Vietnam as an IT Outsourcing Powerhouse: A Solution for Future

Vietnam has had one of the fastest growth rates in the world regarding outsourcing services. Since 2005, many companies have turned to Vietnam for outsourcing, like IT services, data entry, and call centers, among other things. As a result, these services made up $2 billion of the country’s GDP in 2015. Since this number keeps going up, it’s clear that Vietnam has become a significant player in the IT outsourcing world in recent years. How will others consider Vietnam as an IT Outsourcing powerhouse in the near future?

The History Of Global IT Outsourcing In Vietnam

IT outsourcing in Vietnam is still in its infancy. In addition to adopting new rules attractive to digital enterprises, the government of Vietnam has also made significant investments in STEM education, resulting in a well-equipped workforce with qualified technicians. Since then, Vietnam’s technology and outsourcing sectors have been experiencing consistent growth. As multinational corporations such as Intel, IBM, Samsung Display, Nokia, and Microsoft continue to invest in Vietnam, the success of the country’s outsourcing industry is becoming a competitive worry for the Indian equivalent. So they are recognizing Vietnam as an IT outsourcing powerhouse.

Why should foreign businesses consider outsourcing to Vietnam?

Shortly, some Western corporate leaders anticipate Vietnamese outsourcing companies to be inflexible. The Vietnamese economy, which has shifted from its agrarian roots to a modern, business-driven market, has been characterized by rapid transformation. Vietnam has participated in the World Trade Organization (WTO) since 2007 and has worked to make it simpler for Western firms to establish a presence in Vietnam.

Solid Bases for Fast-track Growth in the Future

While still in its infancy, Vietnam’s outsourcing sector is expected to continue to expand. The Vietnamese government’s commitment to encouraging foreign direct investment in the IT industry is one of the key reasons behind this. As an illustration, Vietnam has supported the opening of several foreign-funded IT research and development centers, which are essential to creating the requisite environment for a robust BPO industry (Vietnam Investment Review). Vietnam as an IT outsourcing powerhouse also has services benefiting from the government’s commitment to education and desire to undergo a digital revolution. 

According to Cushman Wakefield’s Business Process Outsourcing (BPO) Shared Service Location Index, Vietnam has made “significant investments in education and training.” 

This approach has helped “many Vietnamese attain high levels of literacy and numeracy, allowing its workforce to transition from low-productivity agricultural employment to higher-productivity office work” (Cushman Wakefield). This assures a solid base for the labor force required to provide BPO services.

Read more: Why Outsourcing Software to Vietnam is a Wise Move?

The Vietnamese government’s desire to provide the country’s students with the opportunity to acquire a second language is an essential aspect of its educational program. They have also mandated that English be taught as a second language on university campuses. In addition, Japanese was recently introduced into Hanoi’s elementary schools. Vietnam as an IT outsourcing powerhouse, is the first Southeast Asian nation to teach Japanese as a primary foreign language (Nikken Asian Review by Atsushi Tomiyama). Foreign languages are essential for outsourcing services, and Vietnam’s educational system provides the necessary resources.

Furthermore, the educated IT workforce in Vietnam demonstrates tremendous development potential for the BPO industry. Currently, Vietnam’s educational system produces 40,000 new IT graduates annually; this, together with the country’s median age of fewer than 30 years, ensures a robust labor supply. The repercussions of this are evident in the nation’s economic expansion. Vietnam is home to over a thousand software companies that employ over eighty thousand people. Vietnam has become a significant software exporter and Japan’s second-largest software outsourcer due to the IT software industry’s rapid expansion over the past several years (Cushman Wakefield).

Affordable Reasonable Expenses

Vietnam’s competitiveness in the international labor market can be attributed to the country’s highly educated workforce in addition to the robust support of the Vietnamese government. The labor cost in Vietnam is around fifty percent lower than that in their competitors’ countries. 

As an illustration, the average monthly wage for general office workers in Vietnam’s non-manufacturing sector was $390 in the United States of America, as reported by the Japan External Trade Organization (JETRO). 

It was noticed that their average monthly wage was $728 US dollars, which was significantly lower than the average salary in China.

It should not be surprising that Vietnam has had one of the fastest growth rates in outsourcing globally over the past decade. As a result of having a supportive government, a large labor pool that is educated and bilingual, and being internationally competitive, Vietnam as an IT outsourcing powerhouse, has emerged as the country of choice for any business operating in the business process outsourcing (BPO) service industry.

