Outsourcing IT to Vietnam: Pros & Cons and How to Get Started in 2024

Is Outsourcing IT to Vietnam the right decision for your business? What are the outstanding benefits of IT outsourcing as well as challenges you will face when choosing Vietnam as a destination in 2024? Let's follow the article below

Why Outsource IT to Vietnam?

Cost-Effective IT Solutions

Vietnam has emerged as a leading destination for offshore IT outsourcing, offering a blend of cost-effectiveness and high-quality services. One of the main reasons why many businesses choose to outsource IT to Vietnam is the low cost. 

According to a report by Statista, revenue from IT services in Vietnam is expected to reach 1.99 billion USD by 2024, of which IT Outsourcing accounts for the majority with an estimated market size of 0.69 billion USD. 

Labor costs in Vietnam are much lower than in other countries such as China and India, helping businesses save significantly on costs while still receiving high-quality services.

Skilled IT Talent Pool

Vietnam has an abundant and high-quality IT workforce. Every year, Vietnam has more than 40,000 students graduating with a major in information technology, equipped with modern technical skills and knowledge. The Vietnamese government has also invested heavily in STEM education, ensuring a quality supply of human resources for the IT industry. By outsourcing their IT departments to Vietnam, companies can significantly reduce operational costs while accessing a skilled talent pool.

Vietnam's thriving tech industry is not only a hub for full-scale IT outsourcing but also for companies seeking to augment their teams through IT staff augmentation companies.

High-Quality Work

The quality of work in Vietnam is always guaranteed thanks to strong investment in education and training. Many companies in Vietnam meet international standards and have cooperated with large enterprises around the world. IT experts in Vietnam are not only highly skilled but also fluent in English, helping to communicate smoothly with international customers.

Socio-economic stability

Vietnam has a stable socio-economic environment, which is an important factor in helping outsourcing projects run smoothly. Vietnam has maintained a stable GDP growth rate of about 6-7% over the past decade, among the highest in the region. The Vietnamese government has also introduced many policies to support and encourage foreign investment, creating favorable conditions for foreign businesses when outsourcing IT to Vietnam.

Growing IT Industry

The information technology industry in Vietnam is growing strongly with an annual growth rate of about 30%. This development not only creates many job opportunities but also improves the quality of IT services and products. 

Vietnam is recognized globally for housing some of the best IT outsourcing companies, known for delivering high-quality services at competitive rates.

IP Protection and Data Security

Protecting intellectual property rights and data security is a top priority in Vietnam. Outsourcing businesses in Vietnam strictly adhere to international security standards, ensuring that customer data is always protected. 

According to Forbes, Vietnam has surpassed China to become the next IT hotspot in Asia-Pacific. Gartner initially recognized Vietnam as one of the top 30 countries for IT services. 

Subsequently, Gartner analysts elevated the country to a top 5 position, placing it alongside India, China, the Philippines, and Malaysia. Many large corporations such as Intel, LG, Samsung, and IBM have a presence in Vietnam, demonstrating the country's capacity and reputation in the IT field. This further reinforces the view that Vietnam is a top choice for future IT development projects.

Vietnam's IT Outsourcing Industry Overview

Growth of the IT Sector in Vietnam

The IT industry in Vietnam has made great strides in the past decade. According to IDC, Vietnam is one of the fastest-growing IT markets in Southeast Asia. This growth comes not only from domestic demand but also from the demand of foreign businesses when outsourcing IT to Vietnam.

The growing number of IT outsourcing companies in Vietnam reflects the country's rapid development as a global tech hub.

Key Cities for IT Outsourcing in Vietnam

Hanoi and Ho Chi Minh City are the two largest IT hubs in Vietnam. In addition, Da Nang is also emerging as an ideal destination for IT outsourcing projects thanks to the rapid development of infrastructure and high-quality human resources. Hanoi ranks among the top in Vietnam's IT and digital technology sectors. 

By 2023, it is expected to be third in revenue, reaching 327,000 billion VND (about 13 billion USD), accounting for 10% of the national IT revenue. 

The city also has over 7,300 digital tech businesses and was the first to establish an IT Industry Department.

Services Commonly Outsourced to Vietnam

Vietnamese IT firms offer various IT outsourcing models and services, allowing businesses to choose the one that best fits their needs and project scope.

