IT outsourcing has become a game-changer for businesses looking for efficient and cost-effective solutions for their software development, testing, maintenance, and operations needs. By strategically utilizing external resources, businesses can now focus on their core activities while enjoying the benefits of specialized services.
Vietnam, in particular, is quickly becoming a leading Asian destination for developing low-cost but high-quality software. With an annual growth rate of 13.31%, the IT outsourcing segment in Vietnam is anticipated to increase from $534.90M in 2023 to $881.90M by 2027. Vietnam’s strong financial attractiveness, digital resonance, business environment, people skills and availability have placed it among the top 6 best locations for IT outsourcing, as per Kearny’s Global Service Location Index.
Let’s explore further these advantages in the article.
Reasons why Vietnam is an attractive IT outsourcing destination
1. Affordable Labour Cost
Lower development cost is one of the most compelling reasons for offshore outsourcing.
Hiring offshore software developers in Vietnam is approximately 9 times less expensive than that in Europe or the United States. When compared to Australia, developing software in Vietnam costs one-third to one-seventh of the cost. According to the Vietnam IT Market Report 2023, Junior developers with 1-2 years of experience can be hired with a salary range of $600- $1,000 per month. IT professionals with 3-4 years of experience earn around $1,300- $1,500 monthly, while managers with 5-8 years of experience get salary from $2,000 per month.
2. Abundant and high-quality IT Workforce
Unlike other industries or service sectors, the success of software outsourcing operations heavily relies on the presence of skilled and proficient personnel.
Vietnam boasts a significant workforce of around 430,000 software developers and 1,030,000 ICT professionals, making it the largest pool of software developers among Southeast Asian countries. In comparison, Singapore and Malaysia have 180,000 and 250,000 developers, respectively. Furthermore, Vietnam has more than three times the number of developers compared to Thailand, which currently has around 150,000.
Annually, over 50,000 technology graduates from more than 149 colleges join the labor market, and 412 IT vocational institutions provide around 12,000 professionals to the ICT industry.
With a robust foundation for programming skills from early exposure to science courses, Vietnamese engineers ranked in the top 6 globally in Developer Skills Charts of Topcoder in 202
3. Government Stability
Vietnam is considered as one of the most politically stable countries in Southeast Asia, with minimum conflict in religion and social politics. The stable society, combined with a supportive government, has earned the nation a #29 ranking globally in Open For Business, making outsourcing to Vietnam an excellent choice for entrepreneurs seeking to mitigate risks associated with unfavourable social situations.
There is no ethnic or religious conflict in Vietnam. Almost 95 percent of the population is ethnic Vietnamese, and more than 80 percent has no declared religion. As a result, Vietnam is free of the social and religious conflicts that plague other outsourcing destinations. In the days of increased security concerns, it is worth noting that Vietnam was ranked as the safest country in Asia in 2002.
4. Government Incentives
Governmental issues can challenge rapid economic liberalization, however Vietnam is clearly moving to open markets and offer incentives, particularly in the IT sector. Some of these incentives include tax breaks, preferential treatment for IT companies in government procurement, and funding for research and development in the industry.
The government has also established several technology parks and special economic zones, such as the establishment of National Innovation Center (NIC) at Hoa Lac Hi-Tech Park and the Quang Trung Software City to foster technological breakthroughs and empower transformative ideas from local entrepreneurs.
Finally, Vietnam has risen 7 positions in the government AI readiness Index 2023, ranking 6th among ASEAN nations and 55th globally.
Conclusion
Vietnam is an ideal IT offshoring location, with a growing and youthful IT workforce, low costs, and high aspirations to develop its software services. It has all the factors to become the leading market choice in the coming years.
With more than 14 years of experience in software development, KMS is honored to be recognized as one of the top IT services companies in Vietnam. Having a team of over 1,600 IT experts, the company is dedicated to developing state-of-the-art financial solutions. The company has delivered successful digital transformation projects for 250+ enterprises, including leading enterprises such as Prudential, ACB, MB Bank, TP Bank, OCB and many others.
If your business is looking for solutions related to Software Development, do not hesitate to visit us and learn more about KMS solutions.