Challenges And Opportunities

Alongside the prominence of Vietnam as an IT outsourcing powerhouse, it is also a center for outsourcing business processes. It is an excellent supplementary tool for multinational organizations that manage large datasets and seek data purification before software development. The industries that most frequently utilize outsourced information technology talent in Vietnam include technology, financial services, media, gaming, software integrators, and businesses attempting to explore emerging trends cost-effectively. Some examples of these types of emerging trends include artificial intelligence (AI), machine learning, and blockchain.

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The most significant obstacle many companies have when engaging in IT outsourcing in Vietnam is adjusting to the idea of presenting a talented innovation team located between 5,000 and 10,000 miles distant. Training and open communication are the most effective means of overcoming this change. Hence, establishing effective communication protocols is necessary for success because it enables teams to operate fluidly and intelligently together, despite time and space constraints. 

The most important aspect is using the various time zone variances to boost productivity. For example, firms should plan their workloads rather than constantly having to play catch-up with their distant teams. The work that a remote team completes the night before should provide material for a local group to work with the following day.

A virtually 24-hour cycle of productive work is one of the many benefits that outsourcing to Asia and the Pacific region may bring to Western organizations. The software development life cycle can be efficiently incorporated into this framework by having offshore teams test what has been developed throughout the day.

The Prospects for Outsourcing in Vietnam

Vietnam has become one of the most desirable offshore countries for software development and IT services due to its unique combination of high-quality services and inexpensive rates during the past decade. Evidence indicates that outsourcing IT to Vietnam reduces corporate expenses by approximately 90 percent compared to China, the United States, and other nations. The COVID-19 outbreak has made Vietnam as an IT outsourcing powerhouse in the Asia-Pacific region, despite its modest size. 

As firms like Intel, IBM, Samsung Display, Nokia, and Microsoft continue to invest in Vietnam, its outsourcing success has become a competitive issue for its Indian equivalent. The expansion of Vietnam’s tech workforce is a significant component in the country’s emergence as a global leader in IT outsourcing. While the rest of the globe was scrambling to prepare for the impact of the pandemic, the communist Asia-Pacific state was experiencing an IT development boom due to its young, tech-savvy workforce, growing middle class, and investor-friendly administration.

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The Google, Temasek, and Bain Economy SEA 2021 report identifies Vietnam as the Southeast Asian nation with the fastest-growing internet economy over the next decade. By 2030, Vietnam’s internet economy will be the second largest in Southeast Asia, with a gross merchandise value of $US220 billion (GMV).

How MOR Software became a reliable software outsourcing company in Vietnam?

MOR Software has clients worldwide, but they still see great potential within Vietnam itself. This is because Vietnam is projected to have one of the most rapidly expanding internet economies over the next ten years. The company anticipates a significant push toward digital transformation in Vietnam, particularly successfully navigating demic. How has MOR Software been able to navigate its journey toward digital transformation? 

Because of the company’s size, MOR Software competes head-to-head with the growing number of smaller businesses entering the names market today. The primary reason is that MOR Software cannot match their prices. MOR Software focuses on educating potential clients on how to solve their problems, and sometimes on how to think about the situation for them to grasp the required solutions. This is the kind of engagement that MOR Software provides. Because of this, our interaction with our customers is genuinely end-to-end, as this IT Outsourcing company is also involved in running the solutions.

Learn more on: Top 15 Vietnam Software Outsourcing Agility Development

To sum up, it should not come as a surprise that Vietnam has had one of the fastest growth rates in outsourcing anywhere in the globe over the course of the past decade. As a result of having a supportive government, a large labor pool that is educated and bilingual, and being internationally competitive, Vietnam as an IT outsourcing powerhouse for any business operating in the business process outsourcing (BPO) service industry has emerged surpassingly. India is now going through some rough patches in outsourcing, but countries like Vietnam continue to see consistent growth. 

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In the same vein as other hotspots for outsourcing in Asia-Pacific, such as Cambodia and Thailand, Vietnam must maintain vigilance in cultivating talent. The labor force and the market in Vietnam will be fueled by continued investments by the government in STEM education and by the expansion of the footprint of multinational firms. In addition, Vietnam has been competing with the BPO heavyweights India and China, which ranked first and second, respectively. In 2012, the Indian Express reported that Vietnam and the Philippines posed “difficult” competition for India’s outsourcing businesses. 

Read more: Top 30 Trustworthy IT Outsourcing Companies in Vietnam [2024 updated]

Vietnam has also achieved considerable success in competition with China. This potential destination surpassed China to become Japan’s second-largest offshore software R&D partner in 2016.

These are the reasons why many experts considered Vietnam as an IT outsourcing powerhouse. Through this post, MOR Software sincerely hopes that you will be able to select the best IT outsourcing firms in Vietnam for your needs.