Software Development

Software development is one of the most popular IT services in Vietnam. Vietnamese companies have implemented many large software projects for global enterprises, from mobile applications to enterprise management systems.

Mobile App Development

With the strong development of the mobile market, mobile application development is a very potential field of outsourcing IT to Vietnam. Many companies in Vietnam have experience in developing multi-platform mobile applications, meeting the needs of global customers. Vietnam has more than 40,000 IT graduates each year, ensuring a quality human resource for developing mobile applications.

IT Support and Maintenance

IT support and maintenance services are also an area where Vietnam has strengths. Businesses can easily find partners in Vietnam that provide 24/7 support services with high quality and reasonable costs. 

According to The 2023 Kearney Global Services Location Index, Vietnam ranks 7th in the list of leading countries for offshore services, one place above the United States.

Challenges of Outsourcing IT to Vietnam and How to Overcome

Communication Barriers

Language barriers can be a challenge when outsourcing IT to Vietnam. However, many IT companies in Vietnam have invested in improving the English proficiency of their employees. To overcome this challenge, businesses should choose partners with good English communication skills and establish clear communication processes.

Time Zone Differences

Time zone differences can make project management difficult. However, this can also be turned into an advantage if you know how to manage your time effectively. Businesses can set up online meetings at times that are convenient for both parties and use project management tools to track progress.

Navigating Cultural Differences

Cultural differences can affect the work process. To minimize this impact, businesses should learn and respect the culture of their partners. Organizing cultural exchanges is also an effective way to enhance understanding and cooperation between the two parties.

How to Start Outsourcing IT to Vietnam?

Steps to Finding the Right IT Partner

To start outsourcing IT to Vietnam, businesses need to find the right partner. You can refer to reviews from previous customers, learn about the partner's experience and capabilities, and participate in face-to-face or online meetings to evaluate. One of the typical partners in the IT outsourcing field in Vietnam is MOR Software. MOR Software has built a reputation through implementing many successful projects for global customers. This company stands out with a team of experienced and knowledgeable staff, ensuring high service quality and meeting the needs of customers well.

Contract and Legal Considerations

When cooperating with partners in Vietnam, businesses need to pay attention to contract terms and legal issues. It is advisable to consult legal experts to ensure that the contract protects the interests of both parties and complies with legal regulations.

Setting Up Your Outsourcing Project

To successfully implement an outsourcing project, businesses need to establish a detailed and clear plan. There should be project kick-off meetings, setting goals and completion times, as well as assigning specific tasks to each team member.

Case Studies of Successful IT Outsourcing Projects in Vietnam

A typical example of the success of outsourcing IT to Vietnam is MOR company. MOR has cooperated with many large enterprises worldwide. Below is a case study about the cooperation of MOR Software and Narosu

Summary and client:

The Narosu project aims to create a seamless international shopping experience through two main modules: BuyBee, which integrates products from Shopee and Lazada, and BeeMall, which supports international purchases from Korea. The system was developed using PHP, NestJS, NextJS, and AWS by a team of 8 people in 9 months and continues to be upgraded. 

The client is a Korean business that wants to improve access to international products for consumers in Korea and Vietnam, offering unique and high-quality products that are difficult to find locally.

Solution and results:

MOR Software used PHP, NestJS, and NextJS to develop a powerful and flexible backend, while AWS provided a stable cloud infrastructure to handle fluctuating traffic. The team has applied advanced data synchronization techniques to ensure product information is always accurate and up to date across platforms. 

As a result, the Narosu system was successfully launched, delivering a smooth shopping experience and enhancing access to international markets. BeeMall has become an important bridge between consumers and global sellers, improving user satisfaction and expanding the market. This platform is still being developed to expand its features and number of users.

FAQs about Outsourcing IT to Vietnam

How much does it cost to outsource IT services to Vietnam?

The cost of outsourcing IT to Vietnam is often lower than many other countries. Depending on the size and requirements of the project, costs can range from a few thousand to tens of thousands of US dollars.

How do I manage time zone differences when outsourcing to Vietnam?

To manage time zone differences, businesses should set up online meetings at times that work for both parties and use project management tools to track work progress.

What legal considerations should I be aware of when outsourcing to Vietnam?

Businesses need to pay attention to contract terms and legal issues when cooperating with partners in Vietnam. It is advisable to consult legal experts to ensure that the contract protects the interests of both parties and complies with legal regulations.