext has developed into a world-leading technology solutions provider offering round-the-clock outsourced IT support services — either remotely or onsite.
Always with clients in mind, we provide intelligent software solutions for such domains as ERP and Asset Management, CRM and Loyalty, IT Infrastructure Management, Document Management, Accounting, Banking, Healthcare, and IoT.
Our impressive portfolio includes recognizable names such as Broadcom, Siemens, TransPerfect, Volkswagen, Parrot, Trumpf, and others.
Get in touch today to explore our software development outsourcing services and open up a universe of opportunities for your business.